TaxTMI 
TaxTMI 
2026 (1) TMI 393
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....Competition Act, 2002 ('"Act"), challenging the order of the Competition Commission of India ("Respondent Commission") dated 17.03.2021 ("Impugned Order") passed by the Respondent Commission under Section 27 of the Act in Case No 90 of 2016 titled as People's All India Anti-Corruption and Crime Preventive Society v. Usha International Ltd & Ors. whereby the commission has hold the appellant guilty of anti-competitive conduct and bid rigging pertaining the tender floated by respondent No.5, for supply of Picofall-cum-Sewing machines and further imposed penalty of Rs. 10,00,000/- (Rs. Ten Lakh only) upon the appellant and other two respondents. 2. Brief facts necessary for disposal of this appeal are, that Informant (Respondent No. 6) is a society registered under the Societies Registration Act, 1860 and stated to be engaged in the business of sale of new age home appliances such as sewing machines, fans, power products, water coolers, water dispensers, etc. Appellant (OP-2), Respondent No. 3 (OP-3) and Respondent No. 4 (OP-4) were the authorised dealers of Respondent No. 2 (OP-1). Respondent No. 5 (OP-5) is the local government body that administers the rural areas of Pun....
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....ian representative and neither Respondent No. 2 nor Appellant or Respondent No. 3 and Respondent No. 4 fulfil the eligibility criteria for the aforesaid tender. 6. It is also stated that due to extraneous consideration, Respondent No. 5 had deliberately overlooked all the aforesaid aspects to favour Respondent No. 2 and the terms of the bid were formulated in such a manner that none other than Respondent No. 2 and its dealers can fulfil the same. It was also alleged that the Appellant and Respondent No. 2 to Respondent No. 5 had indulged in malpractices and corruption causing huge loss to the pubic exchequer. 7. It is further alleged that Respondent No. 2 submitted three bids through its authorised dealers e.g. Appellant, Respondent No. 3 and Respondent No. 4 with meagre price difference which is against the guidelines of the Central Vigilance Commission (CVC) and when the bids were opened on 08.01.2016 it was found that Appellant had quoted per unit price of Rs. 11,900/- (Rs. 12,621/- with taxes); Respondent No. 3 had quoted per unit price of Rs. 11,931/- (Rs. 12,649/- with taxes); and Respondent No. 4 had quoted per unit price of Rs. 11,921/- (Rs. 12,638/- with taxes). Subs....
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....ing/collusive bidding in Tender No. 1/2015-16 dated 07.11.2015 floated by the Pune Zilla Parishad for supply of Picofall-cum-Sewing Machine? If yes, who are the Opposite Parties involved in the cartelisation and bid rigging/collusive bidding in contravention of the provisions of Section 3 of the Act? and (b) If the answer to Issue (a) is in affirmative, who were the persons/officers in charge of and responsible for the conduct of the business of the OPs concerned at the time of the said contravention? 11. The DG in his report has found that the Appellant at various stages of the bidding use his own funds for bids of Respondent No. 3 and Respondent No. 4 and they all use, common IP address, which belong to the cyber cafe of the Appellant for filling up all the bids and also that Appellant, Respondent No. 3 and Respondent No. 4 were in close association and coordination on a regular basis and also with regard to various other tenders floated by the authorities in the region around the same time and found the common thread and scheme for such coordination between them and concluded that there was prior meeting of minds and coordination amongst Appellant, Responden....
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....any cartel or of any bid rigging and the Commission has materially erred in drawing a presumption under Section 3(3) of the Act without their being any evidence in this regard and has completely ignored the fact that vide letter dated 11.01.2016 the Appellant had reduced the bid price from 12,621/- to Rs. 12,521/- and further reduced it to Rs. 12,250/- and it is only thereafter the tender was awarded to it and had there been any cartel formed amongst Appellant and Respondent No. 3 and 4 then the Appellant would never have reduced the price of the sewing machine in the aforesaid manner as there were only three bidders left in the tender who were the authorized dealers of Respondent No. 2 (who must have known that whosoever wins the bid, the benefit would be to Appellant only). It is further submitted that the Respondent Commission has further failed to consider the correct position of law laid down by the Hon'ble Supreme Court of India and Statutory Appellate Tribunal of the Respondent Commission that agreements mentioned in Section 3(3)could not raise a presumption without proof that such agreement shall have an appreciable adverse effect on competition and these agreements ....
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....by bidders and it appears that the impugned tender and relevant record has not been properly pursued by the DG. 19. It is further submitted that the Commission has completely ignored the fact that the Appellant is in a business of tender filling and he used to charge in lump sum for tender filing and Respondent No. 3 and 4 were his regular clients and the Appellant was in fact waiting to receive some more tender to be filled from the Respondent No. 3 and 4 and thereafter to take the whole of the fee and circumstance of not taking any fee or charges may not be taken as adverse to the Appellant. 20. It is vehemently submitted that filing of the bids by the single IP address of the Cyber Cafe of the Appellant is not a circumstance which may be taken against the Appellant as the Appellant had given justification for the same and similarly, even on relying on call data records (CDR) of the Appellant and other Respondents the Commission has not considered the justification given by the Appellant and other Respondents and has ignored this fact that in the locality like Pune Zila Parishad almost all the bidders who participate in the tender know each other very well and interact over....
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....h ISI mark for distribution among the people of specified class. 25. It is further submitted that appellant had entered into a horizontal anti-competitive agreement with Respondent No.3 and 4, who have acted as cover bidders for the appellant and this has been done in contravention of the provisions of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002. 26. It is further submitted that the findings arrived at by the Commission are based on the strong evidence available on record with regard to the appellant entering into an anti-competitive agreement with Respondent No.3 and 4 leading to the bid rigging. 27. Ld. Counsel for the Commission highlighted that the bids filed by the appellant/OP No. 3 and OP No. 4 were having a very narrow price range and significantly they were filed from the one and the same IP address of the appellant using the cyber café of the appellant as a convenient place for performing this illegal collusive act. 28. It is also submitted that there was strong evidence that OP No. 3 and 4 were in constant touch on mobile phone with the appellant on one day before the date of submissions of the bids as about 19 phone calls of 90....
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....arallelism as the bids by the Appellant as well as the Respondent No. 3 and 4 have been filed from the same and single IP address which was of the Appellant's cyber café and further payment of not only tender fee and EMD was managed by the Appellant but the refund of the EMD deposited by the Respondent No. 3 and 4, who were unsuccessful bidders, also came back to the Appellant which shows crystal clear agreement between these persons pertaining to the bid rigging. 35. It is also submitted that the evidence has also been collected by the DG with regard to the close association and interactions of the Appellant, Respondent No. 3 and 4 through their mobile phones on one day before the date of submission of bids i.e. 25.11.2015 by making various calls for long duration and also mobile location of Respondent No. 3 was found in the office of the Appellant while he had taken a defense that he was in his office. 36. It is also submitted that apart from the tender in question, the Appellant and Respondent No. 3 and 4 has also adopted the same modus operandi in earlier two tenders and therefore, the formation of illegal cartel for the purpose of bid rigging was in existence from....
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....nd therefore, the circumstances and evidence collected by DG in both his reports so far as the Respondent No. 2 is concerned, was insufficient and untenable and has not established any agreement of the Respondent No. 2 with the Appellant and the other two co- bidders in order to prove the role of Respondent No. 2 in alleged bid rigging and only issuance of authorization letters cannot be taken as an evidence of collusion. 41. It is further submitted that upon a holistic assessment of the material/ evidence, the Commission has concluded that Appellant and Respondent No.3 and 4 had acted in concert and there is no evidence with regard to the involvement of Respondent No. 2, being part of their agreement. 42. Having heard Ld. Counsel for the parties and having perused the record, we find that with regard to the allegations alleged by the Respondent No. 6 (Informant) the Commission has taken a decision to investigate the allegations by the DG and the DG in this regard has submitted his first report. For ready reference, the relevant paras mentioned by the commission in impugned order with regard to the of the said report are being reproduced as under: - "11. After invest....
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....cted to bid rigging by OP-2, coupled with the consent and connivance of OP-3 and OP-4 in the process to rig the bids. 11.4. The analysis of call data record (CDR) revealed that Mr. Venkatesh, Proprietor of OP-2 was in continuous touch with Mr. Nayan Shah, Proprietor of OP- 3 and Mr. Rahul Shah of OP-4 at the time of submission of bids for the Impugned Tender. Based on the CDR analysis, there is evidence that on the date of submission of bids - by OP-3 and OP-4, all the three OPs were not only interacting with each other, but there were also - - talks in quick sessions amongst the three of them. They were in constant touch with each other - and thus - as per the DG, it is a reasonable inference that they had a deep level of association as well as they were into collusive bidding. 11.5. OP-2 to OP-4 were closely coordinating with each other in relation to participation in other tenders also. 11.6. The DG had also noted that in the instant matter, the bids have been ostensibly submitted by OP-2, OP-3 and OP-4 with the help of OP-1 which issued authorisation letters dated 24.11.2015 addressed to OP-5 whereby it authorised OP-2 to OP-4 to quote and negotiate f....
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....on and crux of this report of the DG and we are reproducing these paragraphs herein below:- "18. Based on the Order of the Commission dated 04.10.2018, the DG formulated following issues for investigation: (a) the role played by officials of OP-5 in the tendering process, particularly at the stage of designing of the tender and evaluation of the bids and examination of the officials of OP-5 to ascertain the eligibility of the bidders in terms of tender conditions; (b) to accord opportunity of cross-examination to the OPs; and (c) examination of reply of OP-1 dated 31.03.2018. 19. The DG submitted its Supplementary Investigation Report on 23.10.2019. During the investigation, the DG analysed the role of OP-5 in designing of tender and evaluation of the bids and it was noted by the DG that OP- 5 did not follow the procedure laid down and as such did not exercise due diligence while evaluating the bids. Further, the OPs were accorded opportunities of cross- examination. Reply dated 31.03.2018 of OP-1 was also examined during the course of the investigation. The DG concluded by noting that the basic nature of the transgression, which existed in the initial report, has....
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.... Rs. 11,900/- Rs. 12,621/- OP-3 Rs. 11,931/- Rs. 12,649/- OP-4 Rs. 11,921/- Rs. 12,638/- Table 2 Comparison of rates of the bidders inter se Difference in rate quoted per unit (with taxes) OP-2 with OP-3 Rs. 28/- OP-3 with OP-4 Rs.11/- OP-2 with OP-4 Rs. 17/- The main argument which has been taken by the Appellant is with regard to the lowering of bid price by him, from Rs. 12,621/- to Rs. 12,521/- and further reduction of same to Rs. 12,250/- and also that had there been a cartelization or bid rigging there was no occasion for him to reduce quoted price any further. 47. The Commission considered the aforesaid submissions and came to a conclusion that the bid values quoted by the Appellant and other two Respondents were very close to each other and there was only a difference of less than thirty rupees which is highly unlikely in normal market conditions that the prices quoted by three different independent bidders would be so close to each other and further observed that the Appellant and other two Respondents failed to demonstrate/justify with any evidence, e.g. cost data, the minuscule difference in the price bid in the impu....
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....M/s Jai Khodiyar Industries and M/s Micro Industries in an attempt to show that these entities are also the client of the Appellant. Having regard to the infirmities noted by the Commission in para 52 of the impugned order, we find that this defense of the Appellant has been rightly rejected by the Commission as these documents appears to be manufactured. 51. We also notice that it was admitted to the Appellant that technical envelope of the bid was completed by its employees and the commercial envelop was filled by the concerned Respondent itself while it was evident that the commercial envelop was also filled by Respondent No. 3 and 4 on 26.11.2015 by using the same IP address of the cyber café, which belongs to the Appellant. 52. We have also noticed the call data record (CDR) collected by the DG during the course of investigation, which was clearly indicative of the close association of the Appellant with the Respondent No. 3 and 4 and they have talked frequently just before filing of the tender bids which is highly unlikely for independent competitive bidders and so much so they were also in close association, even when the investigation was being done by the DG. ....
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....ut this presumption, once the burden has been discharged by the reliable evidence collected by the DG. 58. We find that the material / evidence which has been produced by the Appellant and other Respondents before the Commission, in order to rebut this presumption was not sufficient enough and it was clearly evident that the Appellant and respondent No. 3 and 4 had formed a cartel for the purpose of bid rigging in the tender floated by Respondent No. 5 which was having an adverse effect on the competition in the market and also having an AAEC. 59. Thus, keeping in view all the evidence and material which is available on record before the Commission, we do not find any illegality so far as the holding of the Appellant guilty in terms of Section 27(a) of the Act and the directions issued by the Commission therein, is concerned. 60. So far as the imposition of penalty of Rs. 10 Lakhs is concerned, we are in agreement with the view taken by the Commission. It has been argued on behalf of the appellant that the imposition of penalty is not proportionate and the whole of the turnover of the Appellant has been considered for the purpose of imposition of penalty, which is per se i....