Common IP Address, EMD Payments & Call Records Establish Cartelisation: NCLAT Upholds ₹10 Lakh Penalty For Bid Rigging [Read Order]
NCLAT Affirms CCI Order Holds Common IP, EMD Trail And Call Records Sufficient To Prove Cartelisation And Bid Rigging
The National Company Law Appellate Tribunal (NCLAT), Principal Bench New Delhi has confirmed a penalty of ₹10 lakh on M/s Klassy Enterprises for engaging in bid rigging and cartels in contravention of Section 3(3)(d) read with Section 3(1) of the Competition Act, 2002.
The appeal was filed against the order passed by the CompetitionCommission of India (CCI) which held Klassy Enterprises and two other participants guilty of collusive bidding in a tender invited by Pune Zilla Parishad for the supply of Picofall-cum-Sewing Machines.
The investigation carried out by the CCI showed that the appellant and other bidders had quoted almost similar prices with a meager difference of a few rupees only. The Director General (DG) held that all bids were uploaded from the same IP address which belonged to the appellant’s cyber cafe.
Moreover, the appellant had arranged for the payment of tender fees and Earnest Money Deposits (EMD) on behalf of the other bidders, and the refunded EMD amounts were sent back to the appellant.
The Call Data Records (CDRs) also reflected that the bidders had been in constant touch with each other before finally submitting their bids which revealed a common intention.
The appellant argued that the similarity in prices was merely a coincidence and it ran a cyber cafe where it provided services to the public for filing tenders. It also argued that there was no Appreciable Adverse Effect on Competition (AAEC) and the proportionality of the penalty was also challenged.
The NCLAT rejected the appeal and held that cartelization is normally proved on the basis of circumstantial evidence and common use of IP, common financial activity and call details had established collusive bidding. The Tribunal also noted that on establishment of agreement under Section 3(3) presumption of AAEC arises and the burden shifts on the appellant.
The Bench headed by Justice Mohd. Faiz Alam Khan (Judicial Member) and Naresh Salecha (Technical Member) confirmed the CCI’s order and held that the penalty of ₹10 lakh was proportionate and sustainable.
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