Club Factory is unable to repay its debts after being banned in India, and may invoke force majeure clause

Following the clash between Chinese and Indian soldiers in the Galwan Valley in Ladakh in June last year , the Indian government banned 59 Chinese applications ( Apps ) on June 29, 2020 , on the grounds of protecting Indian user data privacy and India 's sovereignty and territorial security.

Club Factory is one of the 59 Chinese cross-border shopping apps that have been banned. After the Chinese e-tailer was banned, Indian companies and suppliers tried to apply to Club Factory to recover the money they were owed, and Club Factory said it planned to invoke force majeure clauses .

According to Indian media reports, some Indian companies and suppliers have sought help from the judicial authorities because Club Factory has suspended settlement of all outstanding payments and they are unable to find Club Factory representatives or office contacts to recover the debts .

One of the suppliers said: “ For months, Club Factory has been saying they were processing our payments. Now even the supplier login on the site is not working and we can’t get in touch with him. ”

According to a report in The Economic Times, Club Factory believes that the Indian government's ban on many Chinese apps in June 2020 was a situation beyond the company's control , and therefore the company will not be able to fulfill its contractual obligations to clear pending payments to Indian suppliers.

The report also stated that Club Factory stated that the ban constituted a "force majeure" event, so it planned to invoke the force majeure clause to temporarily relieve both the supplier and Club Factory of their obligations to each other in the contract.

Cyfuture and Aegis, which used to provide customer service support to Club Factory, have filed separate cases against the company in the Delhi High Court . The two business process outsourcing companies are seeking to recover a total of Rs 5 crore from Club Factory .

Club Factory has hired Khaitan & Co, a Delhi-based law firm , to defend it against several lawsuits. Club Factory had not responded when contacted by The Economic Times. Cyfuture and Aegis' lawyers Pankaj Bhagat and Khaitan & Co also declined to comment.

The report said that when Cyfuture sent a legal notice to Club Factory regarding the arbitration clause in September 2020, it received a response stating that the latter had "left" India.

India

supplier

Shopping