Case Summary
The dispute is between a Chemical Manufacturer based out of Indore as the Claimant and a distributor of chemicals based in Khargaon, Madhya Pradesh, as the Respondent. While the parties had a long working relationship, a particular order was placed by the distributor for a specialised dye that had to be imported.
The order was to be delivered in 30 days, and payment was to be made within 15 days from the date of delivery. This was a back-to-back order placed by the Respondent, who in turn had a client who would purchase the same in bulk. The total amount payable was Rs. 2,00,000/-, including freight charges.
The Issue
While the product was delivered, there was a delay in customs clearance, and the product was delivered late by 5 days. Although the Respondent showed his unhappiness at the delay, he still accepted the consignment and signed the airway bill for the same.
The dispute occurred when the payment was not made even after the 15-day period had lapsed. The argument put forth was that, due to the delay, his own client had cancelled the order, and hence he could not pay the amount to the Claimant.
While there were several rounds of discussions, no headway could be made in the case, and the matter was handed over to PDR COURT for settlement.
The Resolution
The mediator, in this case, established the facts of the claim and then approached the Respondent for a discussion. While the same argument of loss of business was put forth, what stood out was the fact that despite the delay, the Respondent had not only accepted the consignment but also raised no issues until the end of the 15-day payment period — a pattern that suggested malice in his intent to withhold payment.
It was also discussed that the Claimant, being a very large manufacturer, losing credit lines in supply would significantly disrupt the Respondent's business going forward. Once the impact of this was impressed upon him, the Respondent requested a deferred payment option.
Considering the business loss he had genuinely incurred, and in consultation with the Claimant, an agreement was reached.
The Settlement Agreement
The Respondent agreed to pay the total dues of Rs. 2,00,000/- on or before four months from the date of settlement, i.e., on or before the end of November 2022.
The Inference
Bringing into perspective the possible loss of business often brings out solutions.
This case illustrates how framing a dispute in terms of its long-term commercial consequences — such as the risk of losing supply credit lines — can motivate a reluctant party to honour their obligations, resulting in a mutually workable settlement rather than a protracted standoff.
