Sep 21, 2019

CCI penalizes SAAR IT Resources Private Limited and Two Others for Bid-Rigging in Supply of Technological Services to Pune Municipal Corporation

On August 2, 2019, CCI penalized SAAR IT Resources Private Limited (‘SAAR IT’), CADD Systems and Services Private Limited (‘CADD’) and Pentacle Consultants (I) Private Limited (‘Pentacle’) for contravention of provisions of Section 3 of the Act. [1]

The allegations pertain to a tender floated by the Pune Municipal Corporation (‘PMC’) for selection of an agency for carrying out geo-enabled tree census using Geographical Information System & Global Positioning System Technology. It was alleged that SAAR IT was the pre-determined winner in the tender and CADD and Pentacle were merely acting as proxy bidders.

Before dealing with the case on merits, CCI dismissed the preliminary objection raised by SAAR IT that the in absence of judicial member, final hearing cannot be concluded by relying in light of  DHC’s decision in Mahindra Electric Mobility Limited and Another v. CCI[2],  CCI also placed reliance on the order of the DHC in Cadd Systems and Services Private Limited v. CCI[3], wherein it was held that the working of CCI cannot be brought to a standstill until the judicial member is appointed in CCI. Thereafter, CCI proceeded to deal with the case on merits.

The evidence on record demonstrated that there was a tacit understanding between SAAR IT and CADD and SAAR IT and Pentacle, pursuant to which CADD and Pentacle merely acted as proxy bidders or cover bidders for SAAR IT. Lack of proper scrutiny by PMC ensured that CADD and Pentacle could qualify in the technical round and be in the reckoning so as to benefit SAAR IT, to get the tender. If CADD and Pentacle were not eligible bidders, then the tendering process itself would have failed with there being no participants other than SAAR IT, which would have remained the lone bidder.

Further, basis the evidence gathered by investigation showing similarities observed in documentation, it appeared that the documentation for the bids was arranged by SAAR IT, CADD and Pentacle in concert with each other and the amount for earnest money for CADD and Pentacle was arranged by SAAR IT, when admittedly, both CADD and Pentacle had their own independent source of funds.

Therefore, CCI observed that the evidence submitted reveals a discernible pattern, which points towards existence of an agreement or meeting of minds amongst the bidders to collude in the tender process.

Accordingly, CCI imposed penalty of 10% of the average turnover for three financial years viz., 2015-16, 2016-17, and 2017-18, through revenue from operations and also invoked sections 48(1) and 48(2) of the Act, under which the persons in charge were also made directly liable.

[1] Case No. 12 of 2017.
[2] W.P.(C) 6610/2014
[3] W.P.(C) 6661/2019.




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