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TMI Blog2022 (11) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... rcised not indiscreet manner. In peculiar facts and circumstances of the present case particularly the fact that the appellant was found by the Commission that he being a Member of the Cartel the appellant was providing cover for the success of the bidder, Yash Solutions, it would be difficult to consider penalty on the basis of relevant turn over and as such total turn over which has been considered by the Commission may not termed as erroneous. However, considering the fact that the appellant was a proprietorship firm the Commission may consider to reduce the percentage of average income of the appellant. While approving the order of Commission in respect of holding the appellant guilty under Section 3(3)(c) and 3(3)(d) read with Section 3(1) and order passed under Section 27(a) regarding cease and desist order it is felt appropriate to remit back the matter to Commission to reconsider imposition of penalty which has been imposed under Section 27(b) of the Act - appeal disposed off. - COMPETITION APPEAL (AT) NO. 31 OF 2022 - - - Dated:- 14-11-2022 - (Justice Rakesh Kumar) Member (Judicial) And (Dr. Ashok Kumar Mishra) Member (Technical) For the Appellant : Mr. Ash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1) of the Act, as detailed in the earlier part of the present order. 135. The Commission, for the reasons recorded below, finds the present case fit for imposition of penalty. Under the provisions contained in Section 27(b) of the Act, 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. Further, in cases of cartelisation, the Commission may impose upon each such cartel participant a penalty of up to three times its profit for each year of continuance of the anti-competitive agreement or 10 per cent of its turnover for each year of continuance of such agreement, whichever is higher. 136. It may be 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their anti-competitive conduct simply because they did not have any turnover from the concerned tender, would not only stultify the Parliamentary intent in providing deterrence through penalties against such behaviour but would 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 behaviour. 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. 139. The Commission notes 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 observes that the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36442 8 M/s Toyfort 27431913 25595204 20621192 73648309 24549436 1227472 9 Chaitanya Business Outsourcing Pvt Ltd 3365279 15821826 41552267 60739372 20246457 1012323 140. The Commission further deems it appropriate and necessary to impose penalty on the individuals identified above for being liable under Section 48 of the Act at the rate of 5 percent of their average income of the financial years 2017-18, 2018-19 and 2019-20 filed with the Commission. However, since M/s Satish Kumar Agarwal, M/s Siddhi Vinayak, M/s Saraswati Sales and M/s Toyfort, are sole proprietorship concerns, no separate penalty is being imposed on their respective proprietors. Accordingly, the computation of penalty imposed on the aforesaid individuals found liable under Section 48 of the Act are as follows: S.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly 3 M/s Siddhi Vinayak and sons 12,62,007 Twelve lakhs sixty two thousand seven only 4 M/s Saraswati Sales Corporation 6,66,975 Six lakhs sixty six thousand nine hundred seventy five only 5 Austere Systems Pvt LTd 44,25,569 Forty four lakhs twenty five thousand five hundred sixty nine only 6 Delicacy Continental Pvt Ltd 32,99,405 Thirty two lakhs ninety nine thousand four hundred five only 7 Fimo Infosolutions Pvt Ltd 36,442 Thirty six thousand four hundred forty two only 8 M/s Toyfort 12,27,472 Twelve lakh twenty seven thousand four hundred seventy two only 9 Chaitanya Business Outsourcing Pvt Ltd 10,12,323 Ten lakh twelve thousand three hundred twenty thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding bid rigging, the Commission prima facie formed an opinion and thereafter directed the Director General to conduct investigation. The Commission in its forming prima facie opinion noticed that audit reports furnished by M/s Satish Kumar and M/s Siddhi Vinayak indicated the same place of business. Further, the experience certificates furnished by M/s Satish Kumar and M/s Siddhi Vinayak (which were part of the bid documents) were issued by Yash Solutions to them on the same date. The Commission further noted that the term deposit receipts submitted by M/s Satish Kumar and M/s Siddhi Vinayak as EMD for Tender No. 1 and Tender No. 2 bore consecutive serial numbers. Further, the non-judicial stamp papers used for filing affidavits along with bid documents filed by M/s Satish Kumar and M/s Siddhi Vinayak also bore consecutive serial numbers. The Commission also observed that Yash Solutions, M/s Satish Kumar and M/s Siddhi Vinayak were dealing with a common supplier i.e., Thermo Fisher Scientific Pte. Ltd., under a common account, which indicated a nexus between them. Further, the tax invoices issued by Today Tech Solutions for lab consumables to Yash Solutions, M/s Siddhi Vinay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Investigation Report dealt with the role played by others also and it was established that the appellant was also in collusion with one M/s Yash Solutions and used fake documents provided by M/s Yash Solutions to become eligible and submit cover bids to support the bid of Yash Solutions. They were blacklisted by Department of Agriculture, Govt of UP for two years in relation to the lack of authenticity of the documents submitted along with bids for soil testing tenders. 5. In respect of M/s Saraswati Sales/Appellant, investigation revealed that it was a proprietorship concern and was basically engaged in the business of electrical contract work for various agencies and it submitted bids in the soil testing tenders in the year 2018 for the Bareilly, Moradabad and Aligarh divisions, even though the proprietorship concern neither had prior soil testing experience nor any infrastructure for conducting soil testing. Investigation revealed that M/s Saraswati Sales in collusion with M/s Yash Solutions submitted cover bids using fake documents provided by M/s Yash Solutions. In the case it was noticed that common IP address was used for submission of E-bids in respect of M/s Satish Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investigation noticed by the CCI in the impugned order at running page 46. 9. Mr. Ashutosh Kumar, learned counsel for the appellant further submits that the Commission agreeing with the investigation report submitted by the DG has recorded that Austere Systems under an agreement/understanding with rival company i.e. Yash Solutions had geographically allocated the soil testing tenders issued by the Department of Agriculture, Govt of UP in the year 2017 and 2018 by not bidding in each other s allocated regions and by submitting supporting bids in favour of each other. The Learned counsel tried to persuade that whatever violations were committed were committed by two entities i.e. by Yash Solutions and Austere Systems. However, without any basis the appellant too has been held responsible for violations of the Act. To substantiate his aforesaid submission he heavily relied on contents of the investigation report which is at running page 223 at para 7.34.26 which is reproduced below: in view of the above it can be concluded that, M/s Yash Solutions and M/s Austere Systems Pvt Ltd through an understanding/arrangement between them, had geographically allocated the soil testing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inbelow:- 57. The Commission also notes that Mr. Praveen Kumar Agarwal in his statement before the DG admitted that fake work orders and experience certificates were issued by Yash Solutions to rival bidders M/s Satish Kumar and M/s Siddhi Vinayak in the 2018 soil testing tenders for Aligarh, Bareilly and Moradabad divisions. However, Mr. Praveen Kumar Agarwal submitted in his deposition that he did not know why such fake experience certificates and work orders were issued by his company to rival bidders. Mr. Praveen Kumar Agarwal, in his statement, could not come up with any cogent explanation for issuing such fake certificates and work orders. The relevant extracts from the statement of Mr. Praveen Kumar Agarwal recorded before the DG are as under: Q. 21. I am showing you the Work Order dated 02.11.2017 Experience Certificate dated 05.12.2017 issued by your company M/s Yash Solutions to M/s Siddhi Vinayak Sons for analyzing 55,300 soil samples for your company [Exhibit 4 (6 pages)] which was submitted by the said firm in the tenders of Aligarh, Bareilly and Moradabad in the year 2018. A. 21. Yes, the said orders and experience certificate were issued by my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd serial numbers and who arranged the said invoices, which the Commission finds highly improbable. The Commission also notes that M/s Satish Kumar Agarwal had submitted invoices for the purchase of lab consumables related to soil testing, issued by M/s Today Tech Scientific Solutions, Ambala Cantt, with exactly the same number of items, amount and time mentioned therein, as other invoices furnished by other bidders namely, Yash Solutions and M/s Siddhi Vinayak, which again the Commission finds highly improbable and inconceivable. Mr. Satish Kumar Agarwal, in his statement before the DG, admitted that the said invoices were fake/ altered; however, he evasively replied I do not know when questioned as to who provided the said invoices and for what purpose. The relevant extracts from the statement of Mr. Satish Kumar Agarwal recorded before the DG are as under: Q. 22. Did you Purchase any Soil testing Machine (ICP-OES) for analysing soil samples? A. 22. Both my firms namely M/s Satish Kumar Aggarwal and M/s Siddhi Vinayak Sons had never purchased any Soil testing Machine (ICP-OES) that is before or after submitting the bids in soil testing tenders during 2017 and 2018. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by your firm and that of M/s Yash Ornaments (Exhibit- 11) having same time i.e. 02:37PM? A. 34. I do not know. Q. 35. How is the invoice submitted by your firm and that submitted by M/s Siddhi Vinayak Sons in the Bareilly Moradabad tenders (Exhibit- 22 23) having same time i.e.02:37PM? A. 35. I do not know. Q. 36. Who provided the said Invoices to you and why? A. 36. I do not know. Q. 37. I am showing you the letter by Dy. Excise Taxation Commissioner(ST) dated 30.06.2020 (Exhibits- 24) confirming that against the above said invoices raised by M/s Today Tech Scientific Solutions, Ambala Cantt in favour of both your firms namely M/s Satish Kumar Agarwal and M/s Siddhi Vinayak Sons for purchase of certain items, that no sales were made to both your aforesaid firms. A. 37. Yes, I have seen it. Q. 38. Why were the said Invoices submitted after alteration in the bids of Soil testing tenders issued by the Uttar Pradesh Agriculture department? A. 38. Yes, it was a mistake on my part to submit fake documents/invoices. Q. 39. When your firm did not have any Machine or Lab, why did you submit a false Undertaking? A. 39. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 2018 tenders for Bareilly and Moradabad divisions. In his statement, Mr. Naresh Kumar Sharma regretted his decision to submit supporting bids and said that it should not have happened. He also stated that the experience certificates from Austere Systems were arranged at the instance of Mr. Praveen Kumar Agarwal. Even the undertaking for the establishment of a lab was arranged at the instance of Mr. Praveen Kumar Agarwal. The Commission also notes that Mr. Rahul Teni of Austere Systems, in his statement before the DG, submitted that his company had not issued any experience certificate for analysing soil samples to M/s Saraswati Sales, which is indicative of the fact that fake experience certificate was furnished by M/s Saraswati Sales to fulfil eligibility criteria under the pertinent tenders. The relevant extracts from the statement of Mr. Naresh Kumar Sharma recorded before the DG are as under: Q. 2. Why did you bid for the above said tenders when you did not have any experience, Infrastructure such as soil testing machine and manpower for conducting soil testing work? A. 2. Sh. Praveen Agarwal of Yash Solutions suggested that soil testing tenders are being issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rachit Agarwal, appeared in the character certificate issued to Ms. Sangeeta Agarwal of M/s Siddhi Vinayak. The Commission also notes that Mr. Satish Kumar Agarwal persistently submitted evasive replies I do not know or I do not remember and submitted no explanation for the alleged linkages. It is also noted that Mr. Satish Kumar Agarwal initially denied knowing Mr. Praveen Kumar Agarwal of Yash Solutions; however, when confronted with the CDR of his mobile number, he admitted having regular interactions with Mr. Praveen Kumar Agarwal. He also admitted to be in regular communication with Mr. Nitish Agarwal, CEO of Yash Solutions, as well as Mr. Rachit Agarwal, General Manager of Yash Solutions. Mr. Satish Kumar Agarwal admitted that he used to take Mr. Rachit Agarwal s assistance in completing and submitting tender formalities of both his concerns. The Commission notes that Mr. Satish Kumar Agarwal also admitted that the Department of Agriculture, Government of Uttar Pradesh, had blacklisted both his concerns namely M/s Satish Kumar Agarwal and M/s Siddhi Vinayak, questioning the authenticity of the documents submitted by his concerns in the soil testing tenders and he had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Vivek Saxena, who was my authorized signatory had discussed with me before bidding the above said tenders and the bid was submitted with my consent and full knowledge. 69. The Commission, from the above, notes that it clearly comes out to the fore that fake and fabricated documents were arranged/ provided by Yash Solutions, to M/s Satish Kumar, M/s Siddhi Vinayak and M/s Saraswati Sales with a view to ensure their technical eligibility and submission of cover bids in favour of Yash Solutions in the 2017 tenders for Bareilly and Moradabad divisions and in the 2018 tenders for the Bareilly, Moradabad and Aligarh divisions. 70. The Commission further notes that, as per records of e-bidding submitted by the National Informatics System, the bids of Yash Solutions, M/s Siddhi Vinayak and M/s Satish Kumar were submitted from the same IP Address in the Bareilly tenders of 2018. Further, in the Moradabad tenders of 2018, the bids of Yash Solutions, M/s Siddhi Vinayak, M/s Saraswati Sales and M/s Satish Kumar Agarwal were also submitted from the same IP Address. The bids submitted by M/s Siddhi Vinayak in both the tenders were submitted using the login id [email protected], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant besides other entity. On the point of penalty Mr. Gaggar has placed Section 27(b) of the Act which is reproduced hereinbelow:- (b) impose such penalty, as it may deem fit which shall be not more than ten per cent. 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 agreements or abuse: Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profits for each year of the continuance of such agreement, whichever is higher 13. Mr Gaggar, learned counsel for the CCI further submits that statutory provision, i.e. sub-section (b) of Section 27 in clear term speaks that penalty may be imposed which shall not be more than 10% of the average of the turnover for the last three preceding years. According to the learned counsel for the CCI in terms of the provisions of the Act, the CCI has leniently and rightly instead of imposing upper limit of 10% has preferred to consider 5% of average in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record and after going through the same we are of the considered opinion that the Commission has correctly and legally held the appellant responsible for violation of Section 3(3)(c) and 3(3)(d) reading 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. So far as imposition of penalty is concerned it is evident that appellant was a proprietor firm. Of course imposition of penalty was entirely within the discretion of the CCI and in respect of exercising discretion same may not be interfered with. However, it is also settled that discretion is to be exercised not indiscreet manner. Moreover, Hon ble Supreme Court in Excel Crop Care Ltd Vs CCI Another particularly in para 95 and 96 has given some guidelines in respect of turnover as well as relevant turn over. Para 95 and 96 of the judgement of the Hon ble Supreme Court reported in (2017) 8 Supreme Court Cases 47 in Excel Crop Care Ltd Vs CCI Another is repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guidelines issued as far as India is concerned and in the absence thereof imposition of penalty, taking into consideration total turnover, may bring about disastrous results which happened in the instant case itself with the imposition of penalty by the CCI. 17. However, in peculiar facts and circumstances of the present case particularly the fact that the appellant was found by the Commission that he being a Member of the Cartel the appellant was providing cover for the success of the bidder, Yash Solutions, it would be difficult to consider penalty on the basis of relevant turn over and as such total turn over which has been considered by the Commission may not termed as erroneous. However, considering the fact that the appellant was a proprietorship firm the Commission may consider to reduce the percentage of average income of the appellant. 18. Accordingly while approving the order of Commission in respect of holding the appellant guilty under Section 3(3)(c) and 3(3)(d) read with Section 3(1) and order passed under Section 27(a) regarding cease and desist order we feel it appropriate to remit back the matter to Commission to reconsider imposition of penalty which has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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