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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 ..... g, is a pernicious form of anti-competitive conduct under the provisions of Section 3 of the Act. None of the Opposite Parties or their individuals have been able to rebut the evidence found against them by the DG of having indulged in anti-competitive conduct and manipulating the bids/bid rigging in respect of tenders floated by the Department of Agriculture, State of Uttar Pradesh. The Commission finds that certain Opposite Parties and their individuals had also resorted to the production and submission of fake invoices and grant of false certificates for making some of the Opposite Parties eligible for participating in the bid process so as to effectively act as cover bidders in respect of the winning bidders. Some of the Opposite Parties did not even have prior experience and were later blacklisted. 133. In view of the foregoing, the Commission holds Yash Solutions, M/s Satish Kumar Agarwal, M/s Siddhi Vinayak, M/s Saraswati Sales Corporation, M/s Austere System Pvt. Ltd., Delicacy Continental Pvt. Ltd, Fimo Infosolutions Private Limited, M/s Toyfort and Chaitanya Business Outsourcing Pvt. Ltd. to have contravened the provisions of Section 3(1) of the Act read with Section 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved in the business of soil testing, zero penalty would naturally arise out of nil income and nil turnover. Some of the Opposite Parties have prayed for mitigation of penalty on the grounds of being Micro Small and Medium Enterprises (MSME). 138. With regard to the submission of the Opposite Parties that they have derived no income from tenders in question and hence zero penalty would arise, the Commission finds no merit in the said submission and no narrow interpretation of the relevant turnover can be taken as suggested. The Commission, in this regard, reiterates its decision dated 03.02.2022 in Suo Motu Case No. 2 of 2020 (In Re: Alleged anti-competitive conduct by various bidders in supplying and installation of signages at specified locations of State Bank of India across India): "115. In relation to the contention that turnover derived from the Impugned Tender alone should be considered, it is noted that a bare perusal of the Excel Crop Care judgement makes it clear that nowhere it held or otherwise declared that relevant turnover should be limited to the turnover earned from the specific customer or tender. Such a plea would frustrate the underlying policy objectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0480288 25240144 1262007 4 M/s Saraswati Sales Corp 14885150 17116200 8017141 40018491 13339497 666975 5 Austere Systems Pv Ltd 48529601 117043789 99960762 265534152 88511384 4425569 6 Delicacy Continental Pvt Ltd 14916478 78839582 94508248 197964308 65988103 3299405 7 Fimo Infosolutions Pvt Ltd 2186517 0 0 2186517 728839 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. Individual Fy 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal (Director Chaitanya Business Outsourcing) 84,541 Eighty four thousand five hundred forty one. 142. The Commission directs the concerned parties to deposit the aforesaid penalty amounts within 60 days of the receipt of this order. It is ordered accordingly. 143. The Secretary is directed to forward copies of this order to all the Opposite Parties and their officials forthwith." 2. The Commission in terms of Section 27(a) of the Act directed the Appellant and others who were held liable in terms of Section 48 of the Act to cease and desist from indulging in practices which were found in the instant case to be in contravention of provisions of Section 3(3) (c) and 3(3)(d) read with Section 3(1) of the Act. In addition the Commission after recording that the appellant was also one of the Members of Cartel and involved in anti competitive conduct under Section 3 of the Act imposed penalty @ 5% of average of turnover for the three financial years imposed penalty on the appellant to the tune of Rs.6,66,975/-. 3. The short fact of the case is that on the basis of a complaint received by the Commission wherein allegation of bid rigging was in the tenders invited by the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the regions of Saharanpur and Meerut for the year 2018. Based on the above analysis, the Commission was of the prima facie view that, despite being competitors, these entities appeared to have manipulated the process of bidding in the soil testing tenders in the state of Uttar Pradesh by indulging in bid rigging, in contravention of provisions of Section 3(1) read with 3(3)(d) of the Act. 4. Accordingly by order dated 30.01.2020 exercising powers under Section 26(1) of the CCI directed Director General to cause an investigation and submit report. The Director General was also in terms of the order granted liberty that if during investigation he comes across anti-competitive conduct of any other entity in addition to those mentioned hereinabove to investigate the same. The Director General was further directed to investigate the role of officers who were incharge and responsible for the conduct of the business of the party at the time the alleged contravention was committed, as well as officers with whose consent or connivance the alleged contravention was committed, in terms of the provisions of Section 48 of the Act. The Director General after conducting investigation submitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d directors and other proprietorship etc. After receipt of the Investigation Report again proper opportunity was given to the parties including the appellant and finally on 04.04.2022 order was passed against the appellant and others both under Section 27(a) and 27(b) of the Act which has been assailed in the present Appeal. 7. Mr. Ashutosh Kumar, learned counsel for the appellant assailing the impugned order at the very outset has argued that it is not in dispute that the appellant firm tender was not accepted rather tender work was allotted to M/s Yash Solutions. To elaborate his submission, learned counsel for the Appellant has referred to statement made in para 7(ii) at Page of the Memo of Appeal. He further referred para 5 at page 44 of the impugned order which is quoted hereineblow:- "5.It was stated in the complaint that Yash Solutions emerged as the successful bidder for the award of work for Tender No. 1 and Tender No. 2 for the regions Moradabad and Bareilly, respectively, in the year 2018-19. It was also stated in the complaint that in the previous year, i.e., 2017-18, Yash Solutions was awarded tenders for soil testing for the regions of Bareilly and Moradabad, and A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CCI. He submitted that the Learned CCI while considering the turn over has incorrectly taken the "total turnover" whereas only the "relevant turnover" was to be taken into account and submitted that monetary penalty imposed by the CCI is not in accordance with the law. 11. Mr Vaibhav Gaggar, learned counsel appearing on behalf of the CCI while controverting the submissions of the learned counsel for the Appellant submits that the case of Yash Solutions as well as of Austere Systems may not be looked into in isolation. He submits that learned counsel for the appellant have tried to only substantiate that during investigation as well as in the order of the Commission in bid rigging Yash Solutions and Austere Systems were held responsible whereas on examination of the investigation report as well as impugned order of the Commission in totality there is no dispute that the appellant alongwith others besides Yash Solutions and Austere System were found involved in bid rigging. He further submits that even during oral examination the proprietor of M/s Saraswati Sales Corporation himself has admitted that he participated in the bid to cover and facilitate success of Yash Solutions. Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Did your Firm entered into any agreement or MoU with M/s Siddhi Vinayak & Sons and M/s Satish Kumar Agarwal, for carrying out the soil testing work for your Firm? A. 26. I do not know. Q. 27. I am showing you the relevant extracts of the statement dated 12.01.2021 i.e Q. 18, 19 & 22 (Exhibit - 6), submitted by Sh. Satish Kumar Agarwal, Proprietor of M/s Satish Kumar Agarwal. A. 27. Yes, I have seen. Q. 28. In view of the above said statement on oath by Sh. Satish Kumar Agarwal it is clear that your Firm had issued fake "Experience Certificates" to M/s Satish Kumar Agarwal and M/s Siddhi Vinayak & Sons for conducting soil sample tests for your Firm. Why did your firm issue fake certificate to both the said firms? A. 28. I do not know why such fake experience certificate and work orders were issued to both these firms. However, I have no justification for issuing such fake certificates to my rival bidders." 58. The Commission further notes that Mr. Satish Kumar Agarwal had submitted invoices for the purchase of soil testing machine, i.e., ICP-OES machine, with identical account number and serial number of the invoices submitted by other bidders such as Yash Solutions, M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by you in the Moradabad tenders are having same Account Number 1532236 and Serial Number IC74DC173313 for Your firm & the Invoice of M/s Yash Solutions Pvt Ltd submitted in the Bareilly & Moradabad tenders (Exhibit-17 & 18)? A. 27. I do not know. Q. 30. I am showing the letter received from M/s Thermo Fisher Scientific India Private Limited confirming that no sale of any ICP-OES machine was made to either to M/s Satish Kumar Aggarwal and M/s Siddhi Vinayak & Sons (Exhibit19). Why did you submit fake invoices for said machine in the tenders of soil testing in Moradabad and Bareilly Divisions during 2018? A. 30. I had submitted the said fake invoices with an intention to service the contract if it was awarded to my firms. Q. 31. I am showing you the Invoice bearing no. 7000 dated 01.07.2017 raised by M/s Today Tech Scientific Solutions, Ambala Cantt in favour of your Firm M/s Satish Kumar Agarwal for purchase of certain items, which was submitted by your Firm to the Department of Agriculture, Govt. of UP, during the tendering process in the year 2018-19 for Bareilly and Moradabad divisions (Exhibit20,21). A. 31. Yes, I have seen it. Q. 32. Why were the aforesaid item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Sharma of M/s Saraswati Sales: "Q. 10. How did you procure Invoices for purchasing of ICP-OPs machine which is used for soil testing as shown in (Exhibits - 5 & 6 above)? A. 10. The said invoices were arranged by Sh. Praveen Agarwal and I have no knowledge from where the said invoices were arranged." Extract from the statement of Mr. Praveen Kumar Agarwal of Yash Solutions "Q. 35. I am also showing you the relevant extracts of the statement dated 29.12.2021 i.e Question no. 10, of Sh Naresh Kumar Sharma., Sole Proprietor of M/s Saraswati Sales Corporation Bareilly (Exhibit - 14). Please submit your comments. A. 35. Yes, I have seen. I agree whatever Sh. Naresh Sharma has submitted in his statement. Q. 36. Why and how did you supply the Invoice for purchase of ICP-OES Machine to Saraswati Sales Corporation? A. 36. No comments." 60. The Commission further notes the fact that Mr. Naresh Kumar Sharma, on being questioned as to why he bid for the tenders, stated that he submitted the bids on the request of Mr. Praveen Kumar Agarwal of Yash Solutions to submit a cover bid or supporting bid so that Yash Solution's bid could not be rejected due to insufficient number of bid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason for M/s Saraswati Sales to submit bids in the 2018 tenders of soil testing for Bareilly, Moradabad and Aligarh divisions with fake and fabricated documents other than to submit cover bids in support of Yash Solutions. 63. The Commission also observes that as per the reply of M/s Thermo Fisher, dated 14.04.2020, Yash Solutions had purchased soil testing machines from it; however, no sale was ever made to M/s Satish Kumar, M/s Siddhi Vinayak and M/s Saraswati Sales, which implies that the invoices submitted by them in the soil testing tenders of 2018 were fake and fabricated. 65. The Commission also notes that Mr. Satish Kumar Agarwal, in his statement, had admitted that he had submitted fake documents and bids separately for both his Suo Motu Case No. 01 of 2020 Page 38 concerns, M/s Satish Kumar and M/s Siddhi Vinayak, in the 2017 soil testing tenders for Moradabad and 2018 soil testing tenders for Aligarh, Moradabad and Bareilly divisions, just to show that there was enough competition and to avoid cancellation of tenders due to lack of participation. The Commission further notes that the name of Yash Solutions appeared in the affidavits submitted by M/s Satish Kumar and M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Corporation for various Tenders. The said documents have been submitted in soil testing tenders in Bareilly and Moradabad division in 2018. I am showing you copies of Pan and Aadhaar cards (Exhibit- 13 & 14) of Shri Vivek Saxena which were submitted in these tenders. "A. 37.I have never authorized Shri Vivek Saxena to sign on behalf of my firm namely M/s Saraswati Sales Corporation to bid in soil testing tenders of U.P. Government. My signatures may have been misused for submission of the said documents. The photograph affixed on the authorization letter does not belong to Sh. Vivek Saxena who was working for my firm. However, the photographs affixed on Pan and Aadhaar cards are of Vivek Saxena who was working for my firm. Q. 1. This is in continuation of your statement recorded on oath on 05.12.2020 copy shown to you as (Exhibit- 1). As you had denied in your earlier statement dated 05.12.2020 that you had not submitted any bids in the soil testing tenders issued by Bareilly & Moradabad divisions of the Deputy Director Soil testing, Uttar Pradesh Government in 2018, I would request you to confirm the same. A. 1. Yes, I admit that my firm had submitted bids in the U.P Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint to their complicity in manipulating the tenders issued by the Department of Agriculture, Government of Uttar Pradesh. Further, even acts of forgery were resorted to in such processes, which speaks about the conduct of such Opposite Parties. Further, Yash Solutions, M/s Satish Kumar and M/s Siddhi Vinayak were blacklisted by the procurer. The Commission does not find any merit in the submissions made by the said Opposite Parties in their objections/ written submissions as well as the arguments advanced during the oral hearing and in subsequent submissions. The Commission thus concludes that Yash Solutions, M/s Satish Kumar, M/s Siddhi Vinayak, M/s Saraswati Sales and Chaitanya Business Outsourcing have contravened the provisions of Section 3 (3)(d) read with Section 3(1) of the Act. Set 2: Austere Systems, M/s Toyfort, Fimo Info Solutions and Delicacy Continental. 12. On the basis of the aforesaid fact which has been reproduced hereinabove it was argued by the learned counsel for the CCI that it was a specific case of involvement of the appellant and it was established that he was Member of the cartel involved in violation of the provisions of the Act and as such Learned CCI h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese documents in some business being carried out by him. Shri Agarwal may have misused these documents in these Soil Testing tenders. And Question No.2 at Page 166 para 7.21.11 is quoted below: "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 by the Agriculture Department, UP Government and accordingly he requested me to prepare the documents and EMD for submitting the same to the Agriculture Department. Shri Praveen Agarwal informed me that he needed a supporting bid/cover bid from my firm in support of his firm Yash Solutions so that his bid is not rejected due to insufficient number of bids. I had submitted supporting bids to help Sh Praveen Agarwal's firm Yash Solutions during the tenders issued in 2017 and 2018. 15. By way of referring to aforesaid fact it was reiterated that all the misdeeds were committed by Mr. Praveen Agarwal of Yash Solutions and the appellant was not at all involved. 16. Besides hearing Learned counsel for the parties we have m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various other countries in his endeavour to demonstrate that it is the concept of total turnover which was recognised in other jurisdictions as well. The attempt was to show that the principle of 'total turnover' was prevalent across the globe wherever such laws are enforced. On the contrary, the learned counsel for the appellants pointed out the provision contained in similar statutes of some countries where the concept of relevant turnover had been adopted. South Africa is one such example and, in fact, COMPAT has referred to the judgment of Southern African Competition Appeal Court in this behalf, i.e., Southern Pipeline Contractors Conrite Walls (Pty) Ltd. 19 case. In such a scenario, it may not be necessary to deal with the statutory provisions contained in different countries. In view of interpretation that is given by us to the provision at hand, we would, however, like to comment that in some of the jurisdictions cited by Mr. Kaul, learned Additional Solicitor General, the guidelines are also framed which ensure that the penalty does not become disproportionate, for example, in the UK, the Office of Fair Trade (OFT) has 'guidelines as to the appropriate amount of penalty'. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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