TaxTMI 
TaxTMI 
2016 (3) TMI 1327
X X X X Extracts X X X X
X X X X Extracts X X X X
....und guilty of abuse of dominant position within the meaning of Section 4 and whether while deciding the issue relating to imposition of penalty under Section 27(b) or its proviso, the Commission is required to follow some objective criteria and take into consideration factors like the nature of anti-competitive agreement and/or abuse of dominant position, appreciable adverse effect on competition, financial health of the enterprise and market condition. 2. RELEVANT FACTS: "(i) M/s. ECP Industries Ltd. (Appellant in Appeal No. 47/2014) is engaged in the manufacture of LPG cylinders of various capacities, i.e., 14.2 kg., 12 kg. and 5 kg., regulators which are fitted on the cylinders, industrial valves and other engineering products. SKN Industries Ltd. (Appellant in Appeal No. 57 of 2015) is also engaged in manufacturing various products including LPG cylinders. (ii) In response to the tender notice issued by Indian Oil Corporation Limited (IOCL) in February, 2010 for supply of 105 Lacs 14.2 Kg. capacity LPG cylinders with SC valves, the appellants and 61 other manufacturers/suppliers of LPG cylinders submitted their bids in two parts, i.e., technical....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rnish the specified information and documents. The appellants and other bidders submitted their response and supplied the required information. The DG also issued summons to the officers of IOCL and others and recorded their statements. (viii) After completing the investigation, the DG submitted report dated 11.05.2011 with the finding that 50 LPG cylinder manufacturers across India had formed cartel and indulged in collusive bidding in violation of Section 3(3) of the Act. For arriving at this finding, the DG relied upon the meetings held by the Cylinder Manufacturers Association at Mumbai on 01.03.2010 and 02.03.2010 and the fact that they had quoted identical price. (ix) The Commission considered the investigation report and directed that copies thereof be supplied to the bidders to enable them to file their replies/objections. Both the appellants filed written objections to contest the findings recorded by the DG. Along with the objections, M/s. ECP Industries Ltd. furnished details of its turnover of three preceding financial years. SKN Industries Ltd. furnished details of the turnover of the preceding two financial years. The other bidders also f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o consideration the financial details furnished by the manufacturers of cylinders or the details available on their websites or MCA21. For M/s. ECP Industries Ltd., the average of the turnovers of the three preceding financial years 2008, 2009 and 2010 i.e. Rs. 2,14,99,939/- was taken into consideration and penalty of Rs. 150,49,366/- was imposed. In the case of SKN Industries Ltd., the average of the turnover of the financial years 2010 and 2011 was taken into consideration and penalty of Rs. 80,38,616/- was imposed. (xii) The appellants and 43 other of LPG cylinder manufacturers challenged the order of the Commission by filing appeals under Section 53B of the Act, which were disposed of by the Tribunal vide order dated 23.12.2013. While confirming the finding recorded by the Commission that the appellants and other LPG cylinder manufacturers had formed a cartel, indulged in collusive bidding and acted in violation of Section 3(3) read with Section 3(1) of the Act, the Tribunal set aside the penalty imposed by the Commission by recording the following observations: "53. This takes us to the next question about the penalty under Section 27 of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he third category is that of Super Industries, Om Containers and Lite Containers, where only one year's turnover was considered and the penalties was inflicted at the rate of 7% of the said average turnover of either two years' or three years' or even one year. The CCI has undoubtedly acted under Section 27(b) the first part. 56. Under Section 27(b), the only rider is that penalty should not be more than 10% of the average turnover for the last three preceding financial years. That is a maximum limit. In effect, the CCI has chosen to inflict 7% of average turnover on all the appellants without doing any comparative study. The CCI also applied the rule of 7% penalty to all the appellants without considering that in case of some only two years' or one year's turnover was available. We do not agree with this exercise. This would amount to an arbitrary approach. 57. We also do not find any reason, why the CCI has chosen to inflict the penalty at 7%. We have considered question of necessity of reasons in MDD Medical Systems India Pvt. Ltd. v. Foundation for Common Cause &Ors. (Appeal No. 93 of 2012). In the aforementioned decision of MDD's case,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e companies were first time offenders and the possibility of industrial activity being chocked because of the hefty penalties ordered. 59. Ordinarily, it was for the learned counsel appearing for the CCI to address the question of penalties. It is unfortunate, that the learned counsel did not choose to argue that question, as some of the learned counsel candidly admitted that they did not address the CCI on the question of penalty. Some other counsel canvassed the argument that CCI should have separately heard them on the question of penalty after the conclusion of the verdict of guilty. We do not think such a course was possible particularly in view of the latest position in the regulation on the question of penalty. We would not ordinarily permit the question of penalty to be raised for the first time before us, however, in this case, there are as many as 44 parties involved. Considering the number of parties and stakes involved and all the other relevant considerations, we feel it will be better, if the parties are given one more opportunity to address on the question about penalties to the CCI, so that the CCI could give an active consideration, while deciding the pena....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2014 was submitted on behalf of SKN Industries Ltd. with the prayer that no penalty may be imposed on it. In the representation, reference was made to several judgements on the interpretation of the words 'may' and 'shall' and the penalty provisions contained in the Income Tax Act. Reference was also made to the judgment of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa, AIR 1970 SC 253, orders passed by the Tribunal in Appeals Nos. 93 to 95 of 2012, MDD Medical Systems India Pvt. Ltd. v. Foundation for Common Cause and Others decided on 25.02.2013, Gulf Oil Corporation and others v. Competition Commission of India decided on 18.04.2013 and Appeal No. 81/2012, M/s. United Phosphorus Limited v. Competition Commission of India and others decided on 29.10.2013 along with Appeal No. 79/2012 M/s. Excel Corp Care Ltd. v. Competition Commission of India and others and Appeal No. 80/2010 M/s. Sandhya Organic Chemicals (P) Limited v. Competition Commission of India and others. The attention of the Commission was also drawn to several mitigating factors as is evident from the following extracts of the representation: "Mitigating Factors & Reasons....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Tirupati LPG Industries 1240 NE Shri Shakti Cylinders Tirupati Cylinders 1081 Uttranchal Faridabad Metal Udyog (viii) The Commission failed to consider that the cost of raw material is about 80-95% in the total cost of a cylinder. The price of steel has more than doubled over the few years whereas the cost of cylinders supplied to IOCL has not, in fact it has increased by only about 36%. (ix) The Commission also failed to consider that the input cost of manufacture of a cylinders, the input raw materials such as steel, SC valves, labour, zinc, paint, freight, power, cost of financing, are the same for everyone and price between producers cannot vary substantially. (x) The Commission cannot ignore that IOCL got lower prices than HPCL and BPCL and consequently if no loss had accrued to HPCL and BPCL can it be held that IOCL had suffered a loss. (xi) The Commission shall also consider that JBM and Punjab are similarly placed as the Company and hence everybody including the Company should be treated equally. It is reiterated that the Company did not participate in any meeting nor was a member of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y is levied on ECP, this will result to ultimate closure of the unit thereby creating unemployment for such a large number of workers. The chart of Workmen employed directly & indirectly through its contractor is enclosed as Annexure-4. h) Inability to Pay: ECP is not in a financial position to pay the huge penalty of INR 1,50,49,366.00 as it is likely to be wiped out of the market. (Excel Corp Care Ltd. &Ors. v. Competition Commission of India and EU Guidelines on the method of setting fines, 2006). i) Very first competition law violation on the part of ECP Industries Ltd. (M/s. Gulf Oil Corporation Ltd. &Ors. v. Competition Commission of India). j) Nascent stage of competition jurisdiction in India. (MDD Medical Systems India Private Limited 7 Ors. v. Competition Commission of India & ors.) k) Uninterrupted supplies were always made by ECP Industries Ltd. to IOCL (M/s. Gulf Oil Corporation Ltd. &Ors. v. Competition Commission of India). l) ECP Industries Ltd. is not the perpetrator or ring leader of alleged cartel. (EU Guidelines on the method of setting fines, 2006 and International Competition Network - ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be met if a cease and desist order is issued under Section 27(a) of the Act against the parties, as noted earlier." Relevant Turnover 24. Further, COMPAT by way of its recent order dated 29.10.2013 in Appeal No. 79 of 2012 (Excel Crop Care Ltd. &Ors. v. Competition Commission of India) observed and held that the adjudicatory role of CCI means it must not only give reasons while imposing penalties but must also consider all relevant factors, including the financial health of the company, and the likelihood of the company being closed down on account of the harsh penalty. The judgment reiterated the doctrine of proportionality while imposing penalties. Further, COMPAT found that the relevant turnover to be used as the basis for the fine is the turnover in the product subject to the bid rigging; not the turnover of the entire multi-product enterprise. While concluding so, the Hon'ble Tribunal relied on the EU and UK fining guidelines. 25. CCI imposed a penalty of INR 1,50,49,366.00 crore on the entire turnover of the ECP. It is submitted that ECP is a multi-product company. Apart from selling and manufacturer LPG Cylinder, ECP is also engaged in manufac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cartelization and bid-rigging took place. Therefore, the nascent stage of competition jurisdiction should be one of the factors to be taken into consideration while inflicting penalties. (ii) First time contravention. No evidence of past similar conduct. (iii) The contract for supply of 14.2 kg LPG cylinders was in the direction of fulfilling an important national objective viz. weaning away the consumers from polluting fuels and from using firewood in rural areas, reducing forest cover. No complaint on record either about any delayed supply or any deficiency in the quality of cylinders supplied to IOCL. (iv) Few firms submitted that they are willing to give undertakings to the Commission for implementing a competition compliance programme as a part of corporate governance. (v) Cost of production is substantial of the total cost. No unreasonable profit earned. Procurement of all raw material including pricing is regulated. (vi) No freedom to the bidders to determine the sale prices as IOCL negotiates the final prices with the bidders by offering counter rates. (vii) Demand-side collective mon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....them would ruin their financials besides driving them to closure. 129. To support the plea, reliance was placed upon an order of the Commission in Ref. Case No. 05 of 2011 filed by Shri B P Khare, Principal Chief Engineer, South Eastern Railway, Kolkata against M/s. Orissa Concrete and Allied Industries Ltd. and others wherein the Commission did give due considerations to the facts that opposite parties therein were small & medium enterprises and there was lack of awareness amongst the alleged bidders thereby resulting into no penalty against the bidders in spite of the fact that the substantive findings of bid rigging were held against them. 130. Before examining the pleas, the Commission deems it appropriate to clarify its holding in M/s. Orissa Concrete and Allied Industries Ltd. (supra). In the said order, it was observed by the Commission as follows: As regards penalty under section 27 of the Act, the Commission notes that there are circumstances in this case which require the issue of penalty to be looked into somewhat differently. The facts as projected in the present reference reveal a complete lack of awareness by the opposite parties....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to become arbitrary. We had also relied on the judgment of the Hon'ble Supreme Court in Kranti Associates Pvt. Ltd. &Anr. v. Sh. Masood Ahmed Khan &Ors. reported in (2010) 9 SCC 496. MDD was also a case of cartelization. In another judgment dated 29.10.2013 in M/s. Excel Crop Care Limited v. Competition Commission of India &Ors. (Appeal No. 79 of 2012), we had relied on some observations made in Southern Pipeline Contractors & Anr. v. The Competition Commission. We had also referred to the guidelines by the European Union (EU) and Office of the Fair Trade (OFT). We had quoted the five EU guidelines, where it was provided that is appropriate for the Commission to refer to the value of the sales of goods or services to which the infringement related. We had also referred to the OFT guidelines to the same effect and we had commented upon the factor of a relevant turnover. Ultimately, we had held that where a particular concern is a multi-commodity company, the relevant turnover should be considered and not the total turnover. 135. The opposite parties would further submit that in the present case, the relevant turnover is that which has been obtained by the opposi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o be determined keeping into consideration the damage caused and the profits which accrue from the cartel activity. The Tribunal had used the words 'affected turnover' in these paragraphs. It is pointed out by Shri Ravinder Narain that the Tribunal determined the amount of penalty on the basis of these guidelines issued by the European Union (EU) and The Office of Fair Trade (OFT). He pointed out that the concerned company Southern Pipeline contractors was a multi-product company and the affected turnover was comparatively small. He, therefore, urged that the CCI should have also adopted the same policy. The learned counsel also pointed out that Section 27(b) of the act is completely silent regarding any specific factors to be taken into consideration or the methodology to be adopted for imposition of penalty. --------- 55...... He also relied on the decision in the case of Southern Pipeline Contractors Conrite Walls (Pty) Ltd. and the Competition Commission (Case No. 105/CAC/Dec 10) (106/CAC/Dec 10) - Page 27: [51.] "The concept of 'turnover' is not defined in the act and is only referred to in Section 59(2), being annua....
X X X X Extracts X X X X
X X X X Extracts X X X X
....estricted turnover relatable to the revenue generated from the sale of 14.2 Kg cylinders to IOCL. The argument is totally misconceived. Nowhere in its orders, the Hon'ble Tribunal sought to confine the concept of relevant turnover to such a restricted levels. Moreover, the order was delivered in the context of multi-commodity firms. In the present case, the parties except pleading themselves to be multi-commodity firms have not disclosed their portfolio of products. If the firms have generated some revenue by sale of scrap or through other incidental or ancillary activities, the same would not convert them into a multi-product company. A byproduct (like scrap etc.) is not a different product and as such the orders cited before the Commission rendered in the context of multi-product firm are of little assistance to the parties. 137. It was also argued by some of the parties that provisions of section 27 of the Act are discretionary and enabling and hence it is not mandatory or necessary for the Commissions to impose penalty in each and every case. The Commission notes that the instant case emanates out of public procurement and as such it is a fit case to impose p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er' means the total turnover. Learned counsel also pointed out that in numerous other jurisdictions, i.e., Switzerland, France, Serbia and Brazil, total turnover of the enterprise is taken into consideration for the purpose of imposing penalty. Shri Sen also supported the reasons assigned by the Commission for distinguishing the order passed by the Tribunal in Appeal No. 79 of 2012 M/s. Excel Corp Care Ltd. v. Competition Commission of India and others. Another argument put forwarded by Shri Sent is that even if the term 'turnover' is read as confined to the product in question, i.e. 14.2 kg LPG cylinders, the appellants are not entitled to any relief because they did not file statistics of the turnover of other products. Learned counsel also countered the argument that the imposition of penalty @ 7% of the average of the turnover of the preceding three financial year is arbitrary. He submitted that once the appellants were found guilty of having formed cartel for fixing the price of cylinders, the Commission was fully justified in imposing heavy penalty, else the parties would be encouraged to indulge in similar activities causing grave loss to the public exchequer. In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a new service; (c) "unit" or "division", in relation to an enterprise, includes- (i) a plant or factory established for the production, storage, supply, distribution, acquisition or control of any article or goods; (ii) any branch or office established for the provision of any service (i) "goods" means goods as defined in the Sale of Goods Act, 1930 (3 of 1930) and includes- (A) products manufactured, processed or mined; (B) debentures, stocks and shares after allotment; (C) in relation to goods supplied, distributed or controlled in India, goods imported into India." (r) "relevant market" means the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets. (s) "relevant geographic market" means a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and can be distinguished from the conditions prevailing in the neighbouring areas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tly or indirectly results in bid rigging or collusive bidding, shall be presumed to have an appreciable adverse effect on competition: Provided that nothing contained in this sub-section shall apply to any agreement entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services. Explanation.--For the purposes of this sub-section, "bid rigging" means any agreement, between enterprises or persons referred to in sub-section (3) engaged in identical or similar production or trading of goods or provision of services, which has the effect of eliminating or reducing competition for bids or adversely affecting or manipulating the process for bidding. (4) Any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including- (a) tie-in arrangement; (b) exclusive supply agreement; (c) exclusive di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... goods or provision of services for such export." "Sec. 4. Abuse of dominant position. - (1) No enterprise or group shall abuse its dominant position. (2) There shall be an abuse of dominant position under sub-section (1),if an enterprise or a group,- (a) directly or indirectly, imposes unfair or discriminatory- (i) condition in purchase or sale of goods or service; or (ii) price in purchase or sale (including predatory price) of goods or service. Explanation.--For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or services referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory conditions or prices which may be adopted to meet the competition; or (b) limits or restricts- (i) production of goods or provision of services or market therefor; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or &nb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvice provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent of its turnover for each year of the continuance of such agreement, whichever is higher. *** (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission; (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any; *** (g) pass such other order or issue such directions as it may deem fit: Provided that while passing orders under this section, if the Commission comes to a finding, that an enterprise in contravention to section 3 or section 4 of the Act is a member of a group as defined in clause (b) of the Explanation to section 5 of the Act, and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group." 13. Before its substitution by the Competiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt while construing the word 'sale' appearing in the Madras General Sales Tax Act, 1939 before its amendment in 1947, observed: it is a settled rule of construction that to ascertain the legislative intent, all the constituent parts of a statutes are to be taken together, and each word, phrase or sentence is to be considered in the light of the general purpose of the Act itself. In Reserve Bank of India v. Peerless General Finance and Investment Company Limited [1987] 2 SCR 1, it was observed, "that interpretation is best which makes the textual interpretation match the contextual." Speaking for the Court, Chinappa Reddy, J. noted the importance of rule of contextual interpretation and held: Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h find place in Chapter IV of the Constitution of India, it was made mandatory for the State to ensure that "the ownership and control of the material resources of the community are so distributed as best to sub-serve the common good" and that "the operation of the economic system does not result in concentration of wealth and means of production to common detriment". For achieving the aforesaid goal, the State enacted several legislations and took administrative steps. In 1960, the Planning Commission appointed Mahalanabis Committee on Distribution of Income and Levels of Living. In its report, the Committee expressed the view that concentration of economic power in the private sector is more than what could be justified as necessary on functional grounds and that this situation exists both in generalised and in specific forms. The Committee suggested that the Government should setup a machinery for collection, examination and analysis of all relevant statistics on the subject and formulate a policy, which will combine industrialization with social justice and economic development with dispersal of economic power. In April 1964, the Government of India appointed a five-member Mono....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ces became obsolete in several aspects in the new dispensation. The Government of India constituted a High Level Committee to examine various issues relating to competition. The Committee submitted its report on 22.05.2002. After considering the report and consulting the concerned segments of the society including the trade and industry associations, Central Government decided to enact a new law. Accordingly, a Bill was introduced in Parliament, with the following Statement of Objects and Reasons: "1. In the pursuit of globalization, India has responded to opening up its economy, removing controls and resorting to liberalization. The natural corollary of this is that the Indian market should be geared to face competition from within the country and outside. The Monopolies and Restrictive Trade Practices Act, 1969 has become obsolete in certain respects in the light of international economic developments relating more particularly to competition laws and there is a need to shift our focus from curbing monopolies to promoting competition. 2. The Central Government constituted a High Level Committee on Competition Policy and Law. The Committee submitted i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n by the Central Government, costs realized by the Commission and application fees charged will be credited into this Fund. The pay and allowances and the other expenses of the Commission will also be borne out of this Fund. The Bill provides for empowering the Comptroller and Auditor-General of India to audit the accounts of the Commission. The Central Government will be required to lay the annual accounts of the Commission, as audited by the Comptroller and Auditor-General and also the annual report of the Commission before both the Houses of Parliament. 8. The Bill aims at repealing the Monopolies and Restrictive Trade Practices Act, 1969 and the dissolution of the Monopolies and Restrictive Trade Practices Commission. The Bill provides that the cases pending before the Monopolies and Restrictive Trade Practices Commission will be transferred to the CCI except those relating to unfair trade practices which are proposed to be transferred to the relevant flora established under the Consumer Protection Act, 1986." 18. The preamble of the new Act reads thus: "An Act to provide, keeping in view of the economic development of the country, for the estab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion, repair, conveying of news or information and advertising. The term 'turnover' as defined in Section 2(y) includes value of sale of goods or services. 20. Section 3(1) contains a prohibition against anti-competitive agreements. Subsection (1) thereof declares that no enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. Sub-section (2) declares that any agreement entered into in contravention of the provisions contained in sub-section (1) shall be void. Subsection (3) contains a presumption that any agreement entered into between enterprises or associations of enterprises or persons or associations of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which, directly or indirectly, determines purchase or sale prices, limi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s prima facie satisfied that the accusation/allegation needs to be investigated, then it can pass an order under Section 26(1) and direct the DG to conduct an investigation. Thereupon, the latter acquires jurisdiction to make investigation in respect the particular goods, product or service and find out whether there has been violation of Section 3 and/or Section 4. While making such investigation into the allegation of breach of Section 3 and/or Section 4 of the Act, the investigating officer is neither required nor It is legally permissible for him to investigate into those activities of the manufacturer, supplier or service provider qua which there is no allegation of such breach and finding on the issue of violation of Section 3 and/or Section 4 will have to be confined to the particular product or service or activity. 22. At the end of the investigation, the DG is required to submit report with the finding whether or not the accusation/allegation is factually correct and there is violation of Section 3 and/or Section 4. On receipt of the report of the investigation, the Commission is required to give an opportunity to the informant and also the enterprise(s)/person(s) inves....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of an argument that the appellants were multi-product companies and the turnover of three preceding financial years except the product qua which a finding of violation of Section 3(3)(1) and 3(3)(b) had been recorded, could not have been taken into consideration for the purpose of imposing penalty. In support of that arguments, reliance was placed on an order passed by South African Tribunal in the case of Southern Pipeline Contractors Conrite Walls (Pty) and the Competition Commission (Case No. 105/CAC/Dec10) (106/CAC/Dec 10) - Page 27. Learned counsel appearing for the Commission did not dispute that the two of the appellants, namely, United Phosphorous Ltd. and M/s. Excel Corp Care Ltd. were multi-product companies, but argued that their total turnover was rightly taken into consideration by the Commission for the purpose of imposing penalty under Section 27(b). By an order dated 29.10.2013, the Tribunal upheld the findings recorded by the Commission on the issue of violation of Section 3(3)(b) and 3(3)(d) read with Section 3(1) of the Act but set aside the penalty. Paragraphs 60 to 62 of that order, which have bearing on these cases, are extracted below: "60. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that case were not multi-product companies. Secondly, we had specifically pointed out that the restricted turn over could not be taken into consideration. A restricted turnover is different from the relevant turn over. In that case the argument was that we must only consider the turn over generated in the supplies made only to the Government Hospitals. We had pointed out that the business of supply of the materials could not be any different from the supplies to the other Hospitals. It was on that basis that we had rejected the argument. We must repeat that we had not rejected the total concept of relevant turn over. We are accepting the argument regarding the relevant turn over in the peculiar circumstances of this case where the two appellant companies have clearly indicated that the other products of those companies have no connection and do not depend upon the product involved in this matter, that is ALP Tablets. We, therefore reject the argument of Shri Balaji Subramanian." [Emphasis supplied] 25. In L.H. Hiranandani Hospital v. Competition Commission of India and Another [Appeal No. 19 of 2014] decided on 18.12.2015, the Tribunal considered whether average of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rises are guilty of abuse of dominant position can be recorded only with reference to the particular goods, product or service. An enterprise may be engaged in manufacture, production, supply, distribution, etc. of multiple products. Another enterprise like the appellant may be engaged in providing multi-dimensional services. Such enterprise may be found guilty either of entering into anti-competitive agreement with reference to particular product/goods or services or may be held guilty of abuse of dominant position in respect of such product/goods or services, but the finding of violation of Sections 3 and/or 4 of the Act recorded by the competent authority i.e. the Commission cannot be made applicable to agreements entered into between the enterprise and another person in respect of other products, goods or services qua there is no allegation of anti-competitive agreements or abuse of dominant position and the turnover of other products and services cannot be clubbed with the one qua which a finding of violation of the provisions of the Act is recorded. 39. At the cost of repetition, it deserves to be emphasised that the appellant has been providing multiple healthcare s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ors in the market and the financial health of the industry etc. and also take note of the law laid down by the Supreme Court, the High Courts and the Tribunal. In Dilip N. Shroff v. Joint CIT [2007] ITR 519, the Court considered the scope of Section 271(1)(c) of the Income Tax Act, 1960 and observed: "The legal history of section 271(1)(c) of the Act traced from the 1922 Act prima facie shows that the Explanations were applicable to both the parts. However, each case must be considered on its own facts. The role of the Explanation having regard to the principle of statutory interpretation must be borne in mind before interpreting the aforementioned provisions. Clause (c) of sub-section (1) of section 271 categorically states that the penalty would be leviable if the assessee conceals the particulars of his income or furnishes inaccurate particulars thereof. By reason of such concealment or furnishing of inaccurate particulars alone, the assessee does not ipso facto become liable for penalty. Imposition of penalty is not automatic. Levy of penalty is not only discretionary in nature but such discretion is required to be exercised on the part of the Assessing Officer k....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... three financial years ignoring that the two of the appellants were multi-product companies. In these appeals also, learned counsel appearing for many of the appellants had argued that their clients were multi-product enterprises. They also pointed out various mitigating factors but without giving due consideration to the argument of the learned counsel and giving due consideration to the mitigating factors, the Commission reiterated the penalty imposed vide order dated 24.02.2012. In our considered view, the Commission committed grave error by passing the impugned order without calling upon the appellants to furnish the statements of their turnover of LPG cylinders of 14.2 Kg. 31. Another error committed by the Commission is that even though it took cognisance of the mitigating factors highlighted by the appellants and others, it brushed aside the same simply because they were found guilty of forming a cartel and indulging in bid-rigging. The fact that many of the appellants were small scale units was also not given due weightage by the Commission while passing the impugned order. 32. The impression which we gather from the impugned order is that the Commission proceeded to ....