On September 6, 2022, the NCLAT dismissed appeal filed by Together We Fight Society (‘TWFS’) against CCI Order dated September 16, 2021, in Case No. 20/2021 (‘Order’), where the CCI closed the information under Section 26(2) of the Competition Act.^[1]

By way of background, TWFS under Section 19 of the Competition Act, filed an information petition before the CCI primarily on the basis of a Report of Comptroller and Auditor General of India (‘C&AG’) dated April 4, 2016 (‘Report’).

On the basis of the Report as well as statements in the petition filed under Section 19 of the Competition Act, TWFS had levelled allegations of contravention under Section 3 and 4 of the Competition Act for cartelization and bid rigging against SR Paryavaran Engineers Pvt. Ltd. (‘OP-1’), Doshion Veolia Water Solution Pvt. Ltd. (‘OP-2’), Water Life India Pvt. Ltd. (‘OP-3’), LVJ Projects Pvt. Ltd. (‘OP-4’), Hi-Tech Water Solutions Pvt. Ltd. (‘OP-5’) and GA Infra Pvt. Ltd. (‘OP-6’) (collectively, referred to as ‘OPs’), in relation to certain tenders for the provision, installation and commissioning of Reverse Osmosis (‘RO’) plants in certain districts of Rajasthan.

Essentially, the Chief Engineer (‘CE‘), Rural, Public Health Engineering Department (‘PHED‘) Jaipur invited tender for installation and commissioning of 35 RO plants for three regions Bharatpur, Jaipur and Jodhpur on rate contract basis (‘Tender No. 1’). While the above work was in progress, the Government of Rajasthan decided to install 1000 more RO plants in rural areas (‘Tender No. 2’). Tender No. 2 was issued on similar terms and conditions as Tender No. 1. However, the rates received by CE were high, and after considering the approved base rates for similar work and adding the impact of appreciation in US Dollars for imported parts, payment terms, etc., the same was submitted to the Standing Negotiation Committee (‘SNC’) for consideration/negotiation.

C&AG in its Report drew a comparison between approved rates in April 2013 of Tender No. 1 and approved rates in August 2013 of Tender No. 2, wherein it was observed that the rates approved for each RO plant in Tender No. 2 were higher by ₹5.14 lakh to ₹5.87 lakh compared to the rates approved in Tender No. 1, and therefore, the action of the Department was not justified. It was also noticed that ‘the rates quoted by all the bidders and reasons explained by them for quoting higher rates were almost similar, indicating some cartelization among the bidders.’ Further, the C&AG also noted that most of the parts used in RO plants were manufactured in India, and the RO plants were manufactured by the contractor himself or by a consortium of service providers.

In light of the above, TWFS, before the CCI, sought the following reliefs:

1. To declare the above practice of the OPs as anti-competitive in violation of the provisions of Section 3 of the Competition Act;
2. To pass a cease-and-desist order against the OPs, directing them to discontinue their cartel and not to enter such arrangements in future;
3. To impose such penalty on the OPs under the Competition Act, as the CCI deems fit and proper; and
4. To pass such further order and issue such directions to the OPs as the CCI may deem fit in the facts and circumstances of the present case.

The NCLAT, in its analysis of the Order, observed that the CCI had noted in the C&AG Report that there was an observation that the rates quoted by the bidders and reasons explained by them for quoting higher rates were almost similar, indicating some cartelization among the bidders. However, in paragraph 14 of the Order, the CCI had not dealt with the said report in detail but had merely recorded that the circumstances do not show prima facie existence of any concerted action on the part of the OPs in submitting the bids in Tender No.2. The NCLAT further observed that if reasons and facts discussed in the impugned Order are examined in totality and not in isolation, then the need to assess that no detailed reason has been assigned to paragraph 14 does not arise, since the CCI had discussed each and every point as to how tenders were floated and rates were quoted by the participants.

Accordingly, the NCLAT dismissed the appeal.

[1] Competition Appeal (AT) No.17/2021.