( Civil Suit No. 59 of 2021; earlier numbered as CS No. 478 of 2006)
The highly contested, cross-border dispute between Mantra Inc. and AAA Apparels Mfg. has reached its conclusive settlement. This case, pending since 2006, traveled all the way up to the Hon’ble Supreme Court and then relegated back to the Commercial Court. It was only after a sincere, hard-hitting, and honest effort by the SKV Commercial Law offices, that mediations between the two parties were made.
FACTS
The plaintiff in the given case, Myntra Inc. (a U.S.A registered sale and supplier company) filed a suit against Defendant AAA Apparels Manufacturing Company, for Partition of property, Rendition of Accounts, and Permanent Injunction.
The defendant (a New Delhi-based manufacturer and exporter of readymade garments), also filed a Counterclaim against the plaintiff for Rs. 49,85,102.48, as the recovery for unpaid outstanding dues.
The history of business relations between the two parties goes back to 1997. In 2002, to further expand their trade bandwidth and to address the government prohibition on manufacturing in the then-existing factory of the Defendant in Khanpur ( a residential area); a proposal to set up a new factory at Gurgaon was discussed between them.
Consequently, a new factory (the suit property), Amber Fashion, was set up in Gurgaon. The factory formally commenced in the financial year 01.01.2003. However, with increasing tensions in the trade relations, the conflict over the suit property also intensified between the two parties.
- The plaintiff claimed that it was agreed by the two parties to share the investment costs of Land, Building, Plant, and Machinery in equal proportion. An MOU dated 16.05.2003 was entered between Mantra and AAA Apparels to document this. The Mantra based on the said MOU inter alia claims that it has half a share in the suit property, as it has paid an amount of Rs. 1,12,50,000/- to AAA Apparels in compliance with the said MOU.
- AAA Apparels, on the other hand, claims that it bought the suit property through its own funds and loans and is the absolute owner of the suit property. The said MOU is not only unregistered and insufficiently documented but is also an inconclusive agreement as the terms of the said MoU could not be given effect.
After a long and intense battle to settle this matter, an agreement was finally reached between the two parties on the 1st of September 2022 (the Effective Date).
AGREEMENT
A Settlement Agreement was reached in the court of Ms. Ranjana Aggarwal, Add. Civil Judge, District Court, Gurgaon, Haryana. The Parties agreed that the present Agreement is for the sole purpose of mutually and amicably settling all the disputes between the Parties. The provisions of the agreement are as follows:
- The final settlement amount is decided to be Rs. 45,00,000 to be payable by AAA Apparels and/or Amber to Mantra Inc. within 2 years from the effective date.
- The manner of payment of the said amount was charted out to create goodwill between both parties. The Amber fashion shall transfer an initial amount of Rs. 4,00,000 within two days of the legal agreement and thereafter a commission is to be paid on the gross receipt for every purchase order received from the USA, till the final settlement amount is reached.
- Under this settlement, Mantra Inc. unconditionally agrees that once it receives the full ‘final settlement amount’, it expressly forfeits any right, title, claim, or interest that it may have against “AAA Apparels”.
- The AAA Apparels and the Amber also expressly forfeit any rights or claims that it may have about any dues or liabilities against the Mantra concerning any past transaction, before the execution of this agreement.
Therefore, upon the payment of the Final Settlement Amount, no party shall have any liability towards each other.
SKV Comment:
An expeditious arrival at a settlement in the Mantra Inc. vs AAA Apparels Mfg. had become a sin quo non for imparting justice. Especially given the magnitude of the amount involved, the interest thereupon, repeated delaying of trials, and the sheer pendency of the controversy since 2006, demanded a speedy conclusion.
In this context, the SKV Law Offices team, led by Advocate Shri Varun Singh, prioritized a swift mediation between the two parties and disposing of this commercial tussle at the soonest. Sincere efforts were made in the same direction culminating in the settlement agreement on 01.09.2022. after 15 long-drawn years of this controversy.
Please find the link to the settlement agreementhttps://skv-c.com/wp-content/uploads/2022/09/Settlement-Agreement-Mantra.pdf
