Legal Question in Consumer Law in India

We awarded a software development project to a company in July 2015 and agreed on certain price which was to be paid in 4 milestones. The initial agreed price was $1900. The work on the project was started. However after a few days their team asked me to increase the budget and I happily increased it to $2100. The milestone 1 was deemed completed with the promise that the deliverables of milestone 1 will be part of source code to be delivered in milestone 2. We made the agreed payment of $400 even though we had no deliverables except the images of how the screens would look like.

The work continued for a few days until their CEO stopped the project development. He blackmailed us to make the payment for milestone 2 in advance in order to restart the work. Because the project was delayed so much and even though it was against the terms of the contract, we made the payment for milestone 2. Their CEO had promised that the work on the project would be restarted which never happened. He simply lied to get the money from us and didn't value his own words. We had agreed that milestone 2 will be delivered by 30th November 2015 when I made the payment which sounds impossible now.

2 weeks after asking for above payment, further to our shock and surprise, they asked us to increase budget by $1000. Since the project has been so much delayed and our business partners have threatened to terminate our business contract, in order to finish the project sooner, we had no choice but to agree with their unethical demand. We agreed to pay additional $1000 on certain conditions. After which neither they have replied nor acknowledged the receipt of the mail.

We feel completely cheated and feel that fraud has been committed against us. They have not only taken our money but also caused great stress, business loss due to delay and distrust with our business partners.

Please advice me what can be done to get back the money and compensation from them for delay which has resulted in business loss. We have the contract signed by their CEO.


Asked on 11/17/15, 6:31 pm

1 Answer from Attorneys
Vivek Mapara Vivek N. Mapara

Dear Sir

Before, i give you official legal advise, it is important to peruse the Contract Signed between your Company and the Developers Company. I would want to verify the following provisions if made in the agreement, because that would govern your rights and remedies

1) Provisions Pertaining to breach of Commitments

2) Indemnification / Penalty Clauses

3) Governing Law / Jurisdiction

4) Arbitration Provisions

Normally such kind of issues are arising often in IT Sector, where the Developer after pocketing the money do not revert back and provide the deliverable, or provide such deliverable, that are not up to the agreed specification.

In your case, subject to the provisions contained in the Agreement and against complete factual background, besides this being a case of Breach of Agreement, this is a case of Cheating, attracting penal consequences u/s 420 of the Penal Code.

The sequel of events, that you narrated, outlines a modus operandi of the developer to extort money from you, without having any intention to actually complete or deliver the work. This fit's in completely to file a Criminal Complaint of Cheating.

Now as regards line of action, you can avail the following remedies (this is subject to the provisions contained in the agreement )

1) You can file a Summary Suit or a Regular Money Recovery Suit, claiming refund of consideration, with interest, in addition to a claim for compensation and damages for breach of agreement and causing business loss for not delivering the deliverable in Time, and mental harassment, in addition to a complete cost of the suit.

2) As the preliminary facts justify, you can file a Criminal Compliant u/s 420 of the Indian Penal Code, before the Local Police Station or before the concerned Judicial Magistrate Court, against the Company, CEO and other Company Officers.

Before, you proceed further with any legal steps you should give a "LEGAL NOTICE" to the Developer Company, calling upon then to deliver the work, or refund back the money, within a stipulated period of time, failing to which, you shall initiate appropriate legal proceedings. After serving such legal notice you should initiate any legal proceedings against them.

Being an Litigation Attorney, i have experienced, that most of the IT case like this one, do get resolved with the legal notices and further negotiations, and only few go to the Court. I have represented many such cases in Court. Should you require any assistance in this Regards, then please do not hesitate to contact me.

Best Regard

Vivek N Mapara

Attorney - At - Law

www.vnmlaws.com

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Answered on 11/22/15, 1:10 pm


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