Payment to vendors due but not verified due to absconding ex-employee
Harpal Singh
(Querist) 11 December 2016
This query is : Resolved
Dear Sirs
I am the factory manager of a recycling unit.
In Aug 16 one of my engineer looking into purchase suddenly stopped coming to work.We found out that he had made purchases from vendors but not paid them the money that was due.
As these were cash purchases with a 30 day credit he procured material and vanished with the cash that we were suppose to pay against these purchases.
We have filed a FIR against this person and have terminated his services.
But the problem is that all the vendors from whom we had material procured are asking for their money.
I must admit that we have no clarity internally as to if the material procured was actually reached our unit or there is some nexus between the ex-employee and some vendors.
Now the vendors are losing patience and demanding their money but due to lack of lists we are unable to verify the items that the vendors claim to have supplied.
Also since our business depends on these vendors we do not want to antagonize them.
Hence I have suggested to my management to get into a written agreement wherein we shall pay these vendors no later than 31-mar-17 as we are hopeful to either trace the accused ex-employee or isolate the list of material supplied.
Thus my query is that to avoid any legal problems with these vendors will a written agreement be sufficent or we should do something else.
If we do make a written agreement what should be its broad parameters.
Please suggest.
Thanks
Harpal Singh
Sudhir Kumar, Advocate
(Expert) 11 December 2016
why should they be entering into such agreement and not insisting payment immediately which you are liable.
Kumar Doab
(Expert) 11 December 2016
The vendors have raised the bills as per practices followed by your establishment.
The vendors must have provided you with copies of bills.
The cash made available to the said engineer was as per practices followed by your establishment.
Why was such a practice of cash followed!
The vendors are not likely to agree with your proposal of paying later.
The lapses at the end of establishment are not doing of vendors.
Better engage the services of a very able counsel/law firm for your establishment.
Guest
(Expert) 11 December 2016
Mr. Harpal Singh,
Your query clearly smacks artificiality, as your organisation has engineers, managers and other supporting staff, as well as vendors, as you stated, "business depends on these vendors," but it seems as if does not have any inventory/ material management system, which is totally unbelievable.
Question arises, if one engineer has stopped coming to the factory, has your factory been locked and work has become stand still?
By the way, if some day, you don't come to your office, whether your office will be locked for ever and nobody would look after work of your assignment?
Even if not an hypothetical academic query, yours is a purely a commercial problem, where your organisation can hire services of some legal expert to sort out your organizational problem after examination of the case related background.
Better hire services of some local lawyer to solve your problem.
H.M.Patnaik
(Expert) 11 December 2016
Dear Querist,
From the limited info. posted above,I gather that your Recycling unit is certainly working in an unorganised manner.
In a situation like this, I can presume it will be difficult to get out of the problem.
Now,Pl. answer few queries, so that a positive headway is worked out in such an situation:
1)Whether Raw materials purchased from vendors carry Challans issued by such parties containing details of Item name, Specification,Quantity despatched, packing and mode of transportwith Vehicle number etc. and upon receipt of goods the challan is acknowledged by Gate keeper or Stock in charge?
2)Whether your firm is regd. under state VAT Act and files periodic returns as reqd.?
3)Whether your firm files Income tax return basing on Financial statements prepared on yearly basis?
4) Whether Your firm has availed any Cash credit loan from banks and submits periodic Stock statement to the bank?
5)Whether you have conducted year end inventory of raw materials (item wise) for the last financial year for prepn. of annual accounts?
6)Whether your factory adopts piece rate or job rate method for payment of daily wages to workers?
7)Whether your factory run in shifts and a record is available for payment of daily wages?
8) Have you made any assessment of Qty. of raw material reqd. for running the recycling unit per shift per day
If you work on these details , you will be in a position to link the inflow of raw material from vendors during the period in question.
Rajendra K Goyal
(Expert) 11 December 2016
Please reply the questions from the expert.
This is a commercial query, please contact your consultant / legal adviser.
Kumar Doab
(Expert) 11 December 2016
Refer the matter to your legal cell/Local counsel/Local law firm.
They shall handle it better.
Sri Vijayan.A
(Expert) 11 December 2016
I endorse the views of Mr.P.S.Dhingra
