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Sugar Mill Owner V Product Distribution Company

Date of Claim raised: 09/07/2022
Date of Conciliation: 11/07/2022
Date of Settlement: 11/07/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

This dispute is between a Sugar Mill owner (the Claimant) and a Product Distribution company (the Respondent). While the purchase order was placed by the respondent to purchase unpolished sugar from the claimant, the same needed to be supplied over a period of 3 months, and the agreed term of credit was 15 days from the date of delivery. While the first part of the deal went smoothly, the deliveries made in the 1st week of the third month were not made even after the stipulated time period, and subsequent deliveries were unpaid. This brought the process to a halt.

The Issue

The Respondent, though a Private Limited company, was managed by a family, and the entire operation depended on the Managing Director, who was the head of the family. He suddenly fell ill and was hospitalised with a serious condition, and this meant that the operations of the company were hindered. His team was unaware of the complete functioning, and they, in turn, ended up with a stockpile of produce and not many customers. This inability to pay meant that they could not pay the claimant the dues. The issue was referred to Private Court for settlement.

The Process

The Mediator, in understanding the facts of the case, realised that there was a need to understand the business model of the Respondent's company, and in turn, offered to help figure out their receivables. This exercise proved fruitful, and the mediator was also able to guide the respondent's team to certain clients who could be possible buyers from their existing client list. This was a breakthrough that was achieved, and the company had a clear view of the cash flow for the coming months. Considering their situation, the respondent agreed to a broken-up payment schedule, and the matter was settled.

The Settlement Agreement

The Parties agreed to the following settlement agreement to settle the Disputed Amount of Rs. 4,78,651/-:

The Respondent to pay the Claimant the entire amount in the following schedule:

Date Amount
20/07/2022 11/08/2022 11/09/2022 11/10/2022 11/11/2022 11/12/2022 11/01/2023
Rs.50000 Rs.71441 Rs.71441 Rs.71441 Rs.71441 Rs.71441 Rs.71441
The Inference

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