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2022 (12) TMI 1062 - AT - Companies LawConspiracy - omission and commission of misconduct by official of Pune Municipal Corporation in connivance with appellants filed a detailed information application before the CCI - levy of penalty - HELD THAT - On examination of entire material we are of the opinion that sufficient evidence were brought on record to show forming cartelisation by the appellants in influencing tender. It was specific case of contravention of Section 3(3)(d) of the Act read with Section 3(1) of the Act. Besides evidence by way of filing leniency application all the appellants have already accepted their guilt. Most of the appellants on the strength of their leniency application have also got reduction in the penalty which is reflected from the relevant portion of the impugned order which we have quoted in the present order. We are of the opinion that disclosure made in leniency application admitting involvement amounts to confession. If confessional statement is also corroborated even by some sort of evidence one is precluded to assail an order imposing penalty/punishment on such confession. Moreover, in the present case at the time of admission itself it was admitted by the appellants that the appeal may be heard on the point of penalty only. Now coming to the discretionary jurisdiction of the CCI in considering the turnover on the higher level i.e. 10% which is maximum percentage prescribed under Section 27(b) of the Act is concerned we are of the opinion that though CCI is empowered to take turnover upto 10% but while taking up such percentage i.e. maximum as prescribed in the Act it was required for the CCI to elaborately assign reason for coming to the conclusion for maximum penalty. It may not be held that CCI in no case can impose higher penalty upto 10% but in such situation it would be required for the CCI to afford full opportunity to the concerned party to address the CCI as to why such higher penalty may not be imposed - On going through the impugned order we find no indication as to whether the appellants were asked to explain regarding exemplary penalty i.e. maximum 10% or detailed reasons has been assigned for the same. It is true that in respect of imposing penalty discretion has been given to the CCI, but at the same time it is settled that discretion may not be exercised indiscreet manner. Though discretionary jurisdiction may not be interfered with but in view of facts and circumstances particularly the fact that discretion by the CCI in the present case has not been exercised in a reasonable manner it would be a fit case for remanding back the matter to CCI to examine the issue to afford opportunity to the appellants to address on the point as to whether instead of exemplary penalty i.e. upper limit of 10%, the appellants are entitled to get the said percentage reduced or not. In the present case it has been noticed that in the information petition which was filed by the informant it is evident that the informant had alleged that conspiracy and collusion by Accused No.1 and 2 alongwith technically ineligible company (nevertheless qualified) on the one hand and personnel of PMC Accused No.3 on the other hand as a result and by giving effect to this fraud Accused No.2 became L1 in 5 tenders in 2014 bagging contracts for worth of Rs.14,82,94,580/- while the internal estimate was Rs.11.45 crores i.e. 30% lower. Even during investigation DG had examined the role of PMC in its report. We are of the opinion that while remitting back the aforesaid appeals to CCI to reconsider the penalty a direction can be issued to the Director General of Police Maharashtra/Director General, Anti-Corruption, Maharashtra to conduct an enquiry in respect of role played by the Pune Municipal Corporation in relation to Tender No.34, 35, 44, 62 and 63 of 2014. It goes without saying that if during enquiry any cognisable offence comes to fore in that event it would be necessary to register FIR for its statutory investigation to its logical end. Let a copy of this order be sent to Director General of Police, Maharashtra/Director General, Anti Corruption, Maharashtra.
Issues Involved:
1. Non-appearance of appellants and dismissal for non-prosecution. 2. Allegation of cartelization and bid-rigging in tenders floated by Pune Municipal Corporation. 3. Imposition and calculation of penalties under Section 27 of the Competition Act, 2002. 4. Consideration of leniency applications under Section 46 of the Competition Act, 2002. 5. Role of Pune Municipal Corporation officials and potential criminal conspiracy. Detailed Analysis: 1. Non-appearance of Appellants and Dismissal for Non-Prosecution: The tribunal observed that despite multiple opportunities, appellants in several appeals did not appear for hearings. Consequently, the tribunal decided to dismiss these appeals for non-prosecution to avoid any perception that the appeals were decided on merit without hearing the appellants. 2. Allegation of Cartelization and Bid-Rigging: The case involved allegations of collusion among bidders to rig the tenders floated by Pune Municipal Corporation for solid waste processing plants. The Competition Commission of India (CCI) found that the appellants had engaged in anti-competitive practices by submitting cover bids to ensure that a predetermined winner emerged. This was established through evidence such as common IP addresses for uploading tender documents, financial transactions, and statements from involved parties. 3. Imposition and Calculation of Penalties: The CCI imposed penalties on the appellants based on 10% of their average turnover for the last three financial years. The tribunal noted that while the CCI has discretion under Section 27(b) of the Competition Act, 2002, to impose penalties up to 10% of the turnover, it must exercise this discretion judiciously. The tribunal found that the CCI did not provide detailed reasons for imposing the maximum penalty and remanded the matter back to the CCI to reconsider the penalties after giving the appellants an opportunity to present their case on the quantum of penalty. 4. Consideration of Leniency Applications: Several appellants had filed leniency applications under Section 46 of the Competition Act, 2002, admitting their involvement in the cartel and cooperating with the investigation. The CCI granted reductions in penalties to these appellants based on their cooperation and the timing of their leniency applications. However, the tribunal noted that the CCI should have provided a more detailed rationale for the extent of penalty reduction and directed the CCI to reconsider this aspect as well. 5. Role of Pune Municipal Corporation Officials and Potential Criminal Conspiracy: The tribunal observed that there were indications of collusion between the appellants and officials of Pune Municipal Corporation, as evidenced by frequent communications and other circumstantial evidence. The tribunal directed the Director General of Police, Maharashtra, and the Director General, Anti-Corruption, Maharashtra, to conduct an inquiry into the role of Pune Municipal Corporation officials in the alleged conspiracy. If any cognizable offense is found, the tribunal directed that an FIR be registered for further investigation. Conclusion: The appeals were remanded back to the CCI for reconsideration of penalties, ensuring that the appellants are given an opportunity to address the quantum of penalty. Additionally, an inquiry was directed into the potential criminal conspiracy involving Pune Municipal Corporation officials.
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