Parties Extend Agreement Through Conduct, Debt Acknowledgment, IBC Section 9 Application Maintainable

The Tribunal found that the parties extended their agreement beyond its original term through their conduct. It was established that the Appellant's invoices were acknowledged and payments were promised by the Respondent, indicating a debt acknowledgment. The issue of newsprint wastage was not considered a valid pre-existing dispute, and the application under Section 9 of the IBC was deemed maintainable due to the unpaid debt exceeding the threshold. Consequently, the Tribunal set aside the previous order, returning the matter for admission of the application and further actions in accordance with IBC provisions. The appeal was successful, with no costs ordered.

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Issues Involved:
1. Whether the agreement that allegedly lapsed on 3.12.2017 was extended by conduct.
2. Whether the percentage of wastage of newsprint and the minimum number of chargeable copies are in consonance with the provisions in the agreement and if there is a pre-existing dispute regarding this.
3. Whether the Appellant can invoke provisions of IBC in view of Clause 24 of the agreements for arbitration under the Arbitration and Conciliation Act.

Issue-wise Detailed Analysis:

1. Extension of Agreement by Conduct:
The Appellant claimed that the agreement, initially valid until 3.12.2017, was extended by conduct as the Respondent continued to send emails requesting printing jobs, which the Appellant fulfilled. The Tribunal found that the continuous email communication and fulfillment of printing orders indicated mutual consent to extend the agreement beyond its original term. This conduct was tantamount to working according to the terms of the agreement even after its lapse. The Appellant provided 66 email communications as evidence of continued operations and payments until January 2018, supporting the claim that the agreements were effectively extended by conduct.

2. Percentage of Wastage and Pre-existing Dispute:
The Respondent argued that the Appellant did not adhere to the agreed wastage percentage of less than 4% and failed to provide satisfactory explanations for high wastage. The Tribunal noted that the agreements stipulated a minimum print order of 10,000 copies, and the wastage percentage was related to this quantity. Since the print orders were often less than 10,000 copies, the higher wastage was justified. The Tribunal found the Respondent's dispute regarding wastage to be an afterthought, raised to avoid payment. The issue of wastage was deemed not to constitute a pre-existing dispute, as payments were made for earlier invoices despite similar concerns.

3. Invocation of IBC Provisions vs. Arbitration Clause:
The Respondent contended that disputes should be resolved through arbitration as per Clause 24 of the agreements. However, the Tribunal observed that neither party had referred the matter to arbitration. The Tribunal clarified that it was not within its purview to direct the parties to arbitration at the appeal stage. The Tribunal emphasized that the provisions of the IBC could be invoked since the matter was not submitted for arbitration by either party.

Conclusion:
The Tribunal concluded that the parties continued their operational relationship beyond 3.12.2017, effectively extending the agreements. The Appellant's invoices were accepted, and the Respondent's promises to make payments indicated acknowledgment of debt. The issue of newsprint wastage was not a valid pre-existing dispute, and the application under Section 9 of the IBC was maintainable as the unpaid debt exceeded the threshold amount. The Tribunal set aside the Adjudicating Authority's order, remitted the matter back for admission of the application, and directed further consequential actions as per the IBC provisions.

Order:
The appeal succeeded, the impugned order dated 16.12.2019 was set aside, and the matter was remitted back to the Adjudicating Authority to admit the application and pass further directions. No order as to costs.

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