TaxTMI 
TaxTMI 
2024 (10) TMI 836
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....I/ R-1. Dr. Navdeep Singh Suhag, Deputy Director for CCI/ R-1. Ms. Manika Brar, Mr. Aman Singh Sethi, Mr. Ramchandra Madan, Mr. Shivek Endlaw, for R-2 JUDGMENT INDEVAR PANDEY , MEMBER ( TECHNICAL ) This appeal has been filed under Section 53 (b) of the Competition Act, 2002 (hereinafter called the Act) challenging the final order and judgment passed by the Competition Commission of India (hereinafter called the CCI) under Section 27 of the Act. The Appeal challenges the order passed by the Commssion in Suo Moto Case No. 02 of 2020 dated 03.02.2020, wherein the Commission held that the appellants had contravened Sections 3(3)(c) and 3(3)(d) r/w Section 3 (1) of the Act. M/s Amreesh Neon Pvt. Ltd. (Appellant No.1) and Manish Thakkar (Appellant No.2) along with other parties were found guilty of bid rigging and cartelisation in a Tender process initiated by SBI Infra Managemnt Solutions Pvt. Ltd. (SBIIMS). Brief facts of the case 2. The present case relates to a tender issued by SBIIMS, a wholly owned subsidiary of the State Bank of India (SBI). The tender, floated on February 8, 2018, called for the procurement and installation of signboards across various SBI branches in India.....
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....olluded to manipulate the tender process, fix prices, and allocate market territories. (vii) Based on the aforesaid complaint The CCI initiated a suo motu investigation under Section 19(1) of the Competition Act, 2002, based on the complaint and other internal reviews. The CCI directed the Director General (DG) to conduct an investigation into the allegations of anti-competitive behavior. (viii) The DG submitted his final Investigation Report on 22.06.2021, concluding that Amreesh Neon Pvt. Ltd. and several other vendors had contravened Sections 3(3)(c) and 3(3)(d) of the Competition Act. The report cited the June 2 and June 4 emails as clear evidence of price-fixing and market allocation. (ix) The CCI passed its order on 03.02.2022, after reviewing the DG's report, and hearing all the opposite parties (OPs) and found that the OPs in violation of Sections 3(3)(c) and 3(3)(d) of the Competition Act. Accordingly, the CCI under Section 27 of the Act imposed penalties on the OPs involved, including Amreesh Neon Pvt. Ltd./ Appellant No.1 and the MD of the firm Sh. Manish Thakkar /Appellant No. 2. The penalties were calculated as 1% of the total turnover for the last three financia....
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....kkar/ Appellant No.2 (MD of Amreesh Neon): Rs. 31,200/- The appellants contend that these penalties are disproportionate, particularly considering that their role in the alleged bid-rigging was minor. The appellants argue that the CCI erred by considering the total turnover of Amreesh Neon Private Limited, instead of focusing on the relevant turnover linked to the tender in question. The counsel submitted that the relevant turnover pertains only to illuminated products, which averaged Rs.19,77,73,440 over three years (FY 2015-16 to FY 2017-18). The CCI, however, included unrelated product lines, such as unilluminated products, furniture, and trading activities, inflating the turnover to Rs.32,15,79,533. The details of the relevant turnover as submitted by their CA are given below:- Particulars FY 2015-16 FY 2016-17 FY 2017-18 Total Turnover Average Turnover Illuminated Products 19,21,33,435 17,30,87,781 22,80,99,105 59,33,20,321 19,77,73,440 Unilluminated Products 5,85,94,753 8,90,90,224 10,44,06,400 25,20,91,377 8,40,30,459 Furniture 3,13,20,881 1,95,69,023 2,76,81,585 7,85,71,489 2,61,90,496 Other (Including Trading) 47,71, 338 -50,24,009 4,10,08,083 ....
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....ng products and when that is the proper yardstick, it brings home the concept of 'relevant turnover. , (vi) Even the doctrine of 'proportionality' would suggest that the Court should lean in favour of 'relevant turnover'. No doubt the objective contained in the Act, viz., to discourage and stop anti-competitive practices has to be achieved and those who are perpetrators of such practices need to be indicted and suitably punished. It is for this reason that the Act contains penal provisions for penalising such offenders. At the same time, the penalty cannot be disproportionate and it should not lead to shocking results. That is the implication of the doctrine of proportionality which is based on equity and rationality. It is, in fact, a constitutionally protected right which can be traced to Article 14 as well as Article 21 of the Constitution. The doctrine of proportionality is aimed at bringing out 'proportional result or proportionality stricto sensu'. It is a result oriented test as it examines the result of the law in fact the proportionality achieves balancing between two competing interests: harm caused to the society by the infringer which gives justification for penalisin....
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....mes the yardstick for imposing such a penalty. In this hue, doctrine of 'purposive interpretation' as well as that of 'proportionality' overlaps." 7. The counsel for appellants argue that their role in the alleged contravention was peripheral. They were only marked as "CC" in emails dated 02.06.2018 and 04.06.2018 and did not participate actively in any bid-rigging discussions or meetings. The key participants were OP-6 and OP-7, yet the penalty imposed on the appellants was uniform, without considering their lesser involvement. 8. Accordingly, the counsel for Appellant No.1 prayed for reduction in the penalty from Rs.32,15,795/- to a figure based on the relevant turnover. Submissions by the respondents: 9. The counsel for main Respondent CCI submitted that this Tribunal has upheld the Impugned Order passed by the CCI and the penalties imposed on the OPs, including those on OP-5 (Appellant No. 1) and Mr. Manish Thakkar (Appellant No. 2) were upheld, in Competition Appeal (AT) No. 24 & 26 of 2022 on 27.07.2022 and further in Competition Appeal (AT) No. 21 & 65 of 2022 dated 23.05.2023. 10. The counsel for Respondent stated that at the hearing on 09.09.2024, the Ld. Counsel for ....
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.... provide vital disclosure in respect of contravention of the provisions of section 3 of the Act; c) provide all relevant information, documents and evidence as may be required by the Commission; d) co-operate genuinely, fully, continuously and expeditiously throughout the investigation and other proceedings before the Commission; and e) not conceal, destroy, manipulate or remove the relevant documents in any manner that may contribute to the establishment of a cartel." 14. The counsel for respondent argued that the Appellants in the given case, failed to meet any of the given qualifying criteria. OP-5 was fully involved in the cartel, as evidenced by their bids mirroring the prices stated in the concerned emails, as well as the many communications between the OPs. There was no cooperation from the Appellants' side w.r.t the Director General's investigation in CCI's suo motu proceedings and the Appellants actively concealed their involvement in the anti-competitive practices. Further, the present stage is not at all appropriate for raising the prayer of lesser penalty. 15. The counsel stated that the Hon'ble Supreme Court has held in a catena of judgments that the power of judicia....
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....cond set of appeal decided by this Tribunal upholding the order of CCI, an appeal was filed in Hon'ble Supreme Court and the same has already been dismissed. 20. The only issue under consideration here is whether the penalty imposed on Appellant No.1 is proportionate to the offence and whether it meets the criteria laid down in Excel Crop Care Ltd. vs CCI (supra). In this regard, we have looked into the relavant paras 113-117 of the impugned order, which is reproduced below : 113. The twin objectives behind imposition of penalties are: (a) to reflect the seriousness of the infringement; and (b) to ensure that the threat of penalties will deter the infringing undertakings from committing contraventions. Therefore, the Commission is of the view that the quantum of penalties imposed must correspond with the gravity of the offence, and the same must be determined after having due regard to the mitigating as well as aggravating circumstances of a case. The Commission is also guided by the judgment of the Hon'ble Supreme Court of India in Excel Crop Care (supra), which enunciates the principle of proportionality. 114. The OPs have also relied on the above-mentioned judgement of ....
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....y upon the contravening parties. Therefore, such contentions by the OPs need to be rejected. 116. In this backdrop, the Commission proceeds to examine the plea raised by OP-6 that it has no income/ revenue from the signage business. As previously detailed in this order, after the award of work to OP-1, OP-6 executed the work in Andhra Pradesh and Telangana in respect of the Impugned Tender on behalf of OP-1. Further, as per the contention of OP-6 itself, MMDD manufactured a small volume of the works allotted to OP-1 in the Impugned Tender and billed the same to OP-6 who, in turn, billed the same at the same price to OP-1. Moreover, as already noted, Mr. Naresh Kumar Dasari of OP-6 has authored the two critical e-mails dated 02.06.2018 and 04.06.2018 which formed the basis for manipulation of the rigging of the Impugned Tender. Therefore, for the reasons already mentioned in the previous paragraph, OP-6 cannot be allowed to go scot-free, and an appropriate penalty needs to be crafted for its conduct taking its revenue into account. 117. As regards the impositions of monetary penalty in terms of the provisions contained in Section 27 of the Act, the Commission has given its thoug....
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....cel Corp Care (supra) closely, regarding the facts of the case and whether the aforesaid ratio applies squarely to the present appeal. 23. In the Excel Crop Care matter (supra) the matter related to procurement by FCI for Aluminium Phosphide tablets (for short APT) of 3 gm each between the year 2007-2009. The relevant para of the judgement are extracted below: 3.2. There were only four manufacturers of APT, namely, M/s Excel Crop Care Ltd.. M/s UPL, M/s Sandhya Organics Chemicals (P) Ltd. (which are the three appellants herein) and Agrosynth Chemicals Ltd. 3.3. It was noted that FCI had adopted the process of tender, which is normally a global tender. The tender concerned had two-bid system, that is, first techno-commercial and then the financial bid. On the basis of the bids, the rate running contracts are executed with successful bidders. The DG found that there was also a committee comprising of responsible officers for evaluation of technical and price bids. As per the practice, the lowest bidder is invited by the Committee for negotiations and after negotiations, the Committee submits the report giving its recommendations and the contracts are awarded and after that the p....