A letter of credit (L/C) looks set to become centre of attention in an anticipated legal showdown between the British-Indian manufacturer of the world's cheapest tablet computer and the Indian assembler of the tablet.

The manufacturer of the Aakash tablet, Quad Electronics, is now suing the Hydrabad based assembler, DataWind.

Orders awaited

The legal dispute is the latest development in a very high profile battle between the two firms as tens of thousands of would-be Aakash buyers await delivery of their tablet.

Availability of the Aakash tablet, which is currently unavailable, was meant to significantly improve Indian children's access to computers, and the scheme to make them available enjoyed strong political backing.

Allegations

Quad alleges that DataWind has failed to take delivery and pay for its contracted inventory of tablets.

DataWind disputes this allegation, citing other reasons for not taking delivery of its allocation and says it will not procure any more tablets from Quad until a legal remedy has been found.

Legal notice

Quad has served a legal notice on DataWind for non-payment of US$1.12 million, claiming that an L/C has not been honoured.

DataWind has countered this argument, apparently correctly, by saying that the L/C has not been honoured because Quad cannot produce the required documents.

Quad is expected to argue that DataWind has so far refused to take delivery of the stock it has ordered and is contracted to purchase, therefore the Indian assembler is liable to pay US$1.2 million.

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