Goan Partners Slug Out Security Cheque Issue With Distributors

DQC News Bureau
Updated On
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Partners in Goa vocife­rously voiced their protest about having to furnish a

security cheque to national distributors-a practice that they claimed was

illegal-at The DQ Week IT Panchayat held in the city on February 28, 2009.

National distributors usually ask partners to deposit post-dated cheques (PDC)

with them for transactions. Additionally, they also ask for blank cheques as

security cheques. Vishal Bhavsar of Redington, Terence Viegas of Ingram Micro,

GM Prabhudesai, President, Goa IT Business Association and Naresh Kumar of

Neoteric Infomatique were on the panel.


All the three distributor representatives from Neoteric Infomatique, Ingram

Micro and Redington claimed that they have till date never deposited the cheques.

But when asked by the moderator of the IT Panchayat, Vinita Bhatia, Executive

Editor, DQ Channels, on why was it needed in the first place, they claimed that

it was a company policy.

Terence Viegas, Branch Manager, Ingram Micro India said that this was a

company policy that has been in practice for several years. “Since we give

credit to the partner, we need some security from them, so in case a cheque is

dishonored we have the security cheque,” he claimed.

However, it is obvious that if a post-dated cheque was to be dishonored then

the security cheque would also follow suit. Sandeep Vaidya of Megatrends,

however, demanded to know why were the distributors were not willing to

acknowledge the receipt of this cheque. “If taking the security cheque is

company policy then why don't the distributors mention it in black and white,

and give documen­tation supporting this?” he questioned.

(l-r) Vishal

Bhavsar of Redington, Terence Viegas of Ingram Micro, GM Prabhudesai,

President, Goa IT Business Association and Naresh Kumar of Neoteric

Infomatique were on the panel

Ejaz of Infotech Solutions also pointed out that giving a blank cheque as

security was a huge security risk. “If my liquidity is Rs 20 lakh and I give a

distributor a blank cheque, I am effectively giving them the power to take all

that funds from my account,” he said. Besides he added that when he had once

presented a cheque and mentioned that it was a security cheque on its back, the

distributor refused to accept it.

Another issue was that, who should take the responsibility in case the cheque

is misused. However, Viegas maintained that this was a business policy and it

was not a way to defraud a channel partner.


Prashant Kuncolienkar of Computronics Infotech noted that his cheques had

been misplaced and he had to keep following up with the distributor for over

three months before the case was resolved.

Vishal Bhavsar, Branch Manager, Redington India mentioned that his company

often used the security cheques while recording a transaction, but when the

transactional PDC is presented then the cheque number is changed in the system.

“We have never used the security cheque for actually charging a transaction till

date,” he reiterated.

GM Prabhudesai of Amey Computers and President of Goa IT Business Association

(GIBA) said, “As per the law, no company can ask you to surrender a blank cheque

as security for a business transaction.”


If distributors insist on taking security cheques, Ejaz suggested that they

should take it for the amount of the credit they extend to the partner rather

than take a blank financial instrument. This suggestion was met with a round of

applause. Partners moved on to to another issue that affected them sporadically

that of the MRP being printed on the box being much lower than the price at

which a dealer can sell to the customer, after factoring the distributor charge

and margin.

The Panchayat saw a lot of participation by all the channel members and

distributor repre­sen­tatives. The presentations were made by the sponsors of

the event-Symantec, Gigabyte and Emerson Power Networks.

Vinita Bhatia