Tamil Nadu mills take firm stand against ICA over delay in cotton delivery

Tamilnadu Spinning Mills Association (TASMA) to grant one week’s time to the International Cotton Association (ICA) for the negotiations to continue to settle the matter amicably with their suppliers/shippers.

Spinning mills in Tamil Nadu are facing problems due to delay in deliveries of imported cotton by the suppliers and shippers. While spinning mills want to cancel the contract, the suppliers and shippers are not ready for this and cite the Bylaws & Rules of the International Cotton Association (ICA) for their action.  Despite the extensive talks between spinning mill owners and their suppliers and shippers, no settlement could be reached. Hence, the Tamil Nadu Spinning Mills Association (TASMA) is in conversation with the International Cotton Association (ICA) to take suitable decisions on the matter. On July 30, the members of TASMA convened a meeting to discuss the issue in detail.

While the ICA admitted that the delay in supply, would constitute a breach in the contract, settlement for the breach is the area, where the matter could not be concluded suitably among the parties. The buyers of cotton, on their side, insist to cancel the contract and pay back the advance amount paid to their suppliers / shippers. Whereas the suppliers / shippers are not accepting to cancel the contracts, as the model text of contract, as provided by the ICA, as per their Bye- Laws never go with the matter of cancellation of contracts on such defaults.

However, since the members of TASMA are no way connected to the Bye- Laws of the ICA and hence, how far the Bye-Laws of ICA would bind members of TASMA or any other buyers from the suppliers / shippers who are members of ICA, would be a great question of law.

Dr K Venkatachalam, Chief Advisor, TASMA, shares the following information about what was addressed in the meeting.

• In respect of the existing contracts, where the disputes are still going on, due to the delayed supplies / delays continuing as such and deliveries have not yet ensured, the members involved in the dispute have finally requested TASMA to grant a time of one more week, for the negotiations to continue to settle the matter amicably with their suppliers / shippers.

• Even though, many members of TASMA found affected due to the non- deliveries of cotton, have suggested to black list such suppliers / shippers for  further dealing, considering the ongoing talks between the members of TASMA and their suppliers / shippers, TASMA has deferred the decision to black list such non-cooperative suppliers / shippers for another one week. In case, if any settlement is not reported to TASMA, considering the future of the TASMA members, TASMA would black list such suppliers / shippers from further dealing with the supply of cotton to members of TASMA anymore.

• Further, in respect of all future contracts, TASMA has advised its members, not to go with the existing text of contract, which is found completely one- sided and not anyway balancing the interest of both the buyers and sellers in a fair manner. Unless and otherwise ICA comes forward to change the model draft, by providing suitable provisions balancing the interest of both the parties involved in the contract to get suitable remedies, in case of any action of default is committed, by either of the party, TASMA members were advised not to make any further orders with the members of ICA, in the matter of supply of cotton, until the drafts of contract are suitably modified in such a manner so as to protect to the interest of both the parties of the contract in a fair and in an equitable manner, to deliver all the fairness to all the parties connected to the contract in every possibility.

Accordingly, with the above decision, TASMA would keep the matter on the disputes going on with the existing breaches of contract, pending for another one week and on hearing from the affected members of TASMA, the association would proceed to announce its decision, either by black listing of such Companies found not in cooperation or it would proceed in such a manner, by following the due process of law. Members can accordingly follow the decisions taken during the meeting held on  July 30.