National Company Law Appellate Tribunal
Rahul Gajanan Teni vs Competition Commission Of India on 23 September, 2025
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Competition Appeal (AT) No. 36 of 2022 &
I.A Nos. 2766, 2767 of 2022
IN THE MATTER OF:
Austere Systems Pvt. Ltd.
Through its Authorized Representative
Office at- 301-303, A Square, Plot no. 34 ADC,
...Appellant
sector 26, Pradhikaran Pune,
Maharashtra, Pin Code - 411 044.
Versus
Competition Commission of India
9th Floor, Office Block-1,
Kidwai Nagar (East) ...Respondent
New Delhi-11 0023, India
Present
For Appellant : Mr. Rahul Kochar, Advocate.
For Respondent : Mr. Dhruv Malik, Ms. Aditi Sinha, Advocates for
CCI.
Mr. Dinesh Chandra, Dy. Director, for CCI.
Ms. Sunaina Dutta, Jt. Director (Law) for CCI.
With
Competition Appeal (AT) No. 48 of 2022 &
I.A Nos. 3891, 3893 of 2022
IN THE MATTER OF:
Rahul Gajanan Teni
Office at- 301-303, A Square, Plot no. 34 ADC,
Sector 26, Pradhikaran Pune,
...Appellant
Maharashtra, Pin Code - 411 044
Versus
Competition Commission of India
9th Floor, Office Block-1,
...Respondent
Kidwai Nagar (East),
Cont'd.../
-2-
New Delhi-11 0023, India
Present
For Appellant : Mr. Rahul Kochar, Advocate.
For Respondent : Mr. Dhruv Malik, Ms. Aditi Sinha, Advocates for
CCI.
Mr. Dinesh Chandra, Dy. Director, for CCI.
Ms. Sunaina Dutta, Jt. Director (Law) for CCI.
With
Competition Appeal (AT) No. 40 of 2022 &
I.A No. 3233 of 2022
IN THE MATTER OF:
Fimo Infosolutions Pvt. Ltd.
Through its Authorized Representative
Office at - Shop No. 3, Ground Floor,
E-99, Kamla Nagar, Delhi,
...Appellant No.1
Pin Code- 110007.
Mr. Jai Kumar Gupta,
Director, M/S Fimo Infosolutions Private Limited
Office at- Shop No. 3, Ground Floor, ...Appellant No.2
E-99, Kamla NagarDelhi, Pin Code - 11 0007.
Versus
Competition Commission of India
9th Floor, Office Block-1,
Kidwai Nagar (East),
...Respondent
New Delhi-11 0023, India.
Present
For Appellants : Mr. Rahul Kochar, Advocate.
For Respondent : Mr. Dhruv Malik, Ms. Aditi Sinha, Advocates for
CCI.
Mr. Dinesh Chandra, Dy. Director, for CCI.
Ms. Sunaina Dutta, Jt. Director (Law) for CCI.
Competition Appeal (AT) Nos. 36,48,40 of 2022
-3-
JUDGMENT
(23rd September, 2025) INDEVAR PANDEY, MEMBER (TECHNICAL) These appeals arise from the final order and judgment passed by the Competition Commission of India (Hereinafter referred to as "Commission") on 04.04.2022 under Section 27 of the Competition Act, 2002 (hereinafter called the Act), wherein the Commission held that Appellants along with other bidders, had contravened Sections 3(3)(c) and 3(3)(d) r/w Section 3 (1) of the Act. The appeals have been filed under Section 53 (b) of the Act challenging the impugned order of the Commission. Brief facts of the case
2. The commission received a general complaint dated 07.08.2018 alleging bid-rigging in the tenders invited by the Department of Agriculture, Government of Uttar Pradesh for soil sample testing. The complaint related to alleged bid rigging in respect of two e-tenders namely, Tender 2018_AGRUP_210583_1 (Moradabad) dated 31.05.2018 ("Tender No. 1") and Tender 2018_AGRUP_212591_1 (Bareilly) dated 18.06.2018 ('Tender No. 2"), invited for the soil sample testing by the Department of Agriculture, Government of Uttar Pradesh.
3. It was stated in the complaint that the following parties participated in the aforesaid two tenders of soil testing in Uttar Pradesh:
Competition Appeal (AT) Nos. 36,48,40 of 2022 -4-
(i) Yash Solutions
(ii) M/s Satish Kumar Agarwal
(iii) M/s Siddhi Vinayak and Sons
(iv) M/s Saraswati Sales Corporation
(v) M/s Lab Traders
(vi) Edward Food Research and Analysis Centre Limited
(vii) Atharva Laboratories Pvt. Ltd.
(viii) M/s Newgen Computers
(ix) Austere System Pvt. Ltd.
4. It was alleged that the following participating bidders acted in a concerted manner in respect of Tender No. 1 and Tender No.2 and resorted to bid-rigging in contravention of provisions of Section 3 (1) read with Section 3 (3) (d) of the Competition Act 2022 ('Act'):
(i) Yash Solutions, Bareilly (Unit of Yash Ornaments Pvt. Ltd.) ("Yash Solutions"/OP-1)
(ii) M/s Satish Kumar Agarwal, Bareilly ("M/s Satish Kumar"/OP-2)
(iii) M/s Siddhi Vinayak & Sons, Bareilly ("M/s Siddhi Vinayak"/OP-3)
(iv) M/s Saraswati Sales Corporation, Bareilly ("M/s Saraswati Sales"/OP-4)
(v) Austere System Pvt. Ltd., New Delhi ("Austere Systems"/OP-5)
5. It was further alleged that there were numerous red flags in the documents submitted by the aforesaid entities for Tender No. 1 and Tender No. 2, but the tender inviting authorities preferred to ignore these aspects. M/s Yash Solutions emerged as the successful bidder for the Competition Appeal (AT) Nos. 36,48,40 of 2022 -5- award of work for Tender No. l 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, M/s Yash Solutions was awarded tenders for soil testing for the regions of Bareilly and Moradabad, and Austere Systems was awarded tenders for the regions of Jhansi, Saharanpur and Meerut as a result of such collusive bidding. It was alleged in the complaint that the entities referred above, rigged the tenders of soil testing in the state of Uttar Pradesh by indulging in cover bidding, bid rotation and collusive bidding.
6. The Commission considered the complaint and obtained documents like audit report, experience certificates and term deposit receipts submitted by relevant parties. Based on the analysis of records, the commission was of the prima facie view, that despite being competitors, these entities appear to have manipulated the process of bidding in the soil testing tenders in state of UP by indulging in bid-rigging, in contravention of provisions of Section 3 (1) r/w Section 3 (3) (d) of the Act. Accordingly, the commission passed an order dated 30.01.2020 under Section 26 (1) of the Act directing the Director General (DG) to cause an investigation and submit the investigation report in the matter. The commission also observed that if the DG came across anti-competitive conduct of any other entity in addition to those mentioned in the information, the DG would be at a liberty to investigate the same. The DG was also directed to investigate the role of the persons/officers, who were in charge of and responsible for the conduct of the businesses of the Competition Appeal (AT) Nos. 36,48,40 of 2022 -6- parties at the time the alleged contravention was committed, as well as persons/officers with whose consent or connivance the alleged contravention was committed, in terms of the provisions of section 48 of the Act. The DG, pursuant to the directions of the Commission, investigated the matter, and after seeking due extensions of time, submitted the investigation Report dated 08.04.2021.
7. The relevant findings of the investigation Report submitted by the DG relating to the appellants role are the following:
(i) Investigation covered 9 tenders namely, tenders of (a) 2017 and 2018 for Moradabad division, (b) 2017 and 2018 for Bareilly division, (c) 2017 for Jhansi division, (d) 2018 for Saharanpur division, (e) 2017 and 2018 for Meerut division, and (f) 2018 for Aligarh division.
(ii) The investigation report identified that Yash Solutions, M/s Satish Kumar, M/s Siddhi Vinayak, M/s Saraswati Sales and Austere Systems (the Opposite Parties as identified by the Commission at prima facie stage) as well as other parties/bidders, namely, Delicacy Continental Private Limited ("Delicacy Continental"), Fimo Infosolutions Pvt. Ltd. ("Fimo Infosolutions"), M/s Toyfort and Chaitanya Business Outsourcing Pvt. Ltd. ("Chaitanya Business Outsourcing") indulged in cartelisation and bid-rigging in the 2017 and 2018 tenders pertaining to soil testing work issued by various Competition Appeal (AT) Nos. 36,48,40 of 2022 -7- divisions of the Department of Agriculture, Government of Uttar Pradesh.
(iii) Austere Systems in collusion with Yash Solutions, Delicacy Continental, M/s Toyfort and Fimo Infosolutions, had rigged bids and emerged as the L-1 bidder in soil testing tenders floated by the Department of Agriculture, Government of Uttar Pradesh in Meerut and Jhansi divisions in the year 2017 as well as Saharanpur and Meerut division tenders in the year 2018.
(iv) The investigation also brought out that Delicacy Continental, Fimo Infosolutions, M/s Toyfort and Chaitanya Business Outsourcing be added as Opposite Parties in the matter.
(v) It was found from the investigation that Austere Systems, Fimo Infosolutions and M/s Toyfort, through cartelisation and collusion, rigged the bids of 2017 for Meerut and Jhansi divisions. Austere Systems and Fimo Infosolutions had prior business relationships and inter-se shareholdings in each other. The investigation revealed that these three entities had no prior experience of soil testing before they submitted bids for the Jhansi and Meerut divisions for the year 20I7. As per the DG, these entities did not even fulfil the terms and conditions of the said tender.
(vi) The investigation revealed that Fimo Infosolutions and M/s Toyfort never purchased any soil testing machine or established any soil testing lab or any other infrastructure required for soil testing. The investigation also showed that the proprietor of M/s Toyfort had Competition Appeal (AT) Nos. 36,48,40 of 2022 -8- submitted bids on behalf of Austere Systems in the Jhansi tender of 2017. Further, the EMD for both Austere Systems and Toyfort was deposited by a Director of rival bidder Fimo Infosolutions from her husband's bank accounts. None of the concerned Directors/Proprietors could provide any explanation for such conduct. These circumstances clearly established that, through collusion and concerted action, the parties created a façade of competition and rigged bids in the 2017 soil testing tenders of Meerut and Jhansi, with the common objective of ensuring the award of contracts in favour of Austere Systems.
(vii) The investigation further revealed that Delicacy Continental, a company primarily engaged in rice exports, was engaged as a sub-
contractor by Austere Systems in soil testing work in 2017. It was established that, in collusion with Austere Systems, Delicacy Continental submitted cover bids in the 2018 tenders for Meerut and Saharanpur.
(viii) The investigation further revealed that Yash Solutions and Austere Systems, through a prior understanding/arrangement, had geographically allocated divisions for soil testing tenders. Pursuant to this arrangement, they either deliberately avoided bidding or submitted supporting/cover bids in each other's regions.
(ix) The investigation found M/s Yash Solutions, M/s Satish Kumar, M/s Siddhi Vinayak, M/s Saraswati Sales, Austere Systems, Delicacy Continental, Fimo Infosolutions, M/s Toyfort and Competition Appeal (AT) Nos. 36,48,40 of 2022 -9- Chaitanya Business Outsourcing to be in contravention of provisions of Section 3 (3) (c) and 3 (3) (d) r/w Section 3 (1) of the Act.
(x) The investigation also identified following individual official/ officers of the Appellants who were found to be responsible under Section 48 of the Act:
(a) Mr. Rahul Gajanan Teni, Director, Austere Systems,
(b) Mr. Jai Kumar Gupta, Director, Fimo Infosolutions.
8. The commission considered the investigation report of the DG in its meeting on 08.06.2021 and noted the findings that Yash Solutions, M/s Satish Kumar, M/s Siddhi Vinayak, M/s Saraswati Sales and Austere System along with other entities namely, M/s Delicacy Continental, Fimo Infosolutions, M/s Toyfort and M/s Chaitanya Business Outsourcing indulge in cartelisation and bid rigging in the soil testing tenders floated by Government of U.P.
9. Thereafter, commission decided to add M/s Delicacy Continental, Fimo Infosolutions, M/s Toyfort and M/s Chaitanya Business Outsourcing as parties to the proceedings and they were arrayed as Opposite Party (OP) Nos. 6, 7, 8 & 9 respectively. The commission, thereafter forwarded a copy of investigation report in electronic form to all the 9 OPs mentioned above and the persons/ individuals of the opposite parties identified by the DG as being responsible under Section 48 of the Act for filing their respective objections/ suggestions thereto latest by 16.07.2021. The Commission Competition Appeal (AT) Nos. 36,48,40 of 2022 -10- also directed the Opposite Parties to furnish copies of their audited balance sheets and profit & loss accounts/turnover for the last three financial years, i.e., 2018-19, 2019-20 and 2020-21 latest by 16.07.2021. The persons/individuals named above were also directed to file their income details including copies of the income tax returns for the last 3 financial years, i.e., 2018-19, 2019-20 and 2020-21. The Commission further decided to hear the parties on the Investigation Report on 05.08.2021. In view of submission of parties seeking further time, the Commission finally heard the parties and their individuals at length on 16.12.2021. The Appellants further submitted their written submissions to the Commission.
10. In their objection, Austere Systems stated that it cannot be said to be a member of any cartel, as the DG failed to establish price fixing, output control, or joint market allocation. The company maintained that the essential ingredients of cartelization under the Act were absent and the investigation overlooked this fundamental aspect.
11. The Austere Systems averred that the DG's findings were flawed in holding that it colluded with Yash Solutions, Delicacy Continental, M/s Toyfort and Fimo Infosolutions. The mere fact that Austere Systems, Toyfort and Fimo Infosolutions had no prior experience in soil testing work cannot, in itself, be the basis to allege bid rigging. Austere contended that if it did not qualify for the tenders, the DG ought to have confronted it with the officials of the Department of Agriculture, Government of Uttar Competition Appeal (AT) Nos. 36,48,40 of 2022 -11- Pradesh and permitted cross-examination to clarify how the tenders were awarded.
12. Austere further submitted that the DG failed to demonstrate any meeting of minds amongst the alleged entities and instead relied merely on family connections and inter-relationships between them to infer collusion. It was asserted that such reliance, without concrete evidence of concerted action, cannot establish the existence of a cartel. Fimo Infosolutions also made the same submission to the Commission.
13. Fimo Infosolutions further submitted that it participated in the tender of 2017 for Meerut and Jhansi regions and remained unsuccessful. It did not participate in other tenders which means there was no coordination between Fimo Infosolutions and other bidders. It further submitted that there is no cogent evidence to indicate any coordination between Fimo Infosolutions and other bidders. The Company further submitted that Ms. Esha Gupta was never a Director of Fimo Infosolutions, she merely acted as authorised signatory and was not a part of decision-making process.
14. The commission after careful perusal of the investigation report, the objections/suggestions thereto received from OPs and the submissions made by the OPs during the hearing on 16.12.2021 framed two issues, these are as follows:
"Issue 1: Whether the Opposite Parties have directly or indirectly rigged/ manipulated the tenders of soil testing issued by the Department of Agriculture, Government of Uttar Pradesh, in various regions for the year 2017 and 2018, by indulging in bid Competition Appeal (AT) Nos. 36,48,40 of 2022 -12- rigging, collusive bidding and sharing of market, resulting in contravention of provisions of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act.
Issue 2: If the Opposite Parties are found to have contravened the provisions of Sections 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act."
15. For the analysis of the first issue the commission grouped the opposite parties in 3 sets are as under:
"For the sake of brevity, the analysis of the first issue in the present case is being carried out by grouping the Opposite Parties in sets, as under:
a) Set 1: Yash Solutions, M/s Saraswati Sales, M/s Satish Kumar, M/s Siddhi Vinayak and Chaitanya Business Outsourcing,
b) Set 2: Austere Systems, M/s Toyfort, Fimo Info Solutions and Delicacy Continental, and
c) Set 3: Austere Systems and Yash Solutions."
16. Commission analysed and gave its findings regarding the Set-II and Set-III in the following manner:
Set 2: Austere Systems, M/s Toyfort, Fimo Infosolutions and Delicacy Continental In order to analyse the allegations of bid rigging and collusion against the parties the commission first discussed the activities of the said party as well as their key personnels. The relevant Competition Appeal (AT) Nos. 36,48,40 of 2022 -13- discussion of the Commission is summed up in subsequent paragraphs:
i) Austere System - The commission noted that as per the statement of Mr. Rahul Teni, Director of Austere Systems, Austere Systems is engaged in software development, onshore development, staffing, augmentation, technology consulting, business consulting, data entry, soil analysis and automation. The shareholding pattern of Austere System is as under:
S. No. Name % Shareholding 1. Mr. Rahul Gajanan Teni 40 2. Mr. Shikhir Gupta 30 3. Mr. Piyush Gupta 10 4. Mr. Suresh Kumar Gupta 20 Total 100
ii) Apart from Mr. Rahul Teni, who manages the business as well as the technological aspect of the company, Mr. Piyush Gupta is the other Director who looks after the financial matters of the company.
Mr. Piyush Gupta is the son of Mr. Suresh Gupta (sole proprietor of M/s Toyfort) who holds 20 percent shareholding in the company and is also stated to be a strategic investor and had purchased a second- hand soil testing machine in 2017. Mr. Shikhir Gupta, another Director looks after the business development of the company. Mr. Teni stated that his company did not have any prior experience in soil testing before participating in the tenders relating to the same.
iii) M/s Fimo Infosolutions -The company is engaged in the business of provision of support services, management consultancy etc. Competition Appeal (AT) Nos. 36,48,40 of 2022 -14- Mr. Jai Kumar Gupta is a Director of the said company and looks after the entire business operations of the company. Ms. Esha Gupta wife of Mr. Shikhir Gupta is also a Director in Fimo. Mr. Shikhir Gupta is a son of Mr. Jai Kumar Gupta and is a part owner (30% shareholding) and Director of Austere Systems. Fimo had no experience of soil testing work.
iv) M/s Toyfort - It is a proprietorship concern and engaged in business of sales of toys, stationery items etc. Mr. Suresh Kumar Gupta is the proprietor of M/s Toyfort and is responsible for all the decisions of the said concerns. This firm also had no experience of soil testing work when they submitted their bids for soil testing tenders of Meerut and Jhansi Divisions in 2017.
v) Delicacy Continental - It is engaged in the production and sale of rice. It has three Directors namely, Mr. Ankur Kumar, Ms. Rajesh Rani and Mr. Abhijeet Singh. The company was not engaged in soil testing work at any prior point in time.
17. The commission thereafter analysed the participation of the said parties in soil testing tenders and allegations of bid rigging and cartelisation:
i) The Commission noted that Austere Systems bid for 2017 soil testing tenders for the Meerut and Jhansi divisions and in the 2018 soil testing tenders for Meerut, Saharanpur and Bareilly divisions. As per the evidence available on record, Austere Systems did not have any Competition Appeal (AT) Nos. 36,48,40 of 2022 -15- experience in soil testing work at the time of the submission of bids for the said tenders. Mr. Rahul Teni, Director of Austere Systems submitted that the company participated in the tender as there were very few players in the soil testing business.
ii) The Commission noted that Fimo Infosolutions and M/s Toyfort had also bid in the Meerut and Jhansi tenders of 2017. As stated above, Fimo Infosolutions and M/s Toyfort had no experience in soil testing work. However, Fimo Infosolutions and M/s Toyfort could not win any of the aforesaid tenders.
iii) Delicacy Continental, despite having no experience in soil testing work, had participated in the 2018 soil testing tenders for Meerut and Saharanpur divisions. However, it also could not win in any of those tenders.
iv) The Commission noted that the investigation also found that the demand draft submitted on behalf of Austere Systems in the Meerut tender of 2017 was made by Ms. Esha Gupta, Director of Fimo Infosolutions, from her own account, with a bank having its branch at Gurugram, Haryana.
v) The Commission also noted that Mr. Rahul Teni, Director of Austere Systems, on being questioned by the DG about why the demand draft was prepared by the rival bidder, stated that he had no information as to how the demand draft submitted by his concern was prepared by Ms. Esha Gupta and had no justification for the Competition Appeal (AT) Nos. 36,48,40 of 2022 -16- same. The relevant extracts from the statement of Mr. Rahul Teni recorded before the DG are as under:
"Q.16. As per reply of ICICI Bank (Exhibit-7), the Demand Draft Bearing No. 505282 in respect of your company M/s Austere Systems, which was submitted in the Meerut tenders of 2017 (Exhibit 8), was made by Ms. Esha Gupta, a Director, M/s FIMO INFO Solutions Pvt. Ltd, from her own account. How and why did the Director of another Firm got prepared a Demand Draft for your company from her own account despite the fact that both were rival bidders in the said tenders?
A.16. I do not know. I knew Mrs. Esha Gupta who is w/o Shri Shikhir Gupta a Director in my company and she is my Professional friend and also a Director of Mis Fimo Info. I have no information how the demand draft submitted by my firm was got prepared by Mrs. Esha Gupta from her own bank account and I do not have any justification for the same."
vi) Mr. Jai Kumar Gupta, Director of Fimo Infosolutions was also questioned by the DG as to why the demand draft was submitted by Ms. Esha Gupta. In response, Mr. Jai Kumar Gupta stated that, "Mrs. Esha Gupta is wife of Shri Shikhar Gupta, who is my son and shareholder of M/s Austere, hence the DD was made by her from her own bank account".
vii) Mr. Rahul Teni admitted that Mr. Shikhir Gupta is one of the Directors of the Austere Systems and is the husband of Ms. Esha Gupta, Director of Fimo Infosolutions. The Commission noted that Competition Appeal (AT) Nos. 36,48,40 of 2022 -17- Mr. Rahul Teni, in his statement before the DG admitted that his company Austere was registered at the address of the rival bidder, Fimo Infosolutions, as they had prior business relations. The relevant extracts from the statement of Mr. Rahul Teni are as under:
"Q.17. I am showing you a copy of Experience Certificate issued to your company M/s Austere System Private Limited, by the Agriculture Department Haryana (Exhibit-9) in which the address of your company is the same as that of your rival bidder firm M/s FIMO Info solution Pvt Ltd in, as per it's GST registration details (Exhibit 10) Le C-58, Suncity, Sector 54, Gurgaon. Please explain how your company has been registered at the address of your rival bidder firm.
A.17. Because, I had business relationship with M/s Fimo Info. I registered their address for my company also Q. 20. Who is Shikhar Gupta?
A. 20. Shri Shikhir Gupta who is one of the directors of my company is also husband of Mrs. Esha Gupta who is director of M/s Fimo Info. I knew Shri Shikhar Gupta when I was working with Cognizant technologies as he was also working in the same company.
Q.24. Why your company M/s Austere transferred such amounts at different intervals to M/s FIMO's bank account? A. 24. Both the companies had business relationship, as both were doing data entry work for each other and the said payment was made by M/s Austere to M/s Fimo Info. However, I do not remember exactly for which data entry work the above said payment were made to M/s Fimo Info."
viii) Based on the above facts and statements, the Commission noted that Austere Systems and Fimo Infosolutions are related entities Competition Appeal (AT) Nos. 36,48,40 of 2022 -18- and, in respect of the aforementioned tenders, were not acting independently but in association with each other in furtherance of their common object.
ix) With respect to the relationship between Austere Systems and Fimo Infosolutions, the Commission noted that Mr. Jai Kumar Gupta initially feigned ignorance with respect to the relationship with his son, Mr. Shikhir Gupta. On being confronted with evidence, he admitted that his son had a shareholding of 30% in Austere Systems. Mr. Jai Kumar Gupta, Director of Fimo Infosolutions, in his statement before the DG, also submitted that he looks after the entire affairs of the company, had no experience of soil testing work, did not fulfil the terms and conditions for eligibility in the said tenders and had submitted tenders with the hope of receiving the tender in his favour. Further, Mr. Jai Kumar Gupta submitted evasive replies such as "I do not know" as to why separate bids were submitted by the three closely related entities.
x) The Commission further noted that Mr. Suresh Kumar Gupta, proprietor of M/s Toyfort, admitted in his statement before the DG that he had submitted bids in the 2017 soil testing tenders for Meerut and Jhansi divisions on the suggestion of his employees. The Commission also notes that Mr. Piyush Gupta, son of Mr. Suresh Kumar Gupta and Director of Austere Systems, had submitted the bids for M/s Toyfort. Mr. Suresh Kumar Gupta, on being questioned by the DG as to why Mr. Piyush Gupta submitted bids for M/s Competition Appeal (AT) Nos. 36,48,40 of 2022 -19- Toyfort when Mr. Suresh Kumar Gupta was the proprietor, he replied "I do not know". Further, Mr. Rahul Teni, on being questioned about the same, had no explanation in this regard. The Commission also takes cognizance of the finding of the investigation that the bid documents of Austere Systems in the soil testing tenders of 2017 for the Jhansi division were signed and submitted by Mr. Suresh Kumar Gupta. In his statement recorded before the DG. Mr. Suresh Kumar Gupta feigned ignorance as to how he submitted the bids of his rival bidder. In his statement, he stated that he had no relationship with Austere Systems. However, he accepted that he and his son, Mr. Piyush Gupta were shareholders in Austere Systems and had a combined shareholding of 30 percent in Austere Systems. Further, on being asked why and how the sole proprietor of M/s Toyfort submitted a bid on behalf of Austere Systems for the said soil testing tender, Mr. Rahul Teni did not have any answer.
xi) The Commission noted that DG investigation also revealed that Austere Systems had formed a consortium with M's Toyfort in which M/s Toyfort had undertaken printing of soil health cards for Austere Systems in 2018. For the said purpose, an MOU between them was also entered into. The said MOU mentioned that M/s Toyfort and Austere Systems were sister concerns. Further, Mr. Rahul Teni as well as Mr. Suresh Kumar Gupta could not provide any justification as to why bids were submitted by related/ sister concerns which had no experience of soil testing work and did not even qualify the terms Competition Appeal (AT) Nos. 36,48,40 of 2022 -20- and conditions of the 2017 Meerut and Jhansi tenders. The relevant extracts from the statements of Mr. Suresh Kumar Gupta and Mr. Rahul Teni in this regard are as under:
"Extracts from statement of Mr. Suresh Kumar Gupta, Director, M/s Toyfort "Q. 28. I am showing you the copy of an MoU (Exhibit 15) between M/s Toy Fort & M/s Austere System Private Limited dated 19.02.2018 for sharing of soil testing work. It is mentioned therein that Toy Fort & Austere System Private Limited are sister concerns and share common director Sh. Suresh Kumar Gupta.
A. 28. Yes, seen.
Q. 29. If both M/s Toy Fort and M/s Austere System Pvt. Ltd. were sister concerns, having common directors, why your firm submitted a separate bid in the soil testing tenders of Jhansi & Meerut divisions in 2017?
A. 29. I do not know."
Extracts from the statement of Mr. Rahul Teni, Director, Austere Systems "Q 25: I am showing you the schedule forming part of the balance sheet of M/s Toyfor: (Exhibit 14). There is a transaction mentioned as "Advanced Paid to Suppliers"
between your company and M/s Toyfort, which shows both the firms were well known to each other and had business relationship A.25. As explained earlier my company formed a consortium M/s Toyfort in which Toyfort has to do printing of soil health cards for my company and the above said payment was made for the card printing work Further, my company prepared domain name and website hosting for. Competition Appeal (AT) Nos. 36,48,40 of 2022 -21- M/s Toyfort for which our company received a payment of Rs. 3500 from M/s Toyfort."
xii) The Commission also noted that Mr. Suresh Kumar Gupta as well as Mr. Jai Kumar Gupta could not submit any explanation regarding the submission of EMD on behalf of their entities from the bank account of Mr. Shikhir Gupta, son of Mr. Jai Kumar Gupta, Director of Fimo Infosolutions. Further, neither persons could justify how Fimo Infosolutions was registered at M/s Toyfort's address. The relevant extracts of the respective statements of Mr. Suresh Kumar Gupta and Mr. Jai Kuma Gupta in this regard are as under:
"Extracts from statement of Mr. Suresh Kumar Gupta, Director, M/s Toyfort "Q. 25. I am showing you a copy of the Demand Draft Nos 505279 (Exhibit-12) issued by ICICI Bank Gurgaon Suncity Branch Gurgaon, to Mis Toyfort, which was submitted in the soil testing tenders of 2017 in Meerut Division A. 25.Yes, seen.
Q. 26.As per reply of ICICI Bank (Exhibit-13) the Demand Draft in respect of M/s Toyjort was made by Sh Shikhir Gupta, from his own account. Why was a Demand Draft for submission in a Government soil testing tender by Toyfort was got prepared by Shikhir Gupta who is associated with another firm Mis FIMO Infosolutions which was also your rival bidder in the Jhansi & Meerut tender, from his own Lank account, although you were the sole Proprietor of M/s Toyfort?' A. 26.I do not know.
Ω. 27. I am showing you a copy of the registration of FIMO Info solutions Pvt Lid with the Ministry of Corporate Affairs Competition Appeal (AT) Nos. 36,48,40 of 2022 -22- (Exhibit 14). As per the said data the Registered address of the said firm is the same as of your firm M/s Toyfort. Please explain how common address for both the firms?
27. I do not know."
Extracts from statement of Mr. Jai Kumar Gupta, Director, Fimo Info Solutions Q. 29. As per reply of ICICI Bank (Exhibit- 13) the Demand Draft Bearing No 505279 in respect of Mis Toyfort were made by Sh Shikhir Gupta, from his own account. Why was a Demand Draft for submission in a Government soil testing tender by Toyfort was got prepared by Shikhir Gupta from his own account although M/s Toyfort's Proprietor was Sh. Suresh Kumar Gupta?
A. 29.1 cannot comment on this question.
Q 30.1 am showing you a copy of the registration of your firm with the Ministry of Corporate Affairs (Exhibit -14). As per the said data the Registered address of your firm is E- 09 Kamala Nagar New Delhi, which is also the address of another bidder in the said tenders namely M/s Toyfort as per its GST Registration (Exhibit -15). Please explain how two rival firms in a Government tender firms have common address.
A. 30. Yes, because M/s Toyfort had space available with them, hence, we took the space for registration of our company Q 31. What was the purpose for submitting three different bids by related firms in the aforesaid tenders?
A. 31.1 do not know"
xiii) In view of the foregoing, the Commission took the view that three bidders, namely, Austere Systems, M/s Toyfort and Fimo Infosolutions, which were related concerns through family as well as Competition Appeal (AT) Nos. 36,48,40 of 2022 -23- business relationships, made concerted efforts and rigged the bids in 2017 soil testing tenders for Meerut and Jhansi divisions with a common objective to ensure that Austere Systems wins those tenders. The Commission agreed with the DG's finding that bids submitted by M/s Toyfort and Fimo Infosolutions were not submitted with the intention to compete and win but to create a façade of competition.
18. Set 3: Austere Systems and Yash Solutions
(i) The Commission noted that Austere Systems had submitted bids in 2018 Bareilly tenders, which was technically rejected due to various reasons, namely, non-submission of three years balance sheet, non-submission of last three years returns, non-availability of ICP machine, etc.
(ii) On being questioned whether the grounds for rejection of 2018 Bareilly tender were appropriate, Mr. Rahul Teni, of Austere Systems, in his statement before the DG submitted that it could have been a mistake and that he was not keen for the tender of 2018 for the Bareilly division although he gave no reasons for the same. The Commission also notes that Mr. Rahul Teni could not give any explanation for not submitting the bids in the Aligarh and Moradabad tenders of 2018, although his company had submitted bids in Meerut and Saharanpur tenders.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -24-
(iii)The Commission notes that Mr. Rahul Teni submitted evasive replies with regard to the reason for not submitting the bids in the 2017 soil testing tenders for the Moradabad division although it had already won a contract for soil testing for Meerut division. In şimilar fashion, Mr. Praveen Kumar Agarwal, MD, Yash Solutions, in his statement submitted that his entity submitted high price bids in 2018 Meerut and Saharanpur tenders, as he was not interested in winning those tenders.
(iv) In their objections to the Investigation Report, Austere Systems stated that the DG has not been able to demonstrate with any cogent evidence, either directly or indirectly which could even remotely suggest that there was any geographic allocation between Austere Systems and Yash Solutions and that either of them deliberately avoided submitting bids in each other's areas. Unless such collusion is established, such erroneous and legally impermissible conclusions would be regarded as pure conjecture and surmise. In this regard, Yash Solutions submitted that it had submitted high price bids in the Saharanpur and Meerut 2018 tenders due to the issue of greater distance and poor connectivity from the head office of Bareilly. Further, the number of samples to be tested in Meerut and Saharanpur were very large, which would have increased the total cost.
(v) The Commission noted that the statement by Mr. Praveen Kumar Agarwal of Yash Solutions is self-contradictory. In the first place, Competition Appeal (AT) Nos. 36,48,40 of 2022 -25- Mr. Praveen Kumar Agarwal accepted that he had no interest in getting the soil testing tenders of 2018 for Meerut and Saharanpur divisions. At the same time, he could not explain why his company, Yash Solutions, submitted high price bids in those tenders. In this regard, the Commission found no merit in the arguments advanced by the said Opposite Party, and is in agreement with the DG that there could be no explanation for the submission of high price bids by Yash Solutions, except that they were cover bids made in support of bid of Austere Systems in the said divisions and to enable Austere Systems to bag the tenders.
(vi) The Commission observed that only three bidders, namely, Austere Systems, Yash Solutions and Delicacy Continental, had submitted bids in the 2018 Meerut and Saharanpur tenders. From the above, the Commission inferred that there was an arrangement/ agreement between the said three entities to manipulate the process of bidding in the soil testing tenders of 2018.
(vii) The Commission agreed with the findings of the DG that Austere Systems, under an arrangement/ understanding with rival company Yash Solutions, had geographically allocated the soil testing tenders issued by the Department of Agriculture, Government of Uttar Pradesh, in 2017 and 2018 by not bidding in each other's allocated regions and by submitting supporting bids in favour of each other.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -26- Issue 2: If the Opposite Parties are found to have contravened the provisions of Sections 3(3) (c) and 3(3)(d) read with Section 3(1) of the Act, who are the persons in charge thereof and responsible for the conduct of business of the respective enterprises under Section 48 of the Act?
19. The Commission noted that Mr. Rahul Teni, Director, Austere Systems, is responsible for managing the business of the said company. Rahul Teni had admitted that Mr. Suresh Kumar Gupta, Proprietor of M/s Toyfort, a rival bidder in the Meerut and Jhansi tender of 2017, was a "Strategic Investor" in Austere Systems, and had invested funds for procuring a soil testing machine before the 2017 tenders were issued. Mr. Rahul Teni could not submit any explanation when questioned as to how the bids of his company, Austere Systems in the Jhansi division tenders of 2017, were signed and submitted by the Proprietor of a rival bidder M/s Toyfort, who had also attended the meeting of the Tender Committee on behalf of Austere Systems.
20. Further, Mr. Rahul Teni admitted that Mr. Shikhir Gupta, one of the Directors of his company, is husband of Mrs. Esha Gupta Director of Fimo Infosolutions, a rival bidder in the Jhansi & Meerut tenders of 2017. Mr. Rahul Teni had no explanation as to how the EMD of Rs. 1 lakh in respect of his firm in the Meerut tenders of 2017 could be submitted by a Director of a rival bidder, Fimo Infosolutions. Mr. Rahul Teni submitted that there was no justification for the submission of bid documents and EMD by Competition Appeal (AT) Nos. 36,48,40 of 2022 -27- competitors on behalf of rival bidders. He also could not submit any justification for the submission of separate bids by three related concerns/sister concerns in the Jhansi and Meerut tenders of 2017.
21. Mr. Rahul Teni stated that Austere Systems had sub-contracted the work to Delicacy Continental, as the entire work was being executed under Austere System's supervision, and Delicacy Continental was a partner for namesake. Mr. Rahul Teni had also issued experience certificates to Delicacy Continental on behalf of Austere Systems, to enable the former to act as a cover bidder for Austere Systems.
22. The Commission noted that Mr. Rahul Teni submitted evasive replies with regard to the reasons for not submitting a bid in the Moradabad Division soil testing tender in 2017, although it had already won a contract for soil testing for the Meerut division. Mr. Rahul Teni submitted that Austere Systems was not keen to bid for the 2018 Bareilly division tender although he gave no reasons for the same. Further, Mr. Rahul Teni could not provide any explanation for not submitting bids in the Aligarh and Moradabad tenders of 2018, although his company had submitted bids in the Meerut and Saharanpur tenders, which were floated after the tendering process of Aligarh and Moradabad was completed. Accordingly, the Commission concluded that Austere Systems, in collusion with Yash Solutions, had reached an understanding to geographically divide the soil testing tenders issued by the State of Uttar Pradesh during 2017 and 2018 Competition Appeal (AT) Nos. 36,48,40 of 2022 -28- between them. Mr. Rahul Teni played an active role in the anti-competitive conduct unearthed by the DG in relation to Austere Systems. He has not been able to refute the findings against him and is, as such, liable under Section 48 of the Act.
23. The Commission noted that Mr. Jai Kumar Gupta looked after the entire business operations of Fimo Infosolutions. Further, Mr. Jai Kumar Gupta could not submit any explanation for the submission of bids by his concern in the 2017 soil testing tenders of Meerut and Jhansi divisions, although his company had no experience of soil testing and did not even fulfil the terms and conditions for eligibility in the said tenders. Further, his company was registered at the address of M/s Toyfort. The Commission also noted that his concern had prior business relationship with rival bidder Austere Systems, and that a demand draft towards the EMD for the 2017 Meerut Division tender for Austere Systems was prepared by Ms. Esha Gupta, Director of his company, from her own bank account.
24. The Commission further noted that Mr. Jai Kumar Gupta could not submit any explanation for the submission of demand draft for M/s Toyfort, a rival bidder, by his son Mr. Shikhir Gupta, from his own bank account. Further, he could not explain why three different bids were submitted by related firms in the said tenders. All these evidences show the active participation of Mr. Jai Kumar Gupta and his knowledge in Competition Appeal (AT) Nos. 36,48,40 of 2022 -29- relation to the anti-competitive conduct, and he is thus held liable under Section 48 of the Act.
25. The Commission noted that aforementioned individuals have not been able to rebut or deny before the Commission the respective roles played by them in cartelization, for which the DG has gathered cogent and clinching evidences, which are primarily based on their active conduct in perpetuating the anti-competitive conduct with a view to manipulate and vitiate the tender process as discussed in the foregoing paragraphs. None of these individuals have been able to credibly refute the evidence against them unearthed by the investigation nor have they been able to explain their conduct. From the statements of the individuals, it can be discerned that they have chosen to be evasive in submitting before the investigation. Mere perfunctory justifications have been proffered to escape their liability. Neither the Opposite Parties nor their individuals have been able to rebut the presumption that stares them in their faces, and the Commission was convinced that the Opposite Parties acted in a concerted manner to rig the tenders, which is in violation of Section 3(1) read with Sections 3(3)(c) and 3(3)(d) of the Act. Therefore, the Commission found the identified individuals of the Opposite Parties liable in terms of the provisions of Section 48(1) and 48(2) of the Act.
26. The Commission noted that cartelisation, including bid rigging, is a pernicious form of anti-competitive conduct under the provisions of Section Competition Appeal (AT) Nos. 36,48,40 of 2022 -30- 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 found 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.
27. In view of these findings, the Commission held that M/s Austere System Pvt. Ltd. and M/s Fimo Infosolutions Private Limited to have contravened the provisions of Section 3(1) of the Act read with Section 3(3)(c) and 3(3)(d) thereof, as detailed in the order.
28. Further, the Commission, in terms of Section 27 (a) of the Act, directed the Opposite Parties and their respective proprietors and directors who have been held liable in terms of the provisions of Section 48 of the Act to cease and desist from indulging in practices which have been found in the present order to be in contravention of the provisions of Section 3(3)(c) and 3(3)(d) read with Section 3(1) of the Act, as detailed earlier.
29. The Commission found the present case fit for imposition of penalty, under the provisions contained in Section 27(b) of the Act. Under the Competition Appeal (AT) Nos. 36,48,40 of 2022 -31- aforesaid section 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.
30. The commission 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 the same must be determined after having due regard to the mitigating and aggravating circumstances of the case.
31. On the issue of penalty, most of the Opposite Parties in their objections to the Investigation Report and subsequent submissions to Commission had averred, referring the decision of the Hon'ble Apex Court in the case of "Excel Crop Care Limited vs. Competition Commission of India and others" [(2017) 8 SCC 47]", that the turnover to be calculated under Section 27 of the Act has to be the relevant turnover, which relates to the product in question, in respect whereof, the provisions of the Act are found to be contravened. The Opposite Parties had further averred that, as that they could not derive any income from the soil testing tenders for never being involved in the business of soil testing, zero penalty would naturally arise out of nil income and nil turnover. Some of the Opposite Competition Appeal (AT) Nos. 36,48,40 of 2022 -32- Parties had prayed for mitigation of penalty on the grounds of being Micro Small and Medium Enterprises (MSME).
32. 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 found no merit in the said submission and stated that no narrow interpretation of the relevant turnover can be taken as suggested. The Commission, in this regard, reiterated its decision dated 03.02.2022 in Suo Motu Case No. 2 of 2020 (In Re: Alleged anticompetitive 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 is held or otherwise declared that relevant turnover should he limited to the turnover earned from the specific customer or tender. Such a plea would fratrate the underlying policy objective of deterring the cartelists besides providing them a fertile ground for regulatory arbitrage. For example, if owing to the understanding between the bidders. If some or few bidders have refrained from participating in the particular tender under investigation, the turnover of the said parties from the said tender would obviously be mil, resulting in nil penalty. To allow such parties to walk free without incoring any monetary penalty for their anti-competitive conduct simply because they did not have any turnover from the concerned tender, would not only smultify the Parliamentary intent in providing deterrence through penalties against such behaviour hut 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 Competition Appeal (AT) Nos. 36,48,40 of 2022 -33- 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."
33. The Commission noted 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 observed that the findings of the DG clearly indicate the active role played by each of the Opposite Parties in rigging the tenders. The Commission accordingly imposed the penalty upon the Opposite Parties @ 5 percent of the average of their turnover for the three financial years, i.e, 2017-20.
34. Keeping in view the facts, clinching evidence, own admissions along with circumstantial evidence, the Commission vide the Impugned Order imposed a penalty of 5% on their average turnover for FY 2017-18 to 2019- 20 on the appellants found liable under Section 48 of the Act, which are given in the table below:
S. Name of the party Amount of penalty
No. (in Rs.)
1. Austere Systems Pvt. Ltd. 44,25,569/-
2. Fimo Infosolutions Pvt. Ltd. 36,442/-
3. Rahul Gajanan Teni (Director 44,712/-
Austere Systems)
4. Mr. Jai Kumar Gupta (Director 21,447/-
Fimo Infosolutions Pvt. Ltd.)
Competition Appeal (AT) Nos. 36,48,40 of 2022
-34-
Submissions of the Appellants
Austere Systems
35. The appellant in Competition Appeal No. 36 of 2022- Austere Systems has challenged the impugned judgment dated 04.04.2022 passed by the Respondent whereby it has held the Appellant guilty of contravening the provisions of Section 3(3)(c) and Section 3(3) (d) read with Section 3(1) of the Act and imposed a total penalty of Rs. 44,25,569/- (Rupees Forty-Four Lacs Twenty-Five Thousand Five Hundred and Sixty- Nine Only) i.e. five percent of the total average turnover of the Appellant company.
36. The Respondent has held the Appellant to be in collusion with three parties namely M/s Toyfort, M/s Fimo Infosolutions, M/s Delicacy Continental and M/s Yash Solutions.
37. The Appellant assails the findings of the Respondent on the following grounds:
a) One crucial aspect which completely gone a miss by the Respondent is the fact that the Appellant was blacklisted by the department of Agriculture, Govt. of Uttar Pradesh which had been struck down by the Hon'ble Allahabad High Court and the ignorance of this crucial aspect seems to have prejudiced the Respondent in painting everyone black.
b) It is relevant to state here that as per its own case and admission, the Respondent has held that the Appellant was a related party to Competition Appeal (AT) Nos. 36,48,40 of 2022 -35- M/s Toyfort and M/s Fimo Infosolutions. It is stated that there can be no collusion between related firms as the related firms would have a common set of management, thereby making decisions common to all.
c) The appellant also places reliance in support of the above submission upon the case of Shri Shamsher Kataria Vs. Honda Siel Cars India Ltd. (Ref Case No. 03/2011) and Exclusive Motors Pvt.
Ltd. Vs. Automobili Lamborghini SPA(Ref Case No. 52/2012). The abovementioned cases provide those single economic entities cannot be said to be in contravention of the provisions of Section 3 of the Act.
d) The Fact that the Appellant had other shareholders that belonged to its related/family/ sister concerns has completely been ignored and overlooked by the Respondent.
e) Respondent has held that the submission of demand draft by Ms. Esha Gupta on behalf of the Appellant pointed towards an understanding between the Appellant and other bidder. The Respondent has further erroneously held that Esha Gupta was a director of Fimo Infosolutions, whereas Esha Gupta was not a director of Fimo Infosolutions and only an authorized signatory, thereby ruling out any collusion as alleged between the parties to rig the tender. The Respondent again completely ignored and overlooked the fact that Shikhir Gupta was the husband of M/s Esha Gupta and was neither shareholder nor director of Austere at Competition Appeal (AT) Nos. 36,48,40 of 2022 -36- the point in time of filing the tender by the Appellant company and only became the shareholder in February 2018 i.e. after the filing of the tender.
f) The Respondent has conveniently ignored and overlooked the tender conditions governing the district in which the Appellant had participated, would make it amply clear that there was in fact stringent tender conditions imposed by the agricultural department, which led to participation only by a few players and the same in no manner could be attributed to the Appellant as foreclosure of competition or restricting the market to itself. In fact there is no finding by the Respondent or the DG to that effect, which shows the manner in which the present proceedings have been conducted by the Respondent. It is also relevant to state here that there was no price discovery in the tenders as the prices for soil samples were fixed at Rs.150/- per sample by the department.
g) Finding of the Commission with respect to Fimo Infosolutions and Toyfort having no experience in the soil testing prior to the present tender has been erroneously and illegally without any application of mind being linked to the Appellant without any basis. The same, if a concern could have been addressed by the tender issuing authority i.e. the Department of Agriculture, State of Uttar Pradesh and not the Respondent as done in the present case. Even ignoring the error on the part of the Commission in the said finding, the Commission has completely ignored the certificate by the soil Competition Appeal (AT) Nos. 36,48,40 of 2022 -37- testing officer Gohana certifying M/s Toyfort had successfully completed the soil data entry and soil health cards which has been annexed as Annexure A-4 in the main appeal.
h) The Commission also relies upon the experience certificates issued by the Appellant to Delicacy Continental and connects the same to the fact that the Appellant had issued the same with an objective to make Delicacy eligible in the Meerut and Saharanpur tenders of 2018. The said evidence cannot be called to be conclusive in nature as the Respondent has completely ignored and overlooked the statement of the Appellant wherein, he had categorically submitted that the Appellant had sub contracted the samples of soil testing to Delicacy and hence the experience certificates were issued with respect to the same. Relevant to place reliance upon the MoU's dated 01.09.2017 and 01.10.2017 which makes it clear that the soil samples were sub-contracted to the Delicacy Continental.
i) It is important to mention here that the judgment of this Hon'ble Tribunal wherein the appeal of Delicasy Continental has been dismissed, while upholding the judgment passed by the Commission, is now pending in a Civil appeal before the Hon'ble Supreme Court of India and yet to be decided (Reference is made to Civil Appeal No. 7883/2024 titled as M/s Delicasy Continental Pvt. Ltd. Vs Competition Commission of India) Competition Appeal (AT) Nos. 36,48,40 of 2022 -38-
38. The Respondent has also held the Appellant to have a collusion/understanding with Yash Solutions on the grounds that:
No justification on the part of the Appellant for not submitting the bids in the 2017 soil tender for Moradabad division although it had won a contract for soil testing for the Meerut division and why did the Appellant got rejected in the 2018 Bareilly tender which indicated some sort of geographical allocation with Yash Solutions.
Submission of higher price bids by Yash Solutions in Saharanpur and Meerut in the 2018 tender.
39. It is the submission of the appellant that these findings are completely erroneous and without application of mind as the Commission failed to examine the fact that if the Appellant and Yash Solution indeed had an understanding, then the Appellant would have also participated in the tender process of 2017 for Moradabad division in order to submit cover bids as a part of a reciprocal understanding, which as per the Commissions own case and finding the Appellant did not participate in the said tender of 2017. The Commission also ignored the fact that the Appellant got technically rejected in the 2018 tender for Bareilly which fact also does not prove that any cover bids were given to support Yash Solutions. In fact, there is no direct evidence which points out any understanding between the parties such as exchange of emails, CDRs, common I.P. addresses or documents manufactured at each other's Competition Appeal (AT) Nos. 36,48,40 of 2022 -39- instance, clearly establishing the fact there was no evidence of any understanding between the Appellant and Yash Solutions.
40. The Commission blindly follows the statement given by the director of Yash Solutions and binds the Appellant and holds it liable which is not permissible in law.
41. The appellant states that the most crucial point which has gone amiss is that even if assumed, but not admitted, that there was an agreement between the parties, there was in fact no Appreciable adverse effect on competition within the meaning of Section 3 of the Act and none of the negative factors present under Section 19 (3) of the Act got fulfilled in the present case and hence the entire case built up against the Appellant from the DG to the Commission was flawed and suffered from grave illegalities and hence is liable to be set side.
42. The Appellant further submitted that the Commission has also erroneously overstepped the concept of relevant turnover as spelled out by the Hon'ble Supreme Court in the case of Excel Crop Care Vs. Competition Commission of India (2017) 8 SCC 47, wherein the Supreme Court had specifically held that the penalty if any shall be calculated from the relevant turnover only. It is stated that the turnover of the Appellant from its business of soil testing in the State of Uttar Pradesh only amounts to Rs. 78,99,298/- in the years 2018-19, 2019-20, and 2020-21 and has had no revenue from soil testing business in the State of U.P. in the years Competition Appeal (AT) Nos. 36,48,40 of 2022 -40- 2019-20 and 2020-21. Thus, the Commission had grossly taken the entire turnover of the Appellant in penalizing the Appellant which is completely illegal and against the settled law.
43. It is the submission of the appellant that it is a small medium company and the imposition of such a harsh penalty would turn it into a loss-making entity and the Appellant was a first-time offender.
44. In light of the above-mentioned submissions, the appellant prays that the impugned order be set aside and the penalty on the appellant be waived or reduced.
Submission of Sh. Rahul Gajanan Teni
45. The appellant in Competition Appeal (AT) No. 48 of 2022 Sh. Rahul Gajanan Teni, is the Director of M/s Austere Systems Pvt. Ltd., a company engaged in soil testing and related services, has challenged the findings of by the Competition Commission of India (CCI) alleging bid-rigging in tenders floated by the Department of Agriculture, Government of Uttar Pradesh. The company participated in specific soil testing tenders for the years 2017-2019, securing contracts for certain divisions while others were awarded to competitors like Yash Solutions. Following a general complaint, the CCI directed an investigation by its Director General (DG), who concluded that Austere Systems colluded with rival firms, including Yash Solutions and others, to rig bids by geographically dividing tenders Competition Appeal (AT) Nos. 36,48,40 of 2022 -41- and submitting supporting bids, thereby violating Sections 3(3)(c), 3(3)(d), and 3(1) of the Competition Act.
46. The Appellant strongly disputed these findings, arguing that there was no evidence of any "meeting of minds" or cartel behaviour, highlighting that prices and quantities were fixed by the government, leaving no scope for manipulation. He emphasized that familial relations with other parties do not constitute collusion, and there was no direct or indirect evidence such as call records or emails proving wrongdoing. Ld. Counsel contended that the CCI and DG misunderstood facts and applied the law incorrectly, especially in calculating penalties based on total turnover instead of relevant turnover. The Appellant sought to overturn the penalty imposed, asserting that the investigation and conclusions were flawed, unjust, and legally unsustainable.
47. The appellant contends that the Director General (DG) failed to properly apply and consider the relevant statutory provisions, especially Section 19(3) of the Competition Act, 2002, which is crucial to determine if Section 3 of the Act was contravened. The DG conducted an incomplete and biased investigation, ignoring essential facts such as the absence of defined relevant product and geographic markets, failure to examine key evidence like call records and emails, and neglecting to consult important witnesses from the Department of Agriculture, Uttar Pradesh. The appellant also points out that the DG accepted forged documents without verifying contrary affidavits and ignored the fact that the tenders involved fixed government-set prices, precluding any price rigging. Competition Appeal (AT) Nos. 36,48,40 of 2022 -42-
48. Further, the appellant highlights that the entities involved--Austere Systems, Fimo Infosolutions, and Toyfort--are closely related family concerns, constituting a single economic entity exempt from anti- competitive agreement allegations under established legal precedents. The DG ignored key facts such as lack of collusion indicators (no common IP addresses or communication), differences in tender qualification criteria, and the quashing of blacklisting orders by the Allahabad High Court. The appellant underscores that the DG erroneously assumed prior soil testing experience was mandatory, when tenders explicitly allowed participation without it, and misinterpreted financial transactions such as earnest money deposits as evidence of collusion without proper context.
49. The appellant also challenges several factual and legal findings of the DG and Commission. It is contended that Toyfort met the eligibility criteria for the Meerut tender and was wrongly disqualified without any substantiated reason. The Commission misinterpreted the MoU between Austere Systems and Toyfort - meant for printing soil health cards--as proof of collusion, when in reality it reflects legitimate business dealings. Similarly, the DG incorrectly treated related entities as rival bidders, ignoring their shared ownership and financial ties. In the case of Delicacy Continental, the appellant clarifies that this company executed legitimate MoUs with Austere Systems and had the required infrastructure, including an ICP machine, to undertake soil testing--contrary to the DG's claims.
50. The appellant further disputes allegations of collusion with Yash Solutions or involvement in cover bidding. The absence of any Competition Appeal (AT) Nos. 36,48,40 of 2022 -43- communication records or shared IP addresses between Austere and Yash undermines such conclusions. The DG and Commission also failed to account for practical factors like transport and logistical costs, which justified variations in bid prices across divisions such as Meerut and Saharanpur. Moreover, the assertion that high-price bids were intentionally submitted lacks evidence and ignores operational realities. Overall, the appellant contends that the findings of collusion and contravention are speculative, unsupported by facts, and legally untenable.
51. Regarding the penalty, the contentions of the appellant are the same as that of his company Austere Systems.
Submission of M/s Fimo Infosolutions Private Limited and Sh. Jai Kumar Gupta
52. The Appellants in Competition Appeal (AT) No. 40 of 2022 - M/s Fimo Infosolutions Pvt. Ltd. (Appellant No.1) and Sh. Jai Kumar Gupta/ Appellant No.2 and Director of Fimo Infosolutions have challenged the findings of Commission, which has concluded that Appellant No.1 has engaged in bid-rigging in connection with soil testing tenders floated by the Department of Agriculture, Government of Uttar Pradesh. The Commission has found that Appellant No.1 has colluded with entities such as Austere Systems and Toyfort, based partly on familial and business connections, and has imposed penalties under Sections 3(3)(c), 3(3)(d), and Competition Appeal (AT) Nos. 36,48,40 of 2022 -44- 3(1) of the Competition Act. A separate penalty has also been imposed on Appellant No.2 under Section 48.
53. The counsel for the Appellants submitted that the Commission's conclusions were based on associations between Fimo and other entities-- Austere Systems, Toyfort, and Delicacy Continental--grouped in "Set 2" of the case. The Appellants argue that these firms are related or family concerns, forming a single economic entity, and therefore cannot be said to have colluded under Section 3 of the Act. This principle, they assert, has been well established in Indian case law (e.g., Shamsher Kataria v. Honda Siel, Exclusive Motors v. Lamborghini) and international jurisprudence. The Appellants point out that the Commission's own findings acknowledge the relatedness of these firms but inconsistently apply this understanding to still infer collusion.
54. The Appellants further assert that there is no direct or indirect evidence of a "meeting of minds" or cartel behaviour. Crucially, prices and output in the tenders were predetermined by the Department of Agriculture, eliminating any scope for price fixing. The DG and the CCI ignored the absence of incriminating data such as call records, email exchanges, or IP address matches--factors that were present in other cases. Additionally, the submission of EMDs (Earnest Money Deposits) through family members or related parties is explained by existing financial arrangements and logistical issues, not collusion. The Appellants criticize the DG's investigation as biased, incomplete, and legally flawed, highlighting that neither the relevant product market nor geographic Competition Appeal (AT) Nos. 36,48,40 of 2022 -45- market was defined, and the statutory requirements under Section 19(3) of the Act were overlooked.
55. The Appellants also argue that they had been disqualified from several tenders due to lack of experience, contradicting the claim that they manipulated outcomes. They emphasize that participation in the tenders did not restrict market entry, as shown by bids from unrelated third parties like R.K. Enterprises. In conclusion, the Appellants maintain that the entire case against them rests on weak inferences and a misapplication of the law. The reliance on family ties alone to infer anti- competitive behavior, without concrete evidence of coordination or intent, makes the CCI's order legally unsustainable and factually erroneous.
56. The Appellants further assert that the CCI and the Director General (DG) misread or ignored critical facts, especially the nature of the relationships between the parties. It is emphasized that the entities involved--Fimo Infosolutions, Austere Systems, and Toyfort--are related parties with overlapping management and ownership, effectively functioning as a single economic entity. According to established legal precedent (including Excel Crop Care, Shamsher Kataria, Exclusive Motors), related entities cannot be accused of collusion under Section 3, and this argument was either dismissed or overlooked in the impugned order.
57. The Appellants also object to the manner in which the monetary penalty was calculated. Citing the Supreme Court's judgment in Excel Competition Appeal (AT) Nos. 36,48,40 of 2022 -46- Crop Care, they argue that the penalty should be based on relevant turnover from the specific activity (soil testing tenders), not the total turnover of the company--especially when they had no turnover from these tenders due to technical disqualification. The Commission, however, calculated the penalty based on total turnover by referencing its own case law, allegedly sidestepping the binding Supreme Court precedent, making the penalty arbitrary, excessive, and unlawful.
58. Finally, the Appellants underscore that in similar cases, such as FCI v. Shivvalik Agro and Eastern Railway v. Chandra Brothers, the Commission chose not to impose penalties on MSMEs in view of mitigating circumstances and to avoid harming competition. The decision to impose a severe penalty on Fimo Infosolutions, an MSME, stands in contrast to this trend and undermines the Act's intent to promote fair competition. They seek the impugned order to be set aside as being based on incomplete analysis, lack of evidence, and misapplication of law.
59. The Appellants challenge the penalty imposed by the Commission on multiple grounds, primarily arguing that it is arbitrary, excessive, and contrary to established legal principles. They contend that the Commission erroneously calculated the penalty based on the total turnover instead of the relevant turnover from the soil testing business, which was nil during the relevant years, thereby violating the Supreme Court's binding precedent in Excel Crop Care. The penalty fails to consider mitigating factors such as the Appellant No.1's status as a small enterprise, its lack of business in the concerned tenders, and the absence of any consumer Competition Appeal (AT) Nos. 36,48,40 of 2022 -47- harm or illegal gains. The Appellants further argue that similar MSME cases were treated with leniency, and that the penalty imposed would cause severe financial distress, risking closure and loss of livelihoods. They also assert that no quid pro quo or actual collusion has been proven, making the penalty not only unjustified but also legally unsustainable. Hence, they seek that the impugned order dated 04.04.2022 be set aside. Submission of the Respondent- Competition Commission
60. Competition Commission of India is the sole Respondent in all three appeals has made detailed submissions in all. However, since all the Appellants are from Set-2 of the impugned order, the major portions of the submission are common in all three appeals. The first submission in Austere Systems covers almost all the points related to the three appeals. In the submission qua other appellants, only the additional points of specific to them have been recorded.
Austere Systems
61. Ld. Counsel for the Respondent Commission submits that arising from the same impugned order, the following appeals have already been decided by this Hon'ble Tribunal favourably upholding the Impugned Order in relation to big-rigging and contravention of the Act:
(a) Saraswati Sales [Competition Appeal (AT) No. 31 of 2022, decided on 14.11.2022] Competition Appeal (AT) Nos. 36,48,40 of 2022 -48-
(b) Delicasy [Competition Appeal (AT) No. 32 of 2022; decided on 31.05.2024]
(c) Toyfort [Competition Appeal (AT) No. 34 of 2022; decided on 02.07.2024]
(d) Yash Solutions & Chaitanya [Competition Appeal (AT) No. 38 of 2022; decided on 22.08.2024]
62. Ld. Counsel in his opening remark stated that findings in the following matters already decided by this Appellate Tribunal for the same set as the appellants are on the following lines:
(a) In the Toyfort judgment, this Hon'ble Tribunal has noted the statements given by Mr. Suresh Kumar Gupta (Toyfort) and Mr. Rahul Teni (Director of the Appellant) and held that the statements demonstrate business and family relationship between Toyfort, Fimo and the Appellant which was the beneficiary of Meerut and Jhansi tender process. Further, there was collusion between Toyfort, the Appellant and Fimo in the 2017 tender process. It was furthermore held that cover bids were given by Toyfort in support of the Appellant so that the tender process is not cancelled due to insufficient number of participants.
(b) In the Delicacy judgment, this Hon'ble Tribunal had observed and held that due to good relationship with the Appellant, the work was sub-contracted to Delicacy and payments were made by the Appellant Competition Appeal (AT) Nos. 36,48,40 of 2022 -49- to Delicasy for conducting the soil testing work. Further, Delicacy was only a namesake partner while the actual work was managed and executed by the Appellant. Furthermore, the MoU signed between the Appellant and Delicasy were created for submission to the investigation before the CCI and that the Appellant had complete control over Delicacy. The bid prices were also decided by the employees of Delicacy in discussion with the Appellant and that there was pre-emptive action to hide facts regarding their collusive relationship and bid-rigging of tenders. It was also held that the entire work was executed under the Appellant's supervision and Delicasy was only an investor in the project, and experience certificates were issued to make Delicacy eligible in the tender process. Moreover, the Appellant had under an understanding with Yash geographically allocated the tenders and were either not bidding in each other's region or submitting supporting bids for each other.
(c) In the Yash Solutions judgment, this Hon'ble Tribunal has held that the Appellant and Yash Solutions, through an understanding/arrangement between them, had geographically allocated the soil testing tenders to either not bid against each other or submitting cover bids for each other. It has further been observed that existence of cartel can be inferred from circumstantial evidence, which is implicit in the facts of the case, and this is a clear case of anti-competitive practices.
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63. Ld. Counsel stated that the DG Report and investigation brought out the collusive and controlling nature of the Appellant and other related firms in submitting their bids. It is pertinent to mention here that none of the Directors could submit any explanation for their conduct and gave evasive replies on being questioned, which reaffirmed that through collusion and concerted action, the said entities created a façade of competition and rigged the bids in the 2017 Meerut and Jhansi and in 2018 for Saharanpur and Meerut divisions with the objective to ensure that Appellant wins the said tenders.
64. The Austere Systems, Fimo and Toyfort had prior business relationship and inter se shareholding in each other:
(a) The Appellant has 4 (four) directors namely, Rahul Ganjan Teni having 40% shareholding, Shikhar Gupta (who is son of Jai Kumar Gupta and husband of Esha Gupta who are directors in Fimo) with 30% shareholding; Suresh Kumar Gupta (sole proprietor of Toyfort) with 20% shareholding, and Piyush Gupta (son of Suresh Kumar Gupta-sole proprietor of Toyfort) with 10% shareholding.
(b) During cross examination of the Director of the Austere i.e, Mr. Rahul Teni admitted that the Appellant was registered at the same address as the rival bidder, Fimo, as they had prior business relations.
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(c) Austere and Toyfort had formed a consortium in which Toyfort had undertaken to print soil health cards for the Appellant in 2018, and for this purpose a Memorandum of Understanding dated. 19.02.2016 was entered into which reflects both entities as sister concerns.
65. Ld. Counsel stated that Austere did not have prior soil testing experience and failed to abide by the terms and conditions of the tender upon submission of bids. The Austere is a software development company providing IT services and solutions to startups and enterprises and has no prior experience of soil testing. Further, Mr. Rahul Teni, the Director of the Austere, had submitted that they had participated in the tender process as there were relatively few players in the soil testing business and had no prior soil testing experience. The Directors of the Austere and Toyfort could not provide any justification as to why bids were submitted by related/sister concerns which had no experience of soil testing work and did not even qualify the terms and conditions of the 2017 Meerut and Jhansi tenders.
66. He further stated that Mr. Ankur Kumar (Director of Delicacy) had admitted that the bids prices for the 2018 tender process for Meerut and Saharanpur were decided by his employees in discussion with the Austere.
67. The Director/Sole Proprietor of one firm being a rival bidder in the tender process submitted Demand Draft, Earnest Money Deposit ("EMD") and bids on behalf of rival bidders Competition Appeal (AT) Nos. 36,48,40 of 2022 -52-
(a) Mr. Suresh Kumar Gupta of Toyfort had submitted bids for the Austere in the 2017 tender process for Jhansi.
(b) Mr. Piyush Gupta s/o of Sh. Suresh Kumar Gupta and Director of Austere had submitted bids for Toyfort in the 2017 tender process of Jhansi and Meerut
(c) Mr. Shikhar Gupta Director of Austere Systems had submitted the demand draft for the EMD on behalf of Toyfort in the 2017 tender process for Meerut from his bank account and this was admitted by him as well.
(d) Ms. Esha Gupta (Director in Fimo) had submitted the demand draft for the EMD on behalf of the Austere from her own bank account in the 2017 tender process for Meerut and the Director of the Appellant did not have justification for the same.
(e) Mr. Piyush Gupta (son of Mr. Suresh Gupta and Director of the Austere) had submitted bids for Toyfort, to which Mr. Suresh Kumar Gupta (proprietor of Toyfort) had no answer and even Mr. Rahul Teni had no answer. Further, the bid documents submitted for the Austere were signed by Mr. Suresh Kumar Gupta for 2017 tender process for Jhansi. On being questioned, Mr. Suresh Kumar Gupta denied his relationship with the Appellant and feigned ignorance as to how he submitted the bids for a rival bidder. However, he admitted that he along with his son, Mr. Piyush Gupta were shareholders in the Appellant and held 30% of total shareholding.
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68. Austere Systems had sub-contracted soil testing work to Delicacy, who submitted cover bids for the Appellant in 2018-19 Saharanpur and Meerut tenders.
69. Ld. Counsel stated that Austere Systems had issued fake experience certificates to Delicasy which was a requirement for submitting the bids in the 2018 tender process for Saharanpur and Meerut. Delicacy is a rice exporter and had no experience of soil testing work or soil testing machines. This has been admitted by the Director of Delicacy, Mr. Ankur Kumar. He had also admitted that he was introduced to soil testing work by Mr. Rahul Teni (Director of the Austere Systems) and that Delicacy was offered sub-contract work of soil testing by the Austere Systems (which had won the tender), due to good relations with Austere Systems. Further, the Austere had also not taken permission of the Department of Agriculture, before sub-contracting the work to Delicacy.
70. Ld. Counsel submitted that Mr. Ankur Kumar Director of Delicacy had taken a contrary stand vis-à-vis Austere with respect to the MoU executed between them. Mr. Ankur Kumar submitted that he was unaware of the terms and conditions of the tenders and was also not aware as to whether any Memorandum of Understanding existed for the same. However, he had submitted two versions of the MoUs related to the sub- contract of soil testing work by the Appellant. Both copies were fabricated to prove that the parties had a contract amongst them, thereby indicating Competition Appeal (AT) Nos. 36,48,40 of 2022 -54- a prior business relationship. Moreover, one of the copies of the MOU was sent by Mr. Mandar Teni of the Appellant to Mr. Ankur Kumar just before recording of the statement of Mr. Ankur Kumar before the DG.
71. Ld. Counsel stated that on the other hand, Mr. Rahul Teni Director- Austere Systems submitted that an MoU was executed with Delicacy for undertaking the soil testing work. In response to the statement given by Mr. Ankur Kumar that there was no MoU between the Appellant and Delicacy, Mr. Teni had no comments.
72. Ld. Counsel while arguing about the penalty imposed on Austere Systems placed reliance on the decision of the Hon'ble Supreme Court in Excel Corp Limited v. Competition Commission of India and Others [(2017) 8 SCC 47] and submitted that since it derived no income from the tenders in question, therefore, the penalty has been erroneously imposed on its turnover which was not generated from the soil testing business in Uttar Pradesh. It is submitted that the CCI had rightly noted that there is no merit in this submission and no narrow interpretation of the relevant turnover can be taken, as contended by the Appellant. In support, the CCI had placed reliance on its decision dated 03.02.2020 in Suo Moto Case No. 2 of 2020. Further, CCI considered both aggravating and mitigating factors while imposing the penalty at 5% on the Appellant, whereas the penalty permissible under section 27(b) is a maximum of 10% of the turnover and further, for violations under section 3 of the Act, a penalty of up to three Competition Appeal (AT) Nos. 36,48,40 of 2022 -55- times of its profits for each year of the continuance of such agreement or ten percent whichever is higher.
73. However, if the submission of the Appellant is accepted then the relevant turnover would be zero, and this would defeat the entire purpose of the Act. It is imperative to note that violation of Section 3 of the Act is considered the most egregious violations under the Competition law regime. Further, in contrast to foreign jurisdictions where there are also criminal consequences of such violations, the penalty imposed by CCI is justified, which otherwise is permissible to be imposed up to 10%, whereas in the present case 5% of the relevant turnover has been imposed on the Appellant. In so far as reliance on the decision of the Excel Corp (supra) is concerned, it was nowhere held or otherwise declared that the relevant turnover should be limited to the turnover earned from the specified customer or tender. If such an interpretation is permitted, then it would frustrate the entire objective of the imposing penalty to deter cartelists, and this could not have been the intent of the Parliament or the Hon'ble Supreme Court. Further, in the judgment passed in Yash Solutions, given the lead role played by Yash Solutions in organising the bid-rigging, this Hon'ble Tribunal has upheld the penalty as imposed by CCI at 5% of the relevant turnover. Similarly, in the present case and as already held in the Yash Solutions judgment, the Appellant was acting as the leader of the cartel under an understanding arrangement with Yash Solutions to geographically allocate the soil testing tenders and organised the big Competition Appeal (AT) Nos. 36,48,40 of 2022 -56- rigging. Therefore, the penalty as imposed on the Appellant by CCI at 5% of the relevant turnover should be upheld as directed in Yash Solutions. Mr. Rahul Gajanan Teni
74. Ld. Counsel for Commission stated that the DG Report and investigation brought out the collusive and controlling nature of the Appellant Sh. Rahul Gajanan Teni and other related firms in submitting their bids. Pertinently, none of the directors could submit any explanation for their conduct and gave evasive replies on being questioned, which reaffirmed that through collusion and concerted action, these entities created a façade of competition and rigged the bids in the 2017 Meerut and Jhansi and in 2018 for Saharanpur and Meerut divisions with the objective to ensure that Austere wins the said tenders.
75. Ld. Counsel submitted that the Appellant Sh. Rahul Gajanan Teni is responsible for managing the affairs of Austere Systems. He has admitted that Mr. Suresh Kumar Gupta, proprietor of Toyfort, a rival bidder in 2017 Meerut and Jhansi tender, was a 'strategic investor in Austere and had invested funds for procuring a soil testing machine before the said tenders were issued. The Appellant could not submit any explanation when questioned as to how the bids of his company in the 2017 Jhansi tender, were signed and submitted by the proprietor of a rival bidder Toyfort, who had also attended the meeting of the Tender Committee on behalf of Austere.
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76. Ld. Counsel further submitted that during cross examination, by DG the Appellant admitted that Austere was registered at the same address as the rival bidder, Fimo Infosolutions, as they had prior business relations. It is evident that Austere and Fimo were not acting independently but in association with each other in furtherance of their common object.
77. The Respondent submitted that Austere did not have prior soil testing experience and failed to abide by the terms and conditions of the tender upon submission of bids. Austere is a software development company providing IT services and solutions to startups and enterprises and has no prior experience of soil testing Further, the Appellant had submitted, that Austere had participated in the tender process as there were relatively few players in the soil testing business.
78. The Respondent further submitted that Austere and Toyfort had formed a consortium, in which Toyfort had undertaken to print soil health cards for Austere in 2018, and for this purpose a Memorandum of Understanding dated 19.02.2016 was entered into which reflects both entities as sister concerns. The Appellant could not provide any justification as to why bids were submitted by related concerns, which had no experience in soil testing and did not qualify the terms and conditions of the tenders.
79. Ld. Counsel submitted that the Appellant also gave evasive replies with regard to the reasons for not submitting a bid in the Moradabad Division soil testing tender in 2017, although it had already won a contract Competition Appeal (AT) Nos. 36,48,40 of 2022 -58- for soil testing for the Meerut division. He submitted that Austere was not keen to bid for the 2018 Bareilly division tender, but did not give any reasons for the same. Further, the Appellant could not provide any explanation for not submitting bids in the Aligarh and Moradabad tenders of 2018, although his company Austere had submitted bids in the Meerut and Saharanpur tenders, which were floated after the tender process of Aligarh and Moradabad were completed. Accordingly, Austere in collusion with Yash Solutions, had reached an understanding to geographically divide the soil testing tenders during 2017 and 2018 between them. The Appellant played an active role in the anti-competitive conduct and was unable to refute the findings against him. Further, Mr. Praveen Kumar Agarwal-MD, Yash Solutions, in his statement submitted that his entity had submitted high bid prices in the 2018 Meerut and Saharanpur tenders, as he was not interested in wining those tenders.
80. Ld. Counsel highlighted the contrary stand taken by the Directors of Delicacy and Austere with respect to the MoU executed between them:
(a) Mr. Ankur Kumar on behalf of Delicacy submitted that he was unaware of the terms and conditions of the tenders and was also not aware as to whether any Memorandum of Understanding existed for the same. However, he had submitted two versions of the Mols related to the sub-contract of soil testing work by Austere. Both copies were fabricated to prove that the parties had a contract amongst them, thereby indicating a prior business relationship. Moreover, one of the copies of the MOU Competition Appeal (AT) Nos. 36,48,40 of 2022 -59- was sent by Mr. Mandar Teni of Austere to Mr. Ankur Kumar just before recording of the statement of Mr. Ankur Kumar before the DG.
(b) The Appellant stated that an MoU was executed with Delicacy for undertaking the soil testing work and in response to the statement given by Mr. Ankur Kumar that there was no MoU between Austere and Delicacy, the Appellant had no comments.
81. The Respondent submitted that the Appellant was responsible for managing the business of his company i.e., Austere. In his deposition, as also mentioned in the foregoing paragraphs, the Appellant was unable to provide justifications/ rational explanation or gave evasive replies to the questions put to him. The Appellant has also issued experience certificates to Delicasy on behalf of Austere, to enable Delicasy to act as a cover bidder for Austere and it was noted that the Appellant had played an active role in the anti-competitive conduct unearthed by the DG in relation to Austere and he was further unable to refute the findings against him. Therefore, the Appellant was held and is liable under Section 48 of the Act for contravention of Sections 3(1) read with (3)(c) and 3(3)(d) of the Act and accordingly imposed penalty at the rate of 5% of their average income for the financial years 2017-18, 2018-19 and 2019-20.
82. In the Yash Solutions judgment, based on the evidence on record, this Hon'ble Tribunal had held that its Managing Director, Mr. Praveen Kumar Agarwal, was also individually responsible for colluding and bid Competition Appeal (AT) Nos. 36,48,40 of 2022 -60- rigging the 2017 and 2018 tenders, and has further upheld the penalty as imposed by CCI at the rate of 5%. Similarly, in the present case and as already held in the Yash Solutions judgment, Austere was acting as the leader of the cartel under an understanding/arrangement with Yash Solutions to geographically allocate the soil testing tenders and organised the big rigging and the Appellant was managing the affairs of Austere and hence, guilty of bid rigging. Therefore, the penalty as imposed on the Appellant by CCI at 5% of the average income for the financial years 2017- 18, 2018-19 and 2019-20 should be upheld as directed in Yash Solutions. Submissions of CCI- Fimo Infosolutions Pvt. Ltd. and Sh. Jai Kumar Gupta
83. It is the submission of the Commission that Appellant No. 1 had no experience in soil testing and did not have technical eligibility to bid in the tender process. This would be clear from the following:
(a) Appellant No. 1 is stated to be a company engaged in the business of provision of support services, legal consultancy services, management consultancy etc. and has no experience in soil testing. Appellant No. I had never purchased any soil testing machine or established any soil testing lab or any other infrastructure required for soil testing. Despite this, it participated in the tender process.
(b) In his deposition before the DG, Appellant No. 2 had admitted that Appellant No. 1 had no experience of soil testing work and did not Competition Appeal (AT) Nos. 36,48,40 of 2022 -61- fulfil the terms and conditions for eligibility in the said tenders and the bid was submitted with hope of receiving the tender in his favour. He further gave evasive replies as to why three separate bids were given by three closely related entities i.c., Austere, Appellant No. 1 and Toyfort.
84. The Respondent further submitted that there were overlapping relations and shareholding between the Appellants and Austere:
(a) Appellant No. 1 and Austere had relations and were not acting independently, but in association with each other in furtherance of their common object. Appellant No. 2 also admitted that Mr. Shikhar Gupta, Director of Austere, was his son and Ms. Esha Gupta, Director in Appellant No. 1 was his son's wife.
(b) In his deposition, Appellant No. 2, on being questioned about the relationship between Appellant No. 1 and Austere, initially feigned ignorance about his relationship with his son, Mr. Shikhar Gupta (director of Austere). However, when he was confronted with evidence, he admitted that his son Mr. Shikhar Gupta had a shareholding of 30% in Austere.
85. The Respondent submitted that Demand draft for Austere was prepared by Ms. Esha Gupta who is a Director of Appellant No. 1. The details in this regard are as follows:
Competition Appeal (AT) Nos. 36,48,40 of 2022 -62-
(a) The demand draft submitted on behalf of Austere in the 2017 tender process for Meerut, was made by Ms. Esha Gupta, Director of Appellant No. 1, from her own account.
(b) Mr. Rahul Teni (director of Austere), on being questioned by the DG as to why the demand draft was prepared by the rival bidder, stated that he had no information on this and had no justification for the same.
(c) In his deposition, Appellant No. 2, when questioned about the demand draft being issued for a rival bidder, stated that Ms. Esha Gupta is the wife of Mr. Shikhar Gupta, who is his son and shareholder of Austere and therefore, the demand draft was made by her from her own bank account.
86. It was further stated by the Respondent that Earnest Money Deposit (EMD) on behalf of Toyfort was deposited by Mr. Shikhar Gupta (shareholder and director of Austere) and for Austere by Appellant No. 1. The details of the same are given below:
(a) In their deposition, Mr. Suresh Kumar Gupta (Proprietor of Toyfort) could not submit any explanation regarding submission of EMD on behalf of their entities from the bank account of Mr. Shikhar Gupta (Director of Austere), son of Appellant No. 2.
(b) Mr. Rahul Teni, Director of Austere, had no explanation as to how the EMD of INR 1 lakhs for Austere for the 2017 tender process for Meerut could be submitted by Ms. Esha Gupta, Director of a rival Competition Appeal (AT) Nos. 36,48,40 of 2022 -63- bidder i.e., Appellant No. 1 here. He further submitted that there was no justification for submission of bid documents and EMD by its rival bidder.
87. Appellant No. 2 in his deposition could not justify how Appellant No.1 was registered at Toyfort's address.
88. In regard to the imposition of penalty Ld. Counsel has made the following submissions:
(a) The Appellants have placed reliance on the decision of the Hon'ble Supreme Court in Excel Corp Limited v. Competition Commission of India and Others [(2017) 8 SCC 47]. On the same lines as the other appellants herein.
(b) The Counsel submitted that the Appellants are equally guilty of contravening the provisions of the Act, as they had a crucial role in executing the scheme of bid-rigging orchestrated by Austere.
Without the active role of the Appellants, Austere would not have won the tenders and been successful in the bid-rigging process. He further submitted that this Hon'ble Tribunal in the judgment passed in Toyfort has already held that the Appellants had colluded with Austere and Toyfort to rig the bids in the 2017 tender process of Meerut and Jhansi. It is further submitted that the Act itself does not provide for any distinction in the consequences based on the extent of role played in case of such serious contravention of the provisions of the Act for any reason or Competition Appeal (AT) Nos. 36,48,40 of 2022 -64- ground. Therefore, it is humbly prayed that the penalty imposed at 5% be upheld by this Hon'ble Tribunal.
(c) In so far as reliance on the decision of the Excel Corp (supra) is concerned, it was nowhere held or otherwise declared that the relevant turnover should be limited to the turnover earned from the specified customer or tender. If such an interpretation is permitted, then it would frustrate the entire objective of the imposing penalty to deter cartelists, and this could not have been the intent of the Parliament or the Hon'ble Supreme Court. Analysis and findings:
89. We have considered the evidence on record and heard the submission of Ld. counsels in detail. We need to examine the evidence of key persons in the organizations identified in Set II and Set III of the companies by the Commission to identify the relationship between these organisations. Set II included Austere Systems, M/s Toyfort, M/s Fimo Infosolutions and Delicacy Continental, and Set-III included Austere Systems and M/s Yash Solutions.
90. We have seen from the records of soil testing tenders for 2017 furnished by the Agriculture Department, UP Government for the Meerut and Jhansi divisions that M/s FIMO Infosolutions Private Limited along with M/s Austere Systems Pvt Ltd and M/s Toyfort had bid in the said tenders.
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91. The role of Mr. Rahul Gajanan Teni as Director of M/s Austere Systems is the most critical and needs to be examined in detail. The relevant extracts from the statement of Mr. Rahul Gajanan Teni, recorded on 19.02.2021 are as follows:
"Q.1. What is your role and responsibilities in your firm M/s Austere System Pvt. Ltd?
A.1. My responsibility is mainly related to managing the business as well as technology/technical part. Shri Piyush Gupta Son of Sh Suresh Kumar Gupta who was a strategic investor in our company looks after finance matter of the company Shri Shikhir Gupta, another Director looks after the business development work. Q.2. Details of the business your company M/s Austere System Pvt Ltd. is engaged in?
A.2. Software Development, Onshore development, Staffing Augmentation. technology consulting, business consulting, data entry, soil analysis and automation. My company M/s Austere is not engaged in any other business other than the above mentioned business.
Q.3 Has your company M/s Austere Systems Pvt Ltd, submitted bids in the tenders for Soil Testing floated by Govt. of UP? If yes, please provide details?
A.3. Yes, our company M/s Austere bid for Meerut and Jhansi Divisions in 2017 and in Meerut, Saharanpur and Bareilly Divisions in year 2018 tender. Shri Suresh Gupta was strategic investor in our company. In mid of 2017 my company had purchased a second Competition Appeal (AT) Nos. 36,48,40 of 2022 -66- hand soil testing machine from Mumbai based vendor in which Shri Suresh Gupta had invested majority of the capital. Q.6. Did you or your firm have any relation with any other firm or their Directors/Proprietors which had submitted bids in the 2017 & 2018 soil testing tenders of UP Government?
A.6. I was aware about M/s Fimo Info and M/s Toyfort. I had some prior business relation related to data entry work with Fimo while Toyfort was a strategic investor in our company. Q.10. Did you or your company had any experience in soil testing work when you had bid in the soil testing tenders of UP Government during 2017? If Yes give details.
A.10. No, my company was not having any soil testing work experience at the time of submitting bids for the above tenders. Q.11. The terms & Conditions of the soil testing landers issued by Meerut Division in the year 2017, Clause No 18 prescribed that the Bidder should have experience of soil testing of 12 parameters (Exhibit-3). Did your company had any experience of soil testing? A.11. No, my company did not have any soil testing experience Q12. The terms & Conditions of the soil testing tenders issued by Meerut (Clause 18) & Jhansi (Clause 14), Divisions in the year 2017 prescribed that the Bidder should have experience of working on high tech equipment namely ICP (Indictivity Cupeled Plasma Spectrometer) (Exhibit-3). Did your company had any such experience when bids were submitted in the soil testing tenders? A. 12. No, my company did not have any soil testing experience Competition Appeal (AT) Nos. 36,48,40 of 2022 -67- Q. 13. Where was the soil testing lab of your firm and what machines were available for soil testing, when bids were submitted in the soil testing tenders of Meerut division in the year 2017? A 13. Before bidding in the Meerut and Jhansi tenders in 2017, my company was had a ICP Machine which was lying idle. Q. 14. As per details of soil testing experience submitted by your firm in the Soil testing tenders of UP Government (Exhibit 4), it only had data entry experience and did not had any soil testing experience, before contract for soil testing was awarded by the Meerut and Jhansi Divisions in the year 2017. How did your company qualify and receive contract for soil testing from UP Govt. in 2017 tenders, when your company neither had any Lab nor the relevant experience of the soil testing work as required by the aforesaid conditions?
A. 14. Because, there were very few players in the soil testing business. We thought that we can apply in these tenders. As to how my company qualified only Government authorities can explain the same.
Q15. I am showing you the GST Registration receipt (Exhibit 5) generated from Maharashtra which was submitted in the Meerut tenders. As per details of GST registration of your company (Exhibit6). the Principal place of business of your company is mentioned as the office of the Assistant Director (Soil Testing/Culture), Regional Soil testing laboratory, Meerut. How and why did you register your company at the address of the Regional Soil Testing Lab Meerut to the GST Department? Competition Appeal (AT) Nos. 36,48,40 of 2022 -68- A 15 There was no permission from any authority to use the address of the Assistant Director (Soil testing) for using their address in the GST registration. However, I do not remember whether the soil testing authorities has given me any No objection certificate (NOC) for using their address in the GST registration. Q. 16. As per reply of ICICI Bank (Exhibit-7), the Demand Draft Bearing No. 505282 in respect of your company M/s Austere Systems, which was submitted in the Meerut tenders of 2017 (Exhibit 8), was made by Ms Esha Gupta, a Director, M/s FIMO INFO Solutions Pvt. Ltd, from her own account. How and why did the Director of another Firm got prepared a Demand Draft for your company from her own account despite the fact that both were rival bidders in the said tenders?
A. 16. I do not know. I knew Mrs. Esha Gupta who is wife of Shri Shikhir Gupta a Director in my company and she is my Professional friend and also a Director of M/s Fimo Info. I have no information how the demand draft submitted by my firm was got prepared by Mrs. Esha Gupta from her own bank account and I do not have any justification for the same Q. 25 I am showing you the schedule forming part of the balance sheet of M/s Toyfort (Exhibit 14). There is a transaction mentioned as "Advanced Paid to Suppliers" between your company and M/s Toyfort, which shows both the firms were well known to each other and had business relationship.
A. 25 As explained earlier my company formed a consortium M/s Toyfort in which Toyfort has to do printing of soil health cards for my company and the above said payment was made for the card Competition Appeal (AT) Nos. 36,48,40 of 2022 -69- printing work. Further, my company prepared domain name and website hosting for M/s Toyfort for which our company received a payment of Rs. 3500 from M/s Toyfort.
Q 26.1 am showing you the bid submitted by your company M/s Austere Systems Pvt Ltd in the Jhansi tenders of 2017 and the minutes of the tender committee dated 31.08.2017 (Exhibit-15 &
16), wherein the bid documents of your company have been signed & submitted by Sh. Suresh Kumar Gupta, sole proprietor of M/s Toyfort, a rival bidder in the said tender Sh Gupta also represented company M/s Austere Systems Pvt Ltd in the tender committee meeting. Why and how did the Sole Proprietor of a separate entity submitted bid of your company in the said Soil testing tender?
A 26. I do not know, how it had happened Q. 27. I am showing you the bid submitted by M/s Toyfort in the Jhansi tenders of 2017 (Exhibit 17), wherein the bid documents M/s Toyfort have been signed & submitted by Sh. Piyush Gupta. Sh Piyush Gupta also represented Toyfort in the tender committee meeting.
A. 27. Sh. Piyush Gupta who is son of Sh. Suresh Kumar Gupta. Sh. Suresh Kumar Gupta was also shareholder and director in our company with a 10% holding Sh. Piyush Gupta is currently a director in Mis. Austere Systems Q. 30. What is the justification for submission of bid documents and EMD by competitors on behalf of rival bidders as well as the competitors/bidders being related concerns shows? A. 30. I have no justification.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -70- Q. 31. Why bids from all three related /sister concerns having no experience of soil testing work as mentioned in the terms of conditions, wherein bid & EMD were submitted for each other? A. 31.1 have no justification Q. 65. Your Company had submitted bids in Soil testing tenders issued by Bareilly Division in 2018, as per the Tender Summary report which is being shown to you as A 65. Yes, I have seen.
Q. 66. Why was your bid rejected in the Bareilly division 2018? A. 66. I do not know.
Q. 67. As per technical bid chart of Bareilly division tenders of 2018, Austere's technical bid in the soil testing tender was rejected on the grounds that, 3 years' balance sheet not submitted, Annual turnover is not Rs 3 cr, last 3 years IT Returns with Profits not submitted, Lab Incharge with 3 years' experience not available and Proof of availability of ICP machine/Undertaking for establishment of Lab not submitted. Whether the said grounds for rejection were correct for your bid?
A. 67. It could have been a mistake & I was also not keen for Bareilly tender.
Q. 68. Why were you not keen for Bareilly but for other divisions? A. 68. I do not know.
Q. 69. Why your company did not submit bids in the soil testing tenders of Moradabad and Aligarh Divisions in the year 2018? A.
69. As we were having limited resources.
Q 70 Why your company submitted bids in Meerut & Saharanpur divisions soil testing tenders of 2018?
Competition Appeal (AT) Nos. 36,48,40 of 2022 -71- A. 70. As we were having limited resources Q. 74 Whether your company M/s Austere Systems Pvt Ltd, has been blacklisted and your contract for soil testing cancelled by the Uttar Pradesh Government?
A. 74. Yes, Austere Systems was blacklisted & Soil testing Contract was cancelled by UP Government.
Q. 75. On what grounds your contract was cancelled by the UP Government?
A. 75. Because of Collusion & Bid Rigging by the bidders. Q. 76. Whether any recovery notice for the payments made to your company for soil testing was issued by UP Government? A. 76. Yes, our company received the recovery notice Q. 77. Which other companies were also blacklisted by the UP Government in the matter of soil testing tenders?
A. 77. M/s Austere System and Yash Solution.
Q. 78. Whether any action has been initiated by the UP Government against its employees in this Matter?
A. 78. Yes"
92. The following findings emerge from the statement of Sh. Rahul Teni and evidence on record:
i) On the basis of the evidence on record as well as the statement of Sh. Rahul Teni, it has been concluded that the bidders, namely M/s Austere Systems, M/s Toyfort, and M/s Fimo Infosolutions, which had submitted bids in the Meerut and Jhansi soil testing tenders of Competition Appeal (AT) Nos. 36,48,40 of 2022 -72- 2017, were related concerns and had existing business relationships prior to the issuance of the said tenders.
ii) Sh. Rahul Teni could not provide any explanation when questioned as to how the bids of his company, M/s Austere Systems Pvt. Ltd., in the Jhansi division tenders of 2017, were signed and submitted by the Proprietor of a rival bidder, M/s Toyfort, who also attended the Tender Committee meeting on behalf of M/s Austere.
iii) Sh. Rahul Teni admitted that he had no explanation as to how the Earnest Money Deposit (EMD) of Rs. 1,00,000/- in respect of his firm for the Meerut tenders of 2017 could be submitted by Mrs. Esha Gupta, Director of M/s Fimo Infosolutions, a rival bidder, from her own bank account. He further admitted that there was no justification for the submission of bid documents and EMD by competitors on behalf of rival bidders, nor could he provide any justification for the submission of separate bids by the said three related/sister concerns in the Jhansi and Meerut tenders of 2017.
iv) Sh. Rahul Teni also admitted that Sh. Suresh Kumar Gupta, Proprietor of M/s Toyfort, a rival bidder in the Meerut and Jhansi tenders of 2017, was a "Strategic Investor" in M/s Austere Systems Pvt. Ltd. and had invested funds for procuring a soil testing machine even prior to the issuance of the 2017 tenders. This clearly indicates that a prior understanding existed between the two parties to undertake soil testing work jointly. This is corroborated by the fact that a Memorandum of Understanding (MoU) was Competition Appeal (AT) Nos. 36,48,40 of 2022 -73- subsequently signed between M/s Austere Systems Pvt. Ltd. and M/s Toyfort to jointly undertake soil testing work. It has also been established that Sh. Suresh Kumar Gupta's son, Sh. Piyush Gupta, was appointed as a Director in M/s Austere Systems Pvt. Ltd.
v) Sh. Rahul Teni also failed to explain how his company qualified in the technical bid and was awarded the contract despite not fulfilling the prescribed eligibility criteria in the Meerut and Jhansi tenders of 2017.
93. From the submission of Sh. Teni it can be concluded that all three bidder firms in the Meerut and Jhansi division tenders of 2017, namely M/s Austere Systems Pvt. Ltd., M/s Toyfort, and M/s Fimo Infosolutions, were related concerns, connected both through family and business relationships. The submission of EMD and bid documents by rival bidders on behalf of M/s Austere Systems Pvt. Ltd. demonstrates that these three firms, through concerted efforts, had rigged the bids in the 2017 soil testing tenders of the Jhansi and Meerut divisions, with the common objective of ensuring that M/s Austere Systems Pvt. Ltd. secured the contracts.
94. To examine the role of Fimo Infosolutions in the Meerut and Jhansi Division tenders of 2017 floated by Agriculture Department, Govt. of U.P., we have to take a look at the statement of Mr. Jai Kumar Gupta, Director of M/s Fimo Infosolutions Private Limited, which was recorded by DG on 02.02.2021. The relevant extracts are given below:
Competition Appeal (AT) Nos. 36,48,40 of 2022 -74- "Q.3. what is your role and responsibilities in your firm M/s FIMO INFO Solutions Private Limited?
A. 3. My role was to look after the entire business operation of the company.
Q. 6. Has your Firm ever bid in any tenders for Soil Testing floated by Govt. of UP? If yes, please provide details A. 6. Yes.
Q.7. Please explain your understanding of Government's Soil testing Program?
A. 7. I have no understanding of the soil testing program. Q. 8. What are the requirements for soil testing work? A. 8. I have no knowledge about the soil testing work. Q. 9. Did you or your firm M/s FIMO INFO Solutions Private Limited had any experience in soil testing work when bids were submitted in the soil testing tenders issued by Meerut & Jhansi divisions of the Agriculture department, Government of Uttar Pradesh in the year 2017?
A. 9. No, my firm did not have any experience of soil testing work when bids were submitted ·in the U.P Government 'Soil testing tender.
Q. 10. I am showing you the GST registration of your firm M/s FIMO INFO Solutions Private Limited (Exhibit -1), as per which your firm is engaged in, Management Consultancy, Transport of Goods, Business support services, work contract, legal consultancy however, no mention has been made regarding any soil testing work. Why?
A. 10. As my firm had no soil testing related experience. Competition Appeal (AT) Nos. 36,48,40 of 2022 -75- Q. 11. As per condition no 16 of the terms and conditions for the Meerut tender issued in 2017 (Exhibit -2) "the Bidder should have experience of 12 parameters soil testing. This experience should be from Government/ Semi _ Government .or . standard - Institutions, Further, the company/firm's Proprietor/Director should also have experience of soil testing work of 15 years, for which experience certificate is to be enclosed with bid". Did your firm fulfil the said condition, before submission of bids in the aforesaid tenders?
A. 11 . No. Q. 12. As per condition no 18 for the Meerut Division tender (Exhibit -2) and condition 14 of the Jhansi Division tender (Exhibit
-3) of the terms and conditions for soil testing tenders of 2017, it was required that the bidder should have experience of working on high tech equipment ICP (lndictivity Cupeled Plasma Spectrometer). Did your firm had any experience of soil testing on ICP machine/ high tech soil testing machine?
A 12. No, my firm had no experience of working on high tech equipment ICP (lnductivity Cupeled Plasma Spectrometer). Q. 13. Why your firm submitted bids in the aforesaid tenders even though your firm had no experience of soil testing, and did not fulfil the terms & conditions as per tender requirement? A. 13. Although my firm had no experience of soil testing or of working on ICP machine, still our firm decide to submit the bids in the hope that we may get the tender.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -76- Q. 14. Why your firm submitted bids in the aforesaid tenders even though it did not have any experience of working on high tech equipment ICP (lndictivity Cupeled Plasma Spectrometer). A.14. Although my firm had no experience of soil testing or of working on ICP machine, still our firm decide to submit the bids in the hope that we may get the tender.
Q. 15. I am showing you a copy of the comparative statement of financial bids for soil testing (12/6) parameters, for Jhansi tender which was opened on 31.08.2017 (Exhibit- 4).
A 15. Yes, I have seen.
Q. 16. Did you or your firm have any relation with any other firm or their Directors/Proprietors which had submitted bids in the aforesaid soil testing tenders?
A. 16. M/s Toyfort belongs to my sister namely Mrs Nirmal Gupta wife of Shri Suresh Kumar Gupta. However, I do not know on whose name M/s Toyfort is registered. I am not aware about of M/s Austere Systems Pvt. Ltd.
Q. 17. I am showing you the copy of Form ST -1 submitted to Central Board of Excise and Customs (Exhibit -5), as well as a copy of names and addresses of participating firms in the Meerut soil testing tender for 2017-18 (Exhibit -6). A. 17. Yes, I have seen.
Q. 18. In both the above said documents, the name, tele. no. and e-mail of Sh. Shikhir Gupta were provided. Who is Sh. Shikhir Gupta?
Competition Appeal (AT) Nos. 36,48,40 of 2022 -77- A. 18. Shri Shikhar Gupta is my son and therefore his details were given However, he was not holding any position in my firm M/s Fimo Solution.
Q. 19. Why name, Mobile no. and e-mail of Sh. Shikhir Gupta were given in the above documents, submitted on behalf of your Firm M/s Fimo Infosolutions Pvt. Ltd?
A. 19. Shri Shikhir Gupta is my son and was also assisting me in my business hence, his email id and phone number were submitted to the concern authorities.
Q. 21. I am showing you a copy of GST registration Certificate of M/s Austere System Private Limited (Exhibit -7) in which the address of its Principal place of business is same as that of your firm. kindly explain how both the firms are having common address.
A. 21. I do not know.
Q. 22. How is your firm related to M/s Austere System Private Limited?
A. 22. My firm may have worked for M/s Austere regarding data entry work.
Q. 23. I am showing you the copy of Statement of transactions in your firm's current account number: 039905005145 for the period 01.01.2017 to 31.03.2017 (Exhibit -8) in which your firm has received Rs . 1,39,409 on 02.01.2017, Rs 44.685 on 13.01.2017, Rs. 52,240 on 10.02.2017, Rs. 34,000 on 06.03.2017 & Rs. 4500 on 25.03.2017 from M/s Austere System Private Limited.
A. 23. Yes, I have seen.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -78- Q . 24. Why M/s Austere transferred such amounts at different intervals to your firm's account?
A. 24. The payment received in our firm's account is related to data entry work and/or some software development work which our company had undertaking for M/s Austere Systems Pvt. Ltd. Q.25 How is Sh. Shikhir Gupta associated/related with M/s Austere Systems Pvt Ltd?
A. 25. I do not know.
Q. 26. I am showing you list of shareholders as on 31.03.2018 in M/s Austere Systems Private Limited (Exhibit -9), wherein Sh Shikhir Gupta's shareholding in the said firm is 30%. A. 26. Yes, I have seen.
Q. 27. I am showing you a copy of the Demand Drafts Nos 505284,505282 and 505279 issued by ICICI Bank Gurgaon Suncity Branch, Gurgaon, to M/s FIMO, M/s Austere and M/s Toyfort respectively, which were submitted in the soil testing tenders of 2017 in Meerut Division. (Exhibit - '10,11, & 12). A. 27. Yes, I have seen.
Q. 28. As per reply of ICICJ Bank (Exhibit- 13), the Demand Draft bearing No. 505282 in respect of M/s Austere Systems was made by Ms. Esha Gupta, a Director of your firm, from her own account. How and why a Director of a Firm got prepared a Demand Draft for another rival bidder from her own account? A. 28. Because, Mrs Esha Gupta is wife of Sh. Shikhir Gupta, who is my son and shareholder of M/s Austere hence, the DO was made by her from her own bank account.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -79- Q. 29. As per reply of ICICI Bank (Exhibit- 13) the Demand Draft Bearing No. 505279 in respect of M/s Toyfort were made by Sh Shikhir Gupta, from ·his own account. Why was a Demand Draft- for submission in a Government soil testing tender by Toyfort was got prepared by Shikhir Gupta from his own account although M/s Toyfort's Proprietor was Sh. Suresh? A. 29 I cannot comment on this question.
Q.30. I am showing you a copy of the registration of your firm with the Ministry of Corporate Affairs (Exhibit -14). As per the said data the Registered a Idress of your firm is E-99 Kamala Nagar New Delhi, which is also the address of another bidder in the said tenders namely M/s Toyfort as per its GST F'egistration (Exhibit -15). Please explain how two rival firms in a Government tender firms have common address.
A 30. Yes, because M/s Toyfort had space available with them, hence, we took the space for registration of our company Q. 31. What was the purpose for submitting three different bids by related firms in the aforesaid tenders?
A 31. I do not know"
95. Observations from the statement of Sh Jai Kumar Gupta, Director M/s Fimo Infosolutions Pvt. Ltd:
i) Sh Jai Kumar Gupta submitted that he looks after the entire affairs of the company. He stated that although he or his firm had no experience of soil testing and did not fulfil the terms & conditions for Competition Appeal (AT) Nos. 36,48,40 of 2022 -80- eligibility in the Meerut & Jhansi tenders of 2017, he had submitted bids in the said tenders in the hope of receiving the tender in their favour.
ii) Sh Jai Kumar Gupta admitted that M/s Toyfort another bidder in the said tenders of 2017 belong to her sister Mrs Nirmal Gupta wife of Sh Suresh Kumar Gupta.
iii) Sh Gupta admitted that his son Sh Shikhir Gupta assists him in his business and therefore his mobile and email id is mentioned in the bid document of Meerut tender as well as other statutory registrations.
iv) Sh Gupta submitted "I do not know when enquired as to how the Principal place of Business of M/s Austere Systems Pvt Ltd (OP-5) another bidder in the 2017 tenders, in its GST registration is having the address of his firm. However, Sh Gupta admitted that his firm had undertaken data entry and software related work for M/s Austere Systems Pvt Ltd
v) Sh Jai Kumar Gupta initially feigned ignorance to the relationship of his son Shikhir Gupta with M/s Austere Systems Pvt. Ltd however, on being confronted with evidence admitted that' his •son is having a shareholding of 30% in the said firm.
vi) Regarding preparation of Demand draft of Rs. 'I lakh towards EMD for M/s Austere Systems Pvt. Ltd in the 2017 soil testing tender, Competition Appeal (AT) Nos. 36,48,40 of 2022 -81- from the bank account of Smt Esha Gupta, who is also a Director of M/s Fimo Infosolutions Pvt Ltd, Sh Jai Kumar Gupta submitted that it was because "Mrs Esha Gupta is wife of Shri Shikhir Gupta, who is my son and shareholder of M/s Austere hence, the DO was made by her from her own bank account"
vii) Regarding preparation of Demand draft of Rs. 1 lakh towards EMD for M/s Toyfort in the 2017 soil testing tender, from the bank account of Sh Jai Kumar Gupta submitted that "I cannot comment on this question
viii) Sh Jai Kumar Gupta submitted that his company is registered with MCA at the address of its rival bidder M/s Toyfort, as M/s Toyfort had space available hence, their firm has the same address as its rival firm.
ix) As regards the purpose for submitting three different bids by related firms in the aforesaid tenders Sh Gupta submitted "I do not know"
96. On the basis of the statement of Sh Rahul Gajanan Teni and Sh Jai Kumar Gupta and the evidence on record, it is clear that the bidders in the said tenders namely M/s Fimo Infosolutions Pvt Ltd; M/s Austere Systems Pvt Ltd.; & M/s Toyfort were intricately linked and also had business relationships. Sh Shikhir Gupta son of Sh Jai Kumar Gupta was having 30% shareholding in rival bidder M/s Austere Systems and M/s Toyfort Competition Appeal (AT) Nos. 36,48,40 of 2022 -82- belonged to Sh Jai Kumar Gupta's sister and her family. M/s Fimo Infosolutions also had business relationships with M/s Austere Systems Pvt Ltd.
97. M/s Austere Systems Pvt Ltd's Principal Place of business registered under GST was the same as that of M/s Fimo Infosolutions.
98. It FIMO's address registered with the Ministry of Corporate Affairs was that of M/s Toyfort, reinforcing the close ties and relationships among the three firms.
99. It is an admitted fact that Demand Drafts payable towards the EMD, to be submitted in the 2017 Meerut soil testing tenders, for M/s Austere Systems Pvt Ltd was prepared from the bank accounts of Ms. Esha Gupta, a Director of M/s Fimo Infosolution which was a ribal bidder.
Similarly, in case of M/s Toyfort the DD was got prepared from the bank account of Sh Shikhir Gupta, son of Sh Jai Kumar Gupta was also a shareholder a Director in M/s Austere Systems Pvt Ltd.
100. Sh Jai Kumar Gupta's reply as to the reasons for the same, underlines the fact that close family and interpersonal ties· between the bidder firms led to collusive partnerships to rig bids of Meerut and Jhansi tenders of 2017.
101. Sh. Rahul Teni also in his statement on 19.02.2021 submitted that he has no information as to how the DD submitted by M/s Austere in the Meerut tenders in the year 2017 was prepared from the bank account of a Competition Appeal (AT) Nos. 36,48,40 of 2022 -83- Director of a rival bidder M/s Fimo Infosolutions Pvt Ltd and that he has no justifications for the same.
102. Sh Jai Kumar Gupta did not submit any cogent reply as to why his firm had submitted bids in 2017 Meerut and Jhansi division soil testing tenders although his firm had no experience of soil testing and was not even fulfilling the eligibility terms and conditions mentioned in the said tenders. Further, Sh Gupta submitted an evasive reply "I do not know" as to why separate bids were submitted. by three closely related firms.
103. It is the submissions of the appellants that at the particular time of tendering for the Meerut and Jhansi Division Sh. Shikhir Gupta was neither a shareholder nor a Director of M/s Austere Systems. He only became a shareholder in February, 2018. Similarly, it has also been argued that Smt. Esha Gupta was not a Director of Fimo Infosolutions and only an authorised signatory.
104. In case of Smt. Esha Gupta her links to Fimo Infosolutions are very well established even if we accept her position as authorised signatory. A pertinent question in such cases would be "why an employee of another company which is a rival bidder in the tender in which her own company is participating would get the DD prepared for the rival bidder from her own account?" Infact neither Sh. Rahul Teni nor Sh. Jai Kumar Gupta has a answer to this question.
105. By the same logic the conduct of Sh. Shikhir Gupta getting the DD for EMD of M/s Toyfort in which company he had no role makes no logical Competition Appeal (AT) Nos. 36,48,40 of 2022 -84- sense and Sh Jai Kumar Gupta answered no comment. The fact of the matter is that the owners of Toyfort and Fimo Infosolutions have close family relations as admitted by Sh Jai Kumar Gupta.
106. In view of the above and the evidence on record, it can be concluded that due to close ties and interpersonal relationships of M/s Fimo Infosolutions with the other two bidders namely M/s Austere Systems Pvt Ltd and M/s Toyfort, a facade of competition was created and submitted three different bids to ensure that the Government tender is not cancelled due to lack of bids. The same is also borne by facts wherein the Jhansi & Meerut tenders only three and four bids respectively were submitted.
107. There could be no other reason for the submission of bids by M/s Fimo Infosolutions in the 2017 soil testing tenders for Meerut and Jhansi divisions except that they were cover bids in support of M/s Austere Systems Pvt Ltd, which was the-ultimate beneficiary of both the tenders.
108. The appellants have claimed that single economic entities cannot be said to be in contravention of provisions of Section 3 of the Act. They have claimed that the appellants and Toyfort are related parties and there can be no collusion between related firms as the related firms would have a common set of management, thereby making decisions common to all. The appellants have cited the decision of Commission in Shri Shamsher Kataria v. Honda Siel Cars India Ltd. (Case No. 03/2011), and Exclusive Motors Pvt. Ltd. v. Automobili Lamborghini S.p.A. (Case No. 52/2012). In shamsher Kataria (supra) the Competition Commission examined the conduct of Competition Appeal (AT) Nos. 36,48,40 of 2022 -85- automobile manufacturers and their wholly controlled network of dealers, where the issue involved vertical restraints imposed by manufacturers upon their authorized dealers. The principle applied in that case was based on the concept of a "single economic entity," wherein the subsidiaries and their controlled dealers were considered part of the same group under direct management and ownership. However, in the present case, M/s Toyfort and M/s Fimo Infosolutions are independent business entities with separate legal personality, separate commercial interests, and no common controlling ownership. The mere fact of being categorized as "related parties" for certain transactions does not merge their economic identity into one. In fact, it negates the basic foundation of bidding which entails all participants to bid independently of each other. Independence and secrecy are the key elements of any tendering. The participation in a tender by related parties directly contravenes the fundamental principles and objectives of tendering as there is neither independence nor secrecy in such bids. Rather, it confirms the collusion in bids and bid rigging. The ratio of the case does not apply to the present case.
109. In Exclusive Motors Pvt. Ltd. v. Automobili Lamborghini S.p.A., the CCI held that where a principal and its exclusive distributor operate as a single economic entity, they cannot be treated as separate competitors under Section 3 of the Competition Act, since the distributor functions merely as an extended arm of the principal with no independent decision- making in the market. The ratio therein was strictly confined to the principal-agent relationship. By contrast, in the present case, M/s Toyfort Competition Appeal (AT) Nos. 36,48,40 of 2022 -86- and M/s Fimo Infosolutions are not principal-agent or parent-subsidiary entities; rather, they are distinct companies carrying on business independently and capable of pursuing their own economic interests. The fact that they may share relatedness for accounting or corporate purposes does not eliminate the possibility of collusive practices or concerted decision-making against market norms. Therefore, the reasoning in Exclusive Motors cannot be mechanically applied here, as the structural and factual circumstances are materially different. Set-III role of M/s Yash Solutions and M/s Austere Systems
110. The Commission in its findings had also observed that Austere Systems and Yash Solutions had geographically allocated the soil testing tenders of U.P. Government in 2017-18 by not bidding in each others allocated regions and by submitting supporting bids in favour of each other.
111. We have already examined the role of Sh. Rahul Gajanan Teni of Austere Systems. We now have a look at statement on oath of Sh Praveen Kumar Agarwal, Managing Director of M/s Yash Solutions (A Unit of Yash Ornaments), recorded on 18.03.2021. The relevant extracts of the statement are reproduced below:
"Q.3 What is your role and responsibilities in your firm M/s Yash Ornaments?
A 3. I am responsible for the entire affairs of the business of my firm and all decision are taken by me. My wife is a house wife Competition Appeal (AT) Nos. 36,48,40 of 2022 -87- and she is only a name sake director of the firm M/s Yash Ornaments Pvt. Ltd.
Q.4 Has your Firm ever bid in any tenders for Soil Testing floated by Govt. of UP? If yes, please provide details? A. 4. Yes, in Moradabad and Bareilly in 2017 and in 2018 Bareilly, Moradabad, Jhansi, Saharanpur and Aligarh. Q.6. Name of your competitors who are engaged in soil testing activities.
A.6. None. During 2017-18 the Government Authority Agriculture Department requested me take up this work because there were no other soil testing agencies available in the state of U.P. I invested approximately Rs. 3 crores for purchase of soil testing machine and other equipment's so that I can take up this project. Q.9. Did you or your Firm have any experience in soil testing work when you had bid in the Soil testing tenders of UP Government during 2017?
A.9. No, my company did not have any soil testing work experience before the bids of 2017.
Q 57. Your company had quoted a price of Rs 122/ 81.50 in the Aligarh tenders of 2018 respectively however, in the tenders of Meerut & Saharanpur you had bid Rs 147.25/Rs.98.25 and Rs 148.6/Rs98.5 for the 12/6 parameters respectively. A copy of the comparative bids of the respective divisions is being shown as. A. 57 Yes, I have seen Q. 58. Why an increase of Rs 26.6/17 (21.8%7/20.8%) between Aligarh and Saharanpur bids of 2018?
A. 58. As I was not interested in getting the contract for Saharanpur that is why my firm had quoted high price in the above said two tenders.
Q. 59. Why an increase of Rs 25.25/16.75 (20.7/20.5%) between Aligarh and Meerut bids of 2018?
A. 59. As I was not interested in getting the contract for Meerut that is why my firm had quoted high price in the above said two tenders.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -88- Q. 60. Your company had quoted a price of Rs 144.5/96.5 and Rs 145/97 in the Moradabad & Bareilly tenders of 2018 respectively. However, in the tenders of Meerut & Saharanpur you had bid Rs147.25/Rs.98.25 and Rs 148.6 /Rs98.5 for the 12/6 parameters respectively. A copy of the comparative bids of the respective divisions is being shown as. What is the rationale for increase in price bids for Meerut & Saharanpur tenders? A. 60. I was not interested in getting the contract for Meerut and Saharanpur as I had no links in that region hence, my firm had quoted high price in the above said two tenders. Q. 61. Has your company namely M/s Yash Solutions ever been blacklisted by the U.P Government?
A. 61. Yes, it was blacklisted because of collusion among bidders in the soil testing tender.
Q. 62. Which other companies have been blacklisted by UP Government?
A. 62. I have no information.
Q. 63. Has the Department of Agriculture, UP Government sent you recovery notice of the payment which you had received towards soil testing work?
A. 63. My dues for the year 2017-18 and 2018-19 have not been released by the U.P Government and the contract for the soil testing cancelled in September 2018.
Q. 64. Any other Information you would like to submit with regards to this matter.
A. 64. No. Q. 65. Do you have any regrets?
A 65. Yes, I am ready for whatever punishment is appropriate"
112. The following points emerge from the above statements of Sh Praveen Kumar Agarwal and concerned parties on oath and evidence on record:
Competition Appeal (AT) Nos. 36,48,40 of 2022 -89-
i) M/s Yash Solutions (A Unit of Yash Ornaments) had submitted its bids in the soil testing tenders of Agriculture Department, Government of Uttar Pradesh, Moradabad and Bareilly divisions in the year 2017 and in the Bareilly. Moradabad, Jhansi, Saharanpur and Aligarh division in 2016. The financial bids for the Jhansi division in 2018 were not opened and the tenders were cancelled.
M/s Yash Solutions had won contracts in the Bareilly and Moradabad division tenders in the year 2017 and Bareilly, Moradabad and Aligarh division tenders in the year 2018.
ii) Government of U.P. had black listed M/s Austere Systems and M/s Yash Solutions for bid rigging and collusion for the aforesaid soil testing contracts in late 2018.
113. We have seen from the records and submission of Sh. Rahul Teni that M/s Austere Systems Pvt. Ltd. itself had submitted a bid in the 2018 Bareilly tenders, which was rejected at the technical stage due to non- submission of the last three years' balance sheets, income tax returns, absence of a lab in-charge with requisite experience, and non-availability of an ICP machine.
114. In response to a question regarding the rejection of its 2018 Bareilly bid, Sh. Rahul Teni stated that it might have been a mistake and further added that he was not keen on participating in the Bareilly division tender, though he failed to provide any reasons for the same. Similarly, he could not offer any rational explanation for not submitting bids in the Aligarh Competition Appeal (AT) Nos. 36,48,40 of 2022 -90- and Moradabad tenders of 2018, even though his company had participated in the Meerut and Saharanpur tenders, which were floated after the tender processes of Aligarh and Moradabad had already been completed. He also gave evasive replies when questioned about not submitting a bid in the Moradabad soil testing tender of 2017, despite already holding a soil testing contract from the Meerut division.
115. It has also been noted that although M/s Yash Solutions had already secured contracts in the Bareilly, Moradabad, and Aligarh tenders of 2018, its Managing Director, Sh. Praveen Agarwal, in his statement, claimed that his firm had submitted high-priced bids in the 2018 Meerut and Saharanpur tenders as he was not interested in securing contracts there. This statement is self-contradictory, since despite professing a lack of interest, Sh. Agarwal failed to explain why his company still submitted bids. The only plausible explanation for such high-priced bids is that they were cover bids intended to support M/s Austere Systems Pvt. Ltd.
116. Mr. Ankur Kumar of Delicasy Continental, in his submissions, had also stated that none of the directors of his company had decided the bid price to be submitted in the 2018 soil testing tenders for Meerut and Saharanpur Divisions. It was decided by its employees in discussion with Austere Systems.
117. In view of the above, and considering that only three bidders--M/s Austere Systems, M/s Yash Solutions, and M/s Delicacy Continental--had participated in the 2018 Meerut and Saharanpur tenders, it is concluded Competition Appeal (AT) Nos. 36,48,40 of 2022 -91- that M/s Austere Systems, under an arrangement or understanding with M/s Yash Solutions and M/s Delicacy Continental, had rigged the bids of the said tenders. Furthermore, it is evident that M/s Austere Systems Pvt. Ltd., in collusion with rival firm M/s Yash Solutions Pvt. Ltd., had geographically allocated the soil testing tenders issued by the Government of Uttar Pradesh in 2017 and 2018, by either abstaining from bidding in each other's regions or by submitting supporting bids in favour of each other.
118. In view of the above it can be concluded that Yash Solutions and M/s Austere Systems Pvt Ltd through an understanding/arrangement between them, had geographically allocated the soil testing tenders issued by the UP Government in the year 2017 & 2018 and were either not bidding in each other's area/divisions or submitting supporting bids for each other.
119. It is well established principle that in cases of alleged cartelization or anti-competitive practices, direct evidence of an agreement between parties is not required. Instead, a probabilistic standard of proof is sufficient, meaning that the existence of a cartel can be inferred from circumstantial evidence or behaviours. The said principle was reiterated by Hon'ble Supreme Court in the case of Rajasthan Cylinders and Containers Ltd. Vs. Union of India and Others, (2020) 16 SCC 615. The Hon'ble Supreme Court in further paras 81 & 84 of Judgment supra has made the following observations:
Competition Appeal (AT) Nos. 36,48,40 of 2022 -92- "81. There may not be direct evidence on the basis of which cartelisation or such agreement between the parties can be proved as these agreements are normally entered into in closed doors. The standard of proof which is required is one of probability.
84. Even in the absence of proof of concluded formal agreement, when there are indicators that there was practical cooperation between the parties which knowingly substitute the risk of competition, that would amount to anti-
competitive practices."
120. In the present case the evidence is very direct and is proven from documents on record and conduct of the individuals involved making it a clear case of anti-competitive practices.
121. Based on the material on record; evidence of OPs; and judicial precedent Rajasthan Cylinders (Supra), we are of the considered opinion that Commission has correctly and legally held the appellants responsible for violation of Section 3(3)(c) and 3(3)(d) read 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.
Competition Appeal (AT) Nos. 36,48,40 of 2022 -93-
122. After finding the appellants guilty of collusion and bid rigging, the Commission under Section 48 of the Act imposed the penalty on the appellants. The penalty imposed on each of the appellants is given below:
S. No. Name of the party Amount of penalty
(in Rs.)
1. Austere Systems Pvt. Ltd. 44,25,569/-
2. Fimo Infosolutions Pvt. Ltd. 36,442/-
3. Rahul Gajanan Teni (Director 44,712/-
Austere Systems)
4. Mr. Jai Kumar Gupta (Director 21,447/-
Fimo Infosolutions Pvt. Ltd.)
123. Regarding the punishment, both the appellant and commission have cited the judgement of Hon'ble SC in Excel Crop Care (supra). The contention of the appellants being that the penalty is to be imposed based on the relevant turnover. The commission, however, disagreed with the contention of the appellant and stated that such a narrow interpretation of relevant turnover would allow the OPs who are involved in pernicious practice of bid rigging/collusive bidding to go scot-free. This was never the intention of Hon'ble SC nor of the legislature, while enacting the Competition Act.
124. In this context, we looked into the aforesaid Judgment of Excel Corp Care (supra) closely, regarding the facts of the case and whether the aforesaid ratio applies squarely to the present appeal.
125. In the Excel Crop Care matter (supra) the matter related to procurement by FCI for Aluminium Phosphide tablets (for short APT) of 3 Competition Appeal (AT) Nos. 36,48,40 of 2022 -94- 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 payment for the purchased tablets is released by the regional offices concerned.
3.4. It was found that right from the year 2002, up to the year 2009, all the four parties used to quote identical rates, excepting for the year 2007. In 2002, Rs 245 was the rate quoted by these four parties and in the year 2005 it was Rs 310 (though the tender was scrapped in this year and the material was purchased from Central Warehousing Corporation @ Rs 290). In November 2005, though the tenders were invited, all the parties had abstained from Competition Appeal (AT) Nos. 36,48,40 of 2022 -95- quoting. In 2007, M/s UPL had quoted the price which was much below the price of other competitors. In 2008, all the parties abstained from quoting. while in 2009 only the three appellants, barring Agrosynth Chemicals Ltd., participated and quoted uniform rate of Rs 388, which was ultimately brought down to Rs 386 after negotiations. It was also found that the tender documents were usually submitted in person and the rates were normally filled with hand."
126. It can be seen that the aforesaid companies were in the same business since 2002, and their balance sheets had segment wise reporting, which made it possible to segregate the turnover from the APT business for each year of operation. In such cases, the ratio laid down by Hon'ble SC regarding imposition of penalty on the basis of relevant turnover is a very logical and correct way of calculating the penalty, as it brings in the doctrine of proportionality to the penalty for the offences under the Act.
127. In view of peculiar facts and circumstances of the present case, where all the bidders for soil testing are first time bidders and relevant turnover of firms from the aforesaid business is NIL, the concept of relevant turnover in such cases would not be correct, as it would lead to NIL penalty and allow the parties involved to go scot-free. Hence, we agree with the Commission's approach of taking the total turnover for computation and imposition of penalty.
128. The appellant's have also relied on the Judgment of Competition Appellate Tribunal in MDD Medical Systems India Private Limited (supra) Competition Appeal (AT) Nos. 36,48,40 of 2022 -96- which have been quoted earlier. This case was the first instance of the parties involved being found guilty of such practices, with no prior allegations in this regard. The Commission in that case did not pass a reasoned order, while fixing the penalty at 5%, therefore, the penalty was reduced to 3%. However, in the instant case Commission has given a detailed justification for imposing a penalty of 5% of annual turnover. We find that in absolute terms also the penalties imposed are not excessive and justified on the basis of role performed by the entities in the tenders floated by Agriculture Department, U.P. In the present case, Austere Systems was acting as the leader of the cartel and had provided support to other members of the cartel for bidding in the tenders, accordingly a higher absolute penalty on Austere is justified.
129. In view of the above discussion, we find no infirmity in the order of Commission. All three Appeals are dismissed. The pending IAs if any, are accordingly disposed of.
[Justice Rakesh Kumar Jain] Member (Judicial) [Justice Mohd. Faiz Alam Khan] Member (Judicial) [Mr. Indevar Pandey] Member (Technical) SA Competition Appeal (AT) Nos. 36,48,40 of 2022