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Private Ltd. Company V. Plastic Manufacturer
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Summary
This dispute arose between a Private Limited company that was engaged in the manufacturing of plastic products, referred to herewith as the Claimant, and a proprietary concern that was engaged in distribution referred to herewith as the Respondent. The business relations of these firms have been over a few years old, and it had been common practice for the company to supply materials on credit. Generally, there was a 30-day payment credit extended to the distributor, and on most days, these dates were met, or the claimant extended a few days. However, a consignment of products delivered on 10/05/2021 was not paid for within the stipulated time period.
The claimant had billed an amount of Rs. 63,800.80/-, which remained outstanding.
The Issue
The issue was that the Respondent, being a proprietary concern and the proprietor having run into some health issues, had a cash flow crunch and was unable to pay the dues.
This is a risk that many businesses run with small family-owned operations. Post 60 days, the claimant sought the help of PDR COURT to settle the issue.
The Process
The negotiator, after going through all the documents submitted by both parties viz: Ledger accounts, Outstanding invoices, Email conversations, Purchase orders, and Whatsapp chats, established the claim and approached the respondent for the payment of dues. On understanding the issue and establishing that the respondent has the will to pay, the negotiator agreed on a deferred payment date.
It was also observed that the non-supply of products further by the company had almost brought the respondent's business to a halt and made things further complicated for him. The Negotiator thus asked the company to continue the relationship as it was earlier on with credit limits reduced to 15 days
The Settlement Agreement
The following terms were agreed upon for settlement:
- Rs. 15,000/- (Fifteen Thousand) on or before the 27th of August 2021
- Rs. 15,000/- (Fifteen Thousand) on or before the 27th of September 2021
- Rs. 15,000/- (Fifteen Thousand) on or before the 27th of October 2021
- Rs. 18,800/- (Eighteen Thousand Eight Hundred) on or before the 27th November 2021
The Inference
This case is peculiar as this was a case where the human angle to the issue was also to be considered. It was also a long-standing and honest relationship between 2 entities that needed to be managed. The negotiator addressed both issues here through a dialogue.
