• Delay of supply of goods against dealer deposit

A startup Pvt,ltd company based in PUNE in electric vehicle business demonstrates and proves a product. One dealer FROM RAJASTHAN placed order and gives deposit pre-covid. Company suffers losses, but still has been able to complete product development and has proven the product. WE HAVE ALSO SOLD SOME PROTOTYPES TO MINISTRY OF DEFENCE, ONLY COMPANY IN EV TO DO THAT. However, the commercial delivery will take time due to lack of sufficient funds. The dealer offered to invest at an unacceptable valuation, which was declined. Now he is demanding refund of deposit and threatening legal action. The company has no money. What is the protection? So far, he has asked for refund only through emails. I have asked him to send a formal request letter stating that he is not interested in continueing as our dealer and therefore asking for refund. He is refusing to issue such a letter because he does not want to give up the dealership, knowing that we have an excellet product. What could be our strategy to safegard ourselves since we do not have money to refund.
Asked 9 months ago in Business Law

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11 Answers

It is necessary to peruse agreement entered into with b dealer to advice 

 

2) even if dealer sues  you to recover deposit on account of failure to supply the product you can file detailed reply denying allegations made by dealer 

 

3) litigation is long drawn proposition in India 

Ajay Sethi
Advocate, Mumbai
94922 Answers
7572 Consultations

5.0 on 5.0

  1. Review the Dealer Agreement: Carefully review the terms and conditions outlined in your dealer agreement with the Rajasthan-based dealer. Look for any clauses that pertain to order cancellations, refunds, or penalties for breach of contract. This will help you understand your legal obligations and rights.

  2. Communicate Clearly: Continue communicating with the dealer through written correspondence. It's good that you've requested a formal request letter for the refund. Ensure that your email exchanges are documented and professional. Avoid making any promises you cannot fulfill.

  3. Offer Alternatives: If your company cannot provide an immediate refund, consider offering alternatives that might be acceptable to the dealer. This could include delaying the delivery until your company secures the necessary funds or providing a credit note that can be used for future purchases.

  4. Negotiate: Attempt to negotiate a mutually acceptable solution. This might involve discussing the terms of the refund, extended payment timelines, or other arrangements that both parties find agreeable.

  5. Explore Funding Options: Look into potential sources of funding to meet your financial obligations. This could involve seeking investment, loans, or grants specifically for your industry or sector.

  6. Document Everything: Ensure you maintain meticulous records of all communication, including emails, letters, and any other relevant documents. These records can serve as evidence if the situation escalates.

  7. Consult with Industry Associations: Reach out to relevant industry associations or trade bodies that your company is a part of. They may be able to provide guidance or mediation services to help resolve the dispute.

  8. Seek Mediation or Arbitration: If negotiations stall, consider suggesting mediation or arbitration as a means to resolve the dispute without going to court. This can be a cost-effective and quicker alternative to litigation. Send a notice through your arbitrator. 

Akram Khan
Advocate, Gwalior
20 Answers

Not rated

You just wait and don’t refund. There can’t be any strategy. He may not file legal action as he may lose dealership

Prashant Nayak
Advocate, Mumbai
32067 Answers
183 Consultations

4.1 on 5.0

If the dealer is pestering constantly through email or whats app, you may block him everywhere.

If he is issuing a legal notice you may deal with it legally as per procedures of law as well as invoking the conditions of contract in this regard. 

T Kalaiselvan
Advocate, Vellore
85123 Answers
2215 Consultations

5.0 on 5.0

Police would issue you notice to record your statement under section 41A of cr OC 

 

2) there is no automatic arrest 

 

3) you can apply fir and obtain Anticipatory bail from sessions court in case FIR is lodged against st you 

Ajay Sethi
Advocate, Mumbai
94922 Answers
7572 Consultations

5.0 on 5.0

You may ask the dealer to proceed.

You can then issue a legal notice stating that you have cancelled his dealership and can ask him to collect his money after three months.

You can also inform him to not to disturb by frequent calls in the meantime.

T Kalaiselvan
Advocate, Vellore
85123 Answers
2215 Consultations

5.0 on 5.0

You can contest any action against you. Before that you have no choice to wait and counter the said false allegations with your reply 

Prashant Nayak
Advocate, Mumbai
32067 Answers
183 Consultations

4.1 on 5.0

Recovery already bared by limitation. Just stop responding him.

No FIR in this case.

 

Yogendra Singh Rajawat
Advocate, Jaipur
22669 Answers
31 Consultations

4.4 on 5.0

Dear Client

Review the Deposit Agreement: While you mentioned that there is no formal written agreement with the dealer, the initial deposit transaction and any related communications (such as emails) may be considered a form of agreement. Your attorney can review these documents to determine their legal implications.

Communication: Continue communicating with the dealer in writing, as you have been doing. It's important to maintain a record of all communications. However, avoid making any promises or statements that may be construed as admissions of liability.

Exploring Resolution Options: You may explore potential resolutions with the dealer, such as offering to refund the deposit in installments over time once your company has the necessary funds. Discussing potential solutions with your attorney can be helpful.


Jurisdiction: Whether the Rajasthan Police can arrest you in Pune depends on various factors, including the nature of the dispute and the applicable laws. If the dealer files a complaint, it may initiate a legal process, and you may need to respond to it through legal channels. However, the places where the jurisdiction can be established are places where the deal has taken place, where the business is being conducted.

Document Everything: Keep detailed records of all interactions and correspondence with the dealer. This documentation can be crucial in establishing your position and defending your company's interests

Anik Miu
Advocate, Bangalore
9008 Answers
110 Consultations

4.7 on 5.0

- Since there is no agreement , then you are not bound with any terms to follow the instructions of the said dealer.

- You can issue a letter/notice to the said dealer after stating that due to some technical and financial problems , the order cannot be delivered presently , and only on this point the amount cannot be refunded , and further advise him through this notice /letter to produce formal request , otherwise the company will not accede his request. 

- This is a commercial dispute and a civil nature case , and hence the police cannot entertain any compliant against you for the offence of cheating and breach of trust. 

- Further, for taking any refund from you , that dealer will have to file a case within a period of maximum 3 years , otherwise his suit for recovery will not maintainable before the court. 

Mohammed Shahzad
Advocate, Delhi
13355 Answers
199 Consultations

5.0 on 5.0

It is highly unlikely that an FIR will be filed, however, if he manages to do so, then you can apply for anticipatory bail/ regular bail etc. subject to the relevant sections.

A civil suit for recovery can be contested in Court on merits.

Gaurav Ahuja
Advocate, Faridabad
63 Answers

Not rated

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