TaxTMI 
TaxTMI 
2024 (6) TMI 136
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the Commission held that the appellant had contravened Sections 3(3)(c) and 3(3)(d) r/w Section 3 (1) of the Act. Brief facts of the case 2. The commission received a general complaint dated 07.08.2018 alleging bid-rigging in tenders invited by the Department of Agriculture, Government of Uttar Pradesh for soil sample testing. The complaint pertains to alleged bid-rigging in respect of two e-tenders namely, Tender 2018_AGRUP_210583_1 (Moradabad) dated 31.05.2018 ("Tender No. 1") and Tender 2018_AGRUP_212591_1 (Bareilly) dated 18.06.2018 ('Tender No. 2"), invited for the soil sample testing by the Department of Agriculture, Government of Uttar Pradesh. 3. It was stated in the complaint that the following parties participated in the aforesaid two tenders of soil testing in Uttar Pradesh: (i) Yash Solutions (ii) M/s Satish Kumar Agarwal (iii) M/s Siddhi Vinayak and Sons (iv) M/s Saraswati Sales Corporation (v) M/s Lab Traders (vi) Edward Food Research and Analysis Centre Limited (vii) Atharva Laboratories Pvt. Ltd. (viii) M/s Newgen Computers (ix) Austere System Pvt. Ltd. 4. It was alleged ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....those mentioned in the information, the DG would be at a liberty to investigate the same. The DG was also directed to investigate the role of the persons/officers, who were in charge of and responsible for the conduct of the businesses of the parties at the time the alleged contravention was committed, as well as persons/officers with whose consent or connivance the alleged contravention was committed, in terms of the provisions of section 48 of the Act. The DG, pursuant to the directions of the Commission, investigated the matter, and after seeking due extensions of time, submitted the investigation Report dated 08.04.2021. 7. The relevant findings of the investigation Report relating to the appellant's role are the following: (i) Investigation covered 9 tenders namely, tenders of (a) 2017 and 2018 for Moradabad division, (b) 2017 and 2018 for Bareilly division, (c) 2017 for Jhansi division, (d) 2018 for Sharanpur division, (e) 2017 and 2018 for Meerut division, and (f) 2018 for Aligarh division. (ii) As per the records submitted by the Department of Agriculture, Government of Uttar Pradesh, during the year 2017-18, the contract for soil testing work was award....
X X X X Extracts X X X X
X X X X Extracts X X X X
....M/s Siddhi Vinayak; (c) Mr. Praveen Kumar Agarwal, Managing Director, Yash Solutions; (d) Mr. Nitish Agarwal, Director, Chaitanya Business Outsourcing; (e) Mr. Ankur Kumar, Director, Delicacy Continental; (f) Mr. Jai Kumar Gupta, Director, Fimo Info Solutions; (g) Mr. Suresh Kumar Gupta, Proprietor, M/s Toyfort; and (h) Mr. Rahul Gajanan Teni, Director, Austere Systems 8. The commission considered the investigation report of the DG in its meeting on 08.06.2021 and noted the findings that Yash Solutions, M/s Satish Kumar, M/s Siddhi Vinayak, M/s Saraswati Sales and Austere System along with other entities namely, M/s Delicacy Continental, Fimo Infosolutions, M/s Toyfort and M/s Chaitanya Business Outsourcing indulge in cartelisation and bid rigging in the soil testing tenders floated by Government of U.P. 9. Thereafter, commission decided to add M/s Delicacy Continental, Fimo Info solutions, M/s Toyfort and M/s Chaitanya Business Outsourcing as parties to the proceedings and they were arrayed as Opposite Party (OP) Nos. 6, 7, 8 & 9 respectively. The commission thereafter forwarded a copy of investigation report in electroni....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ul perusal of the investigation report, the objections/suggestions thereto received from OPs and the submissions made by the OPs during the hearing on 16.12.2021 framed two issues, these are as follows: "Issue 1: Whether the Opposite Parties have directly or indirectly rigged/ manipulated the tenders of soil testing issued by the Department of Agriculture, Government of Uttar Pradesh, in various regions for the year 2017 and 2018, by indulging in bid rigging, collusive bidding and sharing of market, resulting in contravention of provisions of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act. Issue 2: If the Opposite Parties are found to have contravened the provisions of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act, then who are the persons in charge thereof and responsible for the conduct of business of the respective enterprises under Section 48 of the Act?" Issue 1 12. For the analysis of the first issue the commission grouped the opposite parties in 3 sets are as under: "For the sake of brevity, the analysis of the first issue in the present case is being carried out by grouping the Opposite Parties in sets, as und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the commission noted that it is engaged in the production and sale or rice. It has three Directors, namely, Mr. Ankur Kumar, Ms. Rajesh Rani and Mr. Abhijeet Singh. The company was not engaged in soil testing work at any prior point in time. 17. Delicacy Continental, despite having no experience in soil testing work, had participated in the 2018 soil testing tenders for Meerut and Saharanpur divisions. However, it also could not win in any of those tenders. 18. The Commission also took notice of the fact that the investigation revealed that Delicacy Continental had submitted experience certificates of soil testing issued by Austere Systems and it had no experience of soil testing work. 19. The Commission noted that Mr. Ankur Kumar, Director of Delicacy Continental, had submitted that he was introduced to the soil testing work through Mr. Rahul Teni of Austere Systems and was offered sub-contract work of soil testing by Austere Systems, which had won the tender. Mr. Ankur Kumar submitted that although his entity did not have any soil testing machine, they were offered the contract due to good relations with Austere Systems. The relevant extracts of the statement of Mr. Anku....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wever, the staff conducting the soil testing work was arranged by one Mr. Arun Bharat and the payment was made by Delicacy. The payment made by Austere for conducting the soil testing work was Rs. 80 to 90 per sample for one type of sample while Rs. 120 to 130 for another type of sample." 21. The Commission further noted that no permission of the Department of Agriculture, Government of Uttar Pradesh, was taken before Austere Systems sub-contracted the work to Delicacy Continental. In his statement, Mr Rahul Teni admitted that, although Delicacy Continental had no experience of soil testing work, his company had sub-contracted the work, as the entire work was being executed under Austere System's supervision. The relevant extracts of Mr Rahul Teni's statement in this respect are as under: "Q32. Why did your Firm sub-let this work to M/s Delicacy Continental, which is a separate entity altogether, as the original contract was allotted by Department of Agriculture, Govt. of UP to your Firm i.e. M/s Austere System Pvt. Ltd? A. 32. The tender was sub-let by my company to Delicacy as our company did not have financial resources to undertake the soil testing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at Mr. Ankur Kumar was evasive in his replies and tried to shift the entire responsibility of collusion and bid rigging upon the employees of Delicacy Continental. 25. The Commission further noted that the experience certificates were issued by Austere Systems to Delicacy Continental with a view to make Delicacy Continental eligible in the Meerut and Saharanpur division tenders of 2018. 26. Mr. Ankur Kumar, in his statement recorded before the DG stated that the bid price in soil testing tenders of Meerut and Saharanpur in 2018 tender were decided in consultation with Austere Systems. In this regard, Mr. Rahul Teni submitted that he was not aware if any other directors or employees had discussed the bid price with Delicacy Continental. 27. In view of the above, the Commission took a view that Delicacy Continental colluded with Austere Systems to rig the soil testing tenders of 2018 for Saharanpur and Meerut divisions. 28. The Commission noted that only three bidders, namely, Austere Systems, Yash Solutions and Delicacy Continental, had submitted bids in the 2018 Meerut and Saharanpur tenders. From the above, the Commission notes that there was an arrangement/ agreement ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g work. 32. The Commission noted that Mr. Ankur Kumar falsely submitted that an MOU was entered into with Austere Systems for sub-contract of soil testing work and copies of the MOU were created just for submission to the investigation. 33. The Commission also noted that the price bids in the 2018 tenders for the Meerut and Saharanpur divisions for his firm were decided by employees of his company in discussion with Austere Systems, and the bidding process in the tenders were manipulated. The Commission noted the active role played by Mr. Ankur Kumar in perpetuating the anti-competitive conduct, which remained unrefuted on his part, and he is thus liable under Section 48 of the Act. 34. It noted that aforementioned individuals have not been able to rebut or deny before the Commission the respective roles played by them in cartelization, for which the DG has gathered cogent and clinching evidences, which are primarily based on their active conduct in perpetuating the anti-competitive conduct with a view to manipulate and vitiate the tender process as discussed in the foregoing paragraphs. None of these individuals have been able to credibly refute the evidence against them ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order to be in contravention of the provisions of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act, as detailed in the earlier. 38. The Commission found the present case fit for imposition of penalty, under the provisions contained in Section 27(b) of the Act under the aforesaid Section the Commission may impose such penalty upon the contravening parties as it may deem fit, which shall be not more than ten percent of the average of the turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreement. 39. The commission noted that the twin objectives behind the imposition of penalty are. (a) to reflect the seriousness of the infringement, and (b) to ensure that the threat of penalties will deter the infringing undertakings from indulging in similar conduct in the future. Therefore, the quantum of penalty imposed must correspond to the gravity of the offence, and the same must be determined after having due regard to the mitigating and aggravating circumstances of the case. 40. On the issue of penalty, most of the Opposite Parties in their objections to the Investigation Report and subsequent sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould also run contrary to the underlying spirit of the judgment of the Hon'ble Supreme Court of India in Excel Crop Care Judgment. Taking such a pedantic interpretation would provide a virtual free run to the infringing parties and an effective immunity against any antitrust action for their anti-competitive hehaviour. This cannot be the purport or intent either of the Parliament or the Hon'ble Supreme Court of India in laying down the parameters and perimeter for Imposition of monetary penalty upon the contravening parties. Therefore, such contentions by the OPs need to be rejected." 42. The Commission noted that the instant case emanates out of conduct pertaining to public procurement in soil testing tenders and, as such, is a fit case to impose penalties upon the infringing parties. On a holistic appreciation of the facts and circumstances of the case and the mitigating factors put forth by the Opposite Parties, the Commission observed that the findings of the DG clearly indicate the active role played by each of the Opposite Parties in rigging the tenders. The Commission accordingly imposed the penalty upon the Opposite Parties @ 5 percent of the average of their tur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itted the experience certificate dated 28.2.2018 and 31.3.2018 as per the requirement of bidding. 50. It is submitted that the said experience certificate had obtained by the Appellant from Austere as the Appellant had completed the work of soil testing allotted by the Austere vide MoU dated 01.09.2017 and 04.10.2017. 51. That MoUs clearly state that the same were executed as Appellant has technical knowledge and resource to invest in the project. Further, it clarifies that the project was to be executed under the supervision of Austere and their staff. The Molls were executed under ordinary business relation which is established from the fact that the Austere was gaining profit from the same. 52. Further Appellant has placed on record the Ledger from the period 01.04.2017 till 02.04.2018 of the Appellant, wherein substantial amount towards purchase of the soil testing machine has been made. 53. Also, Invoice dated 29.09.2017 by Agilent Technologies, Singapore were place of record by the Appellant which clearly shows the purchase of the machine for the said soil testing work. 54. It is submitted that the CCI while passing the impugned order has been able to give any ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollusion with the other Appellants (Austere Systems) had indulged in cover bidding, in contravention of Sections 3(3)(d) read with 3(1) of the Competition Act, 2002 ("Act"). The cause of action arose from a general complaint dated 07.08.2018 received by the CCI alleging bid-rigging in the tenders invited by the Department of Agriculture, Government of Uttar Pradesh ("Department of Agriculture") for soil sample testing. 62. The Director General ("DG") vide its investigation report dated 09.04.2021 ("DG Report") before the CCI concluded that the Appellant had contravened the provisions of the Act, inter alia: a. The Appellant in collusion with Austere Systems, had rigged the bids by submitting cover-bids to ensure that Austere Systems emerges as Ll bidder in the soil testing tenders floated by the Department of Agriculture, in Meerut and Saharanpur divisions in 2018. The modus operandi of the Appellant was as follows: (i) No experience and understanding in soil testing-The Appellant is engaged in production and sale of rice. (ii) Submission of fake experience certificate The Appellant had submitted fake experience certificates which were issued by Auster....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the soil testing work, which were fabricated to prove that the parties had a contract between them, thereby indicating a prior business relationship. (b) In addition to the aforesaid, contrary to the statements made as recorded in the Order dated 18.11.2022 passed in captioned Appeal, during the course of arguments before this Hon'ble Tribunal, (for reasons best known to the Appellant) the Appellant had adopted a shifting stand with regard to execution of the MOU to fit its case. 66. No experience and no understanding in soil testing work and violation of tender condition prohibiting sub-contracting of soil testing works: (a) The Appellant's own admission stating that it had no knowledge about soil testing work and neither the Appellant had any experience of it and it was engaged as a sub-contractor in soil testing work in 2017 because of its relationship with Austere Systems. (b) The Appellant in collusion with Austere Systems, decided and submitted cover bids in the 2018 Tenders for Meerut and Saharanpur. Further, it was explicitly mentioned in the tender conditions that sub-contracting was prohibited and prior experience in soil testing w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntal Pvt. Ltd, recorded on 15.12.2020: Q. 5. Has your Firm ever bid in any tenders floated by Govt. of UP? If yes, please provide details? A. 5. Yes, in 2018 regarding Soil Health Card Q6 Has your Firm ever bid in any tenders for Soil Testing floated by Govt. of UP? If yes, please provide details A 6 Yes Q7 Please explain your understanding of Government's Soil testing program? A 7 I am not aware and have no understanding of the government soil testing program Mr Ankur Rana must be aware about this scheme Q8 What are the requirements for soil testing work? A.8 Do not have any knowledge about soil testing work Q. 10 Name of your competitors/companies who are engage in soil testing activities. A 10 I am not aware about other competitor/companies engaged in so testing activities Q.13. What was the eligibility criterion for bidding in those tenders? A. 13. I am not aware. Although I had submitted my bids. Q.14 Who were the other bidders in the said tenders? A. 14 I am not aware Q.16. Did you or your Firm have any experience in soil testing work when....
X X X X Extracts X X X X
X X X X Extracts X X X X
....UP obtained by your Firm dated 02.03.2018 giving its Principal place of business as Deputy Director, Agriculture, Saharanpur. A. 36. Yes, I have seen it. Q. 37. How and why did you give address for principal place of business of you Firm which belongs to DD, Agriculture. Saharanpur in your GST registration? A. 37. I am not aware 72. The following emerges from the statements of Smt Rajesh Rani on oath before the DG: (a) That she was unaware about the terms & conditions for bidders, other bidders who participated in the said tenders & financial bids submitted by her company in the said tenders. She also submitted that she has no understanding of the Government's soil testing programme and Sh Ankur Kumar Rana, Director, M/s Delicacy Continental Pvt Ltd is the person aware about the same. (b) Smt Rajesh Rani admitted that her firm had experience only of data entry and printing of soil heath cards in Haryana, and they did not have any experience in soil testing work. She was totally unaware about the experience certificates issued by Ms Austere Systems to Delicacy Continental. Regarding soil testing work she unaware as to how her firm ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ducting the soil testing work was arranged by one Mr. Arun Bharat and the payment was made by Delicacy. The payment made by Austere for conducting the soil testing work was Rs. 80 to 90 per sample for one type of sample while Rs. 120 to 130 for another type of sample. Q. 16. Why the copy of MoU dated 01.09.2017 has not been signed by any of the Directors of Delicacy? A. 16 I am not aware Q 18 Shri Ankur also submitted another copy of MoU (Exhibit-2) signed between M/s Austere System and Delicacy Continental, the said MoU has been signed by Directors of both the companies. The said document is taken on record. Kindly explain which copy MoU is an authentic document? A 18. Yes, the copy of MoU which is signed by both the parties is the one which is authentic Q.19 Why the above said MoU which you are submit as authentic is without any date? A. 19. I am not aware Q. 20 Why the said copy of MoU document which has only been signed by Mr Rahul Teni, Managing Director, M/s Austere, been e-mailed to you? A 20 I am not aware Q 21 What was the period of MoU for soil testing with Austere? A. 21. 2017-2018 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e said tenders in 2018? A 49 I am not aware Q.60 I am showing you the GST registration certificate of UP obtained by your Firm dated 02.03.2018 giving its Principal place of business as Deputy Director, Agriculture, Saharanpur (Exhibit-22). A.60. Yes, I have seen it Q 61 How and why did you give address for principal place of business of you Firm which belongs to DD, Agriculture, Saharanpur in your GST registration? A 61. I am not aware Q 64 The Questions and Answers in the documents pertains to the Investigation which is being conducted by the DG, CCI in the instant case and are related to soil testing tenders as well as expected questions that may be asked during the Investigation for recording his statement. One of the questions related to any assistance provided by Delicacy to Austere Pvt. Ltd for winning tenders of soil testing floated by UP Government in 2018, What was the purpose behind including questions related to Austere in this document? A. 84 I am not aware 74. The following emerge from the statement on Oath by Shri Ankur Kumar: (a) It is clear that although M/s Delicacy had no prior experience ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....registered in the firm's GST registration as the Office of Deputy Director, Agriculture. Saharanpur. The same is very perplexing as well as strange that a private firm could manage to register its Principal place of business at the address of a government office however, no objections to the same were raised by the concerned office. 75. Relevant Extracts from the statement of Mr. Rahul Gajanan Teni Director of M/s Austere Systems Pvt. Ltd.: Q1. What is your role and responsibilities in your firm M/s Austere System Pvt. Ltd? A 1 My responsibility is mainly related to managing the business as well as technology/technical part. Shri Piyush Gupta, Son of Shri Suresh Kumar Gupta who was a strategic investor in our company looks after finance matter of the company. Shri Shikhir Gupta, another Director looks after the business development work. Q2 Details of the business your company M/s Austere System Pvt. Ltd. is engaged in? A.2. Software Development, Onshore development, Staffing Augmentation. technology consulting, business consulting, data entry, soil analysis and automation My company M/s Austere is not engaged in any other business other t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ervision for this work and M/s Delicacy purchased the ICP machine on our request, we sub- let the work to M/s Delicacy Q. 40. Have you ever met or had any communication with any of the Directors or any other employee of M/s Delicacy Continental? A 40 I had interacted with one of the directors of M/s Delicacy on telephone whose name I do not remember regarding the soil testing work. M/s Delicacy was only an investor in soil testing work for Saharanpur, Meerut and Jhansi Division and beyond that they did not have any interest in soil testing work. Q 41 I am showing you the details/statement of the soil testing experience of your firm which has been submitted in the Saharanpur tender of 2018 (Exhibit- 29). As per the statement it has been certified that M/s Delicacy conducted soil tests of 60000 & 50000 soil samples, for Austere in the Meerut & Jhansi Divisions respectively However, as per experience certificate issued to Delicacy by your company, the said firm had analyzed 55,000 soil sample tests for Meerut and 50,000 soil sample tests each for Saharanpur and Jhansi Divisions. Why no mention of Saharanpur division tests and explain the anomaly in respect o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e and Delicacy for the sub contract work, but he could not submit any comments on the statement of Sh Ankur Kumar that there was no MoU between Austere and Delicacy and an MoU has been created only for submission to the Investigation. (c) Sh. Teni admitted that though M/s Delicacy Continental had no experience of soil testing work, his company had sub-contracted the work to M/s Delicacy, as the entire work was being executed under M/s Austere's Supervision. Sh. Teni also admitted that M/s Delicacy was only an investor in the said project. (d) It is clear from the above statement that the work of soil testing sub-contracted to M/s Delicacy Continental was only for namesake and the actual work was being carried out under the supervision of M/s Austere Systems without any Agreement or MoU only on the basis of an understanding reached by both the parties. (e) Sh Teni could not submit any explanation for the discrepancy with regards to the details of soil testing work carried out by his company through M/s Delicacy, which was submitted by it in the Saharanpur tenders and the Experience Certificates of soil testing work, issued by him to M/s Delicacy Contin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....npur Division, so that the tender may not fail due to lack of participation. The bid amounts quoted in the Meerut and Saharnpur tenders of 2018 was decided by the Austere Systems on behalf of the Appellant. All the documents related to bids were filed by the Appellant as per advice and guidance of Austere Systems. All this is akin to a complete takeover of Appellant's operations qua soil testing by Austere Systems, indicating a perfect example of collusive bidding/ bid rigging. 78. Based on the material on record and having examined the same closely we are of the considered opinion that: "Commission has correctly and legally held the appellant responsible for violation of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act and there is no error in respect of order passed under Section 27(a) whereby the appellant was directed to cease and desist from such act from indulging in the practices which were found in contravention of the provisions contained in Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act." 79. Regarding the punishment both the appellant and commission have cited the judgement of Hon'ble SC in Excel Crop Care (supra). The contentio....