# EXCEL CROP CARE LIMITED v. COMPETITION COMMISSION OF INDIA AND ANOTHER

- **Citation:** [2017] 5 S.C.R. 901
- **Court:** Supreme Court of India
- **Decided:** 2017
- **Case number:** Civil Appeal No. 2480 of 2014
- **Bench:** A. K. Sikri, N. V. Ramana
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/excel-crop-care-limited-v-competition-commission-of-india-and-another-32310
- **Pages:** 83

## Headnote

Competition Act, 2002:
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B
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ss. 3(3)(a), 3(3}(b) and 3(3)(d) rlw. s. 3(1) and ss.
26(1),27(b) - Complaint by Food Corporation of India (FCI) -
Alleging that the three appellant companies and one more company
had arrived at anti-competitive agreement in relation to tenders
issued by FCI for Aluminium Phosphide Tablets (APT) between the
years 2007 and 2009 - Competition Commission of India (CCI)
directed investigation - Director General (DG) gave report giving
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prima facie .finding affirming the allegations - CCI concluded that
the appellant-companies entered into anti-competitive agreement in
a concerted manner thereby offending the provisions of s.3 and
imposed penalties on all the three appellants at 9% of average 3
years turnover - Competition Appellate Tribunal confirmed the
finding of CCI - However, reduced the penalty holding that the
penalty at 9% cannot be on the 'total turnover' and has to be
restricted to 9% of the 'relevant turnover' - On appeal questions
whether s. 3 was applicable in respect of tender issued prior to
coming into force of s. 3; whether CCI was barredfi·om investigating
the matter pertaining to tender floated in 20 JI as there was no
complaint about that tender; whether .finding as regards collusive
bidding was justified and whether the penalty has to be on 'total
turnover' or only on the 'relevant turnpver' of the offending
company - Held: Section 3 would be applicable in respect of the
tender issued prior to coming into force of s. 3 as well because the
anti-competitive conduct of the offending companies continued even
after coming into force of s. 3 - 2011 tender also could be the
subject-matter of inquiry even when it was not referred to in the
complaint - Section 26(1) is wide enough to cover the investigation
by DG - While carrying out such investigation, il other facts also
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get revealed, DG would be well within its power to include those as
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well in his report - In the facts of the case. the ingredients of s. 3
stand satisfied and the CCI rightly held that provisions of s. 3(3)(a),
3(3)(b) and 3(3)(d) have been contravened by appellantcompanies - Section 27(b), while prescribing the penalty on the
'turnover', neither uses the prefix 'total' nor 'relevant' - In the
absence of specific provision as to whether such turnover has to be
product specific or entire turnover ol the offending company,
adopting the criteria of 'relevant turnover 'for the purpose of
imposition of penalty will be more in tune with ethos ol the Act and
the legal principles pertaining to imposition of penalties.
Interpretation of Statutes:
lnte1pretation of penal statute - Per Sikri, J.: Interpretation
which brings out inequitable or absurd results has to be
eschewed - Even if two interpretation are possible, one that leans
in favow; of i1?fi"inger has to be adopted, on the principle of strict
interpretation that needs to be given to such statutes - Per
Ramana, J.: Where interpretative exercise involves various equitable
facets, literal interpretation might not be conclusive - An
interpretation should sub-serve the intent and purpose of the
statutory provision.
Doctri nes!Princ iples:
Doctrine of proportionality - Applicability of- Discussed.
Doctrine of purposive inte1pretatio11 - Applicability of:
Principle of 'Noscitur a sociis' - Applicability ol
Dismissing the appeals, the Court
HELD: Per A. K. Sikri, J.: 1.1 Though, the Competition
Act is of the year 2002 and was passed by the Legislature on 13•h
January, 2003, as per the provisions of Section 1(3) thereof, the
Act was to come into force from the date to be notified by the
Central Government in the Official Gazette. Notification was
issued by the Central Government wherein 31'' March, 2003 was
specified as the appointed date. However, vide this notification,
some of the provisions of the Act, and not all the provisions,
were enforced. Section 3 of the Act came into force on 20'" May,
2009 vide S.O.

## Text

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[2017] 5 S.C.R. 901
EXCEL CROP CARE LIMITED
v.
COMPETITION COMMISSION OF INDIA AND ANOTHER
(Civil Appeal No. 2480 of 2014)
MAYOS,2017
[A. K. SIKRI AND N. V. RAMANA, JJ.]
Competition Act, 2002:
A
B
c
ss. 3(3)(a), 3(3}(b) and 3(3)(d) rlw. s. 3(1) and ss.
26(1),27(b) - Complaint by Food Corporation of India (FCI) -
Alleging that the three appellant companies and one more company
had arrived at anti-competitive agreement in relation to tenders
issued by FCI for Aluminium Phosphide Tablets (APT) between the
years 2007 and 2009 - Competition Commission of India (CCI)
directed investigation - Director General (DG) gave report giving
D
prima facie .finding affirming the allegations - CCI concluded that
the appellant-companies entered into anti-competitive agreement in
a concerted manner thereby offending the provisions of s.3 and
imposed penalties on all the three appellants at 9% of average 3
years turnover - Competition Appellate Tribunal confirmed the
finding of CCI - However, reduced the penalty holding that the
penalty at 9% cannot be on the 'total turnover' and has to be
restricted to 9% of the 'relevant turnover' - On appeal questions
whether s. 3 was applicable in respect of tender issued prior to
coming into force of s. 3; whether CCI was barredfi·om investigating
the matter pertaining to tender floated in 20 JI as there was no
complaint about that tender; whether .finding as regards collusive
bidding was justified and whether the penalty has to be on 'total
turnover' or only on the 'relevant turnpver' of the offending
company - Held: Section 3 would be applicable in respect of the
tender issued prior to coming into force of s. 3 as well because the
anti-competitive conduct of the offending companies continued even
after coming into force of s. 3 - 2011 tender also could be the
subject-matter of inquiry even when it was not referred to in the
complaint - Section 26(1) is wide enough to cover the investigation
by DG - While carrying out such investigation, il other facts also
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get revealed, DG would be well within its power to include those as
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901
902
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well in his report - In the facts of the case. the ingredients of s. 3
stand satisfied and the CCI rightly held that provisions of s. 3(3)(a),
3(3)(b) and 3(3)(d) have been contravened by appellantcompanies - Section 27(b), while prescribing the penalty on the
'turnover', neither uses the prefix 'total' nor 'relevant' - In the
absence of specific provision as to whether such turnover has to be
product specific or entire turnover ol the offending company,
adopting the criteria of 'relevant turnover 'for the purpose of
imposition of penalty will be more in tune with ethos ol the Act and
the legal principles pertaining to imposition of penalties.
Interpretation of Statutes:
lnte1pretation of penal statute - Per Sikri, J.: Interpretation
which brings out inequitable or absurd results has to be
eschewed - Even if two interpretation are possible, one that leans
in favow; of i1?fi"inger has to be adopted, on the principle of strict
interpretation that needs to be given to such statutes - Per
Ramana, J.: Where interpretative exercise involves various equitable
facets, literal interpretation might not be conclusive - An
interpretation should sub-serve the intent and purpose of the
statutory provision.
Doctri nes!Princ iples:
Doctrine of proportionality - Applicability of- Discussed.
Doctrine of purposive inte1pretatio11 - Applicability of:
Principle of 'Noscitur a sociis' - Applicability ol
Dismissing the appeals, the Court
HELD: Per A. K. Sikri, J.: 1.1 Though, the Competition
Act is of the year 2002 and was passed by the Legislature on 13•h
January, 2003, as per the provisions of Section 1(3) thereof, the
Act was to come into force from the date to be notified by the
Central Government in the Official Gazette. Notification was
issued by the Central Government wherein 31'' March, 2003 was
specified as the appointed date. However, vide this notification,
some of the provisions of the Act, and not all the provisions,
were enforced. Section 3 of the Act came into force on 20'" May,
2009 vide S.O. 124l(E) dated 15'h May, 2009 on which date the
said notification was published in the Gazette of India as well.
[Para 11 I [928-B-D I
EXCEL CROP CARE LIMITED v. COMPETITION
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COMMISSION OF INDIA
1.2 It is not in dispute that against tender of 2009, all the A
appellants had offered price of '388, even though their cost of
production differed. The Competition Appellate Tribunal
(COMPAT), in the impugned order has rightly held that merely
because 8'11 May, 2009 was the last date for submitting the tender,
that would not be the end of the matter as that is not the relevant
date for the purpose of applicability of Section 3 when the
tendering process continued, as the appellants had participated
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in the said tender process on 1'' June, 2009 when the price bids
were opened and offered the negotiated price on 17'11 June, 2009.
This would mean that process of bidding was still on which went
well beyond the date of notifying provisions of Section 3 of the
Act. The COMPAT has also rightly noted that the anti-competitive
conduct of the appellants was not limited to the 2009 tender alone.
It had considered tender dated November 03, 2009 floated by
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the U.P. State Warehousing Corporation, tender dated .luly 13,
2010 of the Central Warehousing Corporation, tender dated July
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15, 2010 of the M.P. State Warehousing Corporation, and tender
dated February 14, 2011 of the Punjab State Cooperative SS &
Marketing Federation and found that even against these tenders
the appellants had quoted identical prices. Keeping in view the
said pattern of quotation, the COMPAT rightly opined that
notwithstanding any objection of the appellants premised on
retrospective application of Section 3, the anti-competitive conduct
of Aluminium Phosphide Tablets (APT) manufacturers, i.e. the
appellants, continued right up to the year 2011, much after Section
3 of the Act had come into force. Therefore, even if 2009 tender
was to be completely ignored, the provisions of the Act would
nevertheless be attracted in the instant case. The provisions of
Section 3 are applicable to 2009 tender as well. !Paras 14, 151
[929-E-F; 931-C-EI
1.3 The Act, which prohibits anti-competitive agreements,
has a laudable purpose behind it. It is to ensure that there is a
healthy competition in the market, as it brings about various
benefits for the public at large as well as economy of the nation.
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In fact, the ultimate goal of competition policy (or for that matter,
even the consumer policies) is to enhance consumer well-being.
These policies are directed at ensuring that markets function
effectively. Competition policy towards the supply side of the H
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market aims to ensure that consumers have adequate and
affordable choices. Another purpose in curbing anti-competitive
agreements is to ensure 'level playing field' for all market players
that helps markets to be competitive. It sets 'rules of the game'
that protect the competition process itself, rather than
competitors in the market. In this way, the pursuit of fair and
effective competition can contribute to improvements in economic
efficiency, economic growth and development of consumer
welfare. Competition is beneficial for the economy. (Paras 17,
19) (932-A-C; 934-C-D)
1.4
Competition
law
enforcement
deals
with
anti-competitive practices arising from the acquisition or exercise
of undue market power by firms that result in consumer harm in
the forms of higher prices, lower quality, limited choices and lack
of innovation. Enforcement provides remedies to avoid situations
that will lead to decreased competition in markets. Effective
enforcement is important not only to sanction anti-competitive
conduct but also to deter future anti-competitive practices. (Para
19) (935-E)
1.5 Cartels or anti-competitive agreements cause harm to
consumers by fixing prices, limiting outputs or allocating markets.
Effective enforcement against such practices has direct visible
effects in terms of reduced prices in the market and this is also
supported by various empirical studies. (Para 201 (935-F-G)
1.6 Keeping in view the afor.esaid objectives that need to
be achieved, Indian Parliament enacted Competition Act, 2002.
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Need to have such a law became all the more important in the
wake of liberalisation and privatisation as it was found that the
law prevailing at that time, namely, Monopolistic Restrictive
Trade Practices Act, 1969 was not equipped adequately enough
to tackle the competition aspects of the Indian economy. The
law enforcement agencies, which include Competition
G Commission of India (CCI) and COMPAT, have to ensure that
these objectives are fulfilled by curbing anti-competitive
agreements. (Para 21) 1935-G-H; 936-A-BI
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1. 7 In view of the explanation to Section 3(3)(d) also May
08, 2009 cannot be the determinative date on which the bid was
EXCEL CROP CARE LIMITED v. COMPETITION
COMMISSION OF INDIA
submitted, as 'manipulating the process of bidding' is also covered
by virtue of the said explanation and this process of bidding
continued even after May 20, 2009. The appellants had
'manipulated the process of bidding' on the ground that bids were
submitted on May 08, 2009 collusively, which was only the
beginning of the anti-competitive agreement between the parties
and this continued through the opening of the price bids on June
01, 2009 and thereafter negotiations on June 17, 2009 when all
the parties reduced their bids by same figure of '2 to bring their
bid down to '386 per kg. from '388 per kg. From this example,
he submitted that on May 08, 2009 there was a collusive bidding
but with concerted negotiations on June 17, 2009, in the continued
process, it was rigging of the bid that was practiced by the
appellants. [Paras 29, 311 [941-G-H; 942-E-Fl
1.8 Collusive bidding/bid rigging which includes: (a) Level
tendering/bidding (i.e. bidding at same price - as in the present
case); (b) Cover bidding/courtesy bidding; (c) Bid rotation; (d)
Bid Allocation. Even internationally, 'collusive bidding' is not
understood as being different from 'bid rigging'. These two
expressions have been used interchangeably. [Paras 32, 33[ [942G-H; 943-A-Bl
Competition Law by Richard Whish and David Bailey
7'h Edition, page 536; UNCTAD Competition Glossmy
dated June 22, 2016; OECD Glossmy of Industrial
Organisation Economics & Competition Law; OECD
Guidelines for.fighting bid rigging; United States 0.ffice
of the Inspector General, Investigations (Fraud
Indicators Handbook)- referred to.
1.9 The Legislature had in mind that the two expressions
are inter-changeably used. Sub-section (1) of Section 3 is couched
in the negative terms which mandates that no enterprise or
association of enterprises or person or association of persons
shall enter into any agreement, when such agreement is in respect
of production, supply, distribution, storage, acquisition or control
of goods or provision of services and it causes or is likely to
cause an appreciable adverse effect on competition within India.
It can be discerned that first part relates to the parties which are
prohibited from entering into such an agreement and embraces
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within it persons as well as enterprises thereby signifying its very
wide coverage. This becomes manifest from the reading of the
definition of "ente171rise" in Section 2(h) and that of 'person' in
Section 2(1) of the Act. Second part relates to the subject matter
of the agreement. Again it is very wide in its ambit and scope as
it covers production, supply, distribution, storage, acquisition or
control of goods or provision of services. Third part pertains to
the effect of such an agreement, namely, 'appreciable adverse
effect on competition', and if this is the effect, purpose behind
this provision is not to allow that. Obvious purpose is to thwart
any such agreements which are anti-competitive in nature and
this salubrious provision aims at ensuring healthy competition.
Sub-section (2) of Section 3 specifically makes such agreements
as void. Sub-section (3) mentions certain kinds of agreements
which would be treated a.s ipso facto causing appreciable adverse
effect on competition. It is in this backdrop and context that
'Explanation' beneath sub-section (3), which uses the expression
'bid rigging', has to be understood and given an appropriate
meaning. It could never be the intention of the Legislature to
exclude 'collusive bidding' by construing the expression 'bid
rigging'narrowly. No doubt, clause (d) of sub-section (3) of Section
3 uses both the expressions 'bid rigging' and 'collusive bidding',
but the Explanation thereto refers to 'bid rigging' only. However,
it cannot be said that the intention was to exclude 'collusive
bidding'. Even if the Explanation does contain the expression
'collusive bidding' specifically, while interpreting clause (d), it can
be inferred that 'collusive bidding' relates to the process of bidding
as well. Keeping in mind the principle of purposive interpretation,
this meaning is given to 'collusive bidding'. It is more so when
the expressions 'bid rigging' and 'collusive bidding' would be
overlapping, under certain circumstances. The two expressions
are to be interpreted using the principle of 11oscit11r a sociis, i.e.
when two or more words which are susceptible to analogous
G meanings arc coupled together, the words can take colour from
each other. (Para 34( f944-H; 945-A-II]
Leelabai Gajanan Pansare & Ors. v. Oriental insurance
Company Limited & Ors. (2008) 9 SCC 720 : f 2008]
12 SCR 248; Thakorla/ D. Vadgama v. State of Gujarat
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(1973) 2 sec 413 : (1974] lSCR 178; M. K.
EXCEL CROP CARE LIMITED v. COMPETITION
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COMMISSION OF INDIA
Ranganathan v. Government of Madras & Ors. [19551
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2 SCR 374 - relied on.
1.10 In view of the aforesaid purpose sought to be achieved
and when applied to the facts of the present case, after finding
that the anti-competitive conduct of the appellants continued after
coming into force of provisions of Section 3 of the Act as well, the B
plea of retrospectivity pales into insignificance. In the aforesaid
conspectus, principle of retroactivity would definitely apply. The
CCI was well within its jurisdiction to hold an enquiry under
Section 3 of the Act in respect of tender of March, 2009. [Paras
22, 26 and 341 1936-B; 939-E; 946-BI
Competition Commission of India v. Steel Authority of
India Limited & Anr. (2010) 10 SCC 744: [20101 11
SCR112; R. Rajagopal Reddy (Dead) by LRs. & Ors. v.
Padmini Chandrasekharan (Dead) By Lrs. (1995) 2 SCC
630 : (19951 1 SCR 715; Zile Singh v. State of Haryana
& Ors. (2004) 8 SCC 1 : (20041 5 Suppl. SCR 272 -
relied on.
Kingfisher Airlines v. Competition Commission of India
(2010) 4 Comp. LJ 557 (Born) - approved.
2. It cannot be said that the 2011 tender could not be the
subject matter of inquiry when it was not referred to in the
communication of the Food Corporation of India (FCI) or order
of the CCI. Section 26(1) is wide enough to cover the investigation
by the Director General (DG). The entire purpose of such an
investigation is to cover all necessary facts and evidence in order
to see as to whether there are any anti-competitive practices
adopted by the persons complained against. For this purpose, no
doubt, the starting point of inquiry would be the allegations
contained in the complaint. However, while carrying out this .
investigation, if other facts also get revealed and are brought to
light, revealing that the 'persons' or 'enterprises' had entered
into an agreement that is prohibited by Section 3 which had
appreciable adverse effect on the competition, the DG would be
Well within his powers to include those as well in his report. Even
when the CCI forms prima facie opinion on receipt of a complaint
which is recorded in the order passed under Section 26(1) of the
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Act and directs the DG to conduct the investigation, at the said
initial stage, it cannot foresee and predict whether any violation
of the Act would be found upon investigation and what would be
the nature of the violation revealed through investigation. If the
investigation process is to be restricted in the manner projected
by tile appellants, it would defeat the very purpose of the Act
which is to prevent practices having appreciable adverse effect
on the competition. [Paras 35, 361 [946-D; 948-G-H; 949-A-Cf
3.1 It was not only 2009 FCI tender in respect of which DG
found the violation. Pertinently, the investigation of DG revealed
that the appellants had been quoting such identical rates much
prior to and even after May 20, 2009. No doubt, in relation to
tenders prior to 2009, it cannot be said that there was any violation
of law by the appellants. However, prior practice definitely throws
light on the formation of cartelisation by the appellants, thereby
making it easier to understand the events of 2009 tender. [Para
37) [949-E-GI
3.2 The trend of quoting identical price in respect of so many
tenders, not only of FCI but other Government bodies as well, is
sufficient to negate all explanations given by the appellants taking
the pretext of coincidence or economic forces. [Para 381 [951-DI
3.3 It is not correct to say that since dominant position is
enjoyed by the buyer, it leads to parallel pricing and this conscious
parallelism takes place leading to quoting the same price by the
suppliers. Argument of parallelism is not applicable in bid cases
and it fits in the realm of market economy. There cannot be
coincidence to such an extent that almost on all occasions price
quoted by the three appellants is identical, not even few paisa
more or less from each other. That too, when the cost structure,
i.e. cost of production of this product, of the three appellants
sharply varies with each other. [Paras 39, 401 [951-F; 952-A-Cf
3.4 There is a 10 years' history of quoting identical prices.
There are only four suppliers of the product in the market out of
which three are the appellants. Even when the cost of production
is different, they have quoted identical price. Even when. the
geographical location of the three suppliers is different, strange
coincidence of identical pricing is found, that too repeatedly. Profit
EXCEL CROP CARE LIMITED v. COMPETITION
909
COMMISSION OF INDIA
margins would be different, still quotations are same. To different A
parties in respect of different tenders, different rates are quoted.
Still whatever price is quoted in respect of one particular tender,
that is identical. It would be too much of a coincidence, difficult
to believe. Thus, onus was on the appellants in view of Section 3
of the Act, and that too heavy onus, to justify the above trend, but B
they have failed to discharge this burden. Therefore, the
ingredients of Section 3 stand satisfied and the CCI rightly held
that provisions of Section 3(3)(a), 3(3)(b) and 3(3)(d) have been
contravened by the appellants. [Para 40] [952-C-G[
3 .5 It is not in dispute that all the three appellants, as well
as M/s. Agrosynth Chemicals Limited did not participate in the
tender of May, 2011. These are the four manufacturers in all.
According to all the appellants, their decision not to participate
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in the aforesaid bid was the onerous, unreasonable, arbitrary and
unquestionable conditions that were put in the said tender. As
these were not acceptable to them, they individually decided not D
to take part in the tender, which was a valid business decision
and not result of pre-concerted agreement of the appellants. From
the conduct of the three appellants, it becomes manifest that
reason to boycott the May 2011 tender was not the purported
onerous conditions, but it was a concerted action. Otherwise, if
the appellants were genuinely interested in participating in the
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said tender and were aggrieved by the aforesaid conditions, they
could have taken up the matter with the FCI well in time. They,
therefore, could request the FCI to drop the same (in fact FCI
dropped these conditions afterwards when the matter was brought
to their notice). However, no such effort was made. Therefore,
not making any sincere effort in this behalf by any of the appellants
clearly shows that they were in hand in glove in taking a decision
not to bid against this tender. This conclusion gets strengthened
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by the fact that these are the only four suppliers (including three
appellants) in the market for this product. Reaction of not
participating in the said tender by four suppliers could have been
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perceived otherwise, had there been a number of manufacturers
in the market and four out of them abstaining. Abstention by
hundred percent (who are only four) makes the things quite
obvious. Events get quite apparent when examined along with
past history of quoting identical prices. Since collusion stands
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proved by the conduct of the appellants in abstaining from the
bidding in respect of May 2011 tender, requirement of Section
3(3)(d) of the Act read with 'explanation' thereto stands satisfied,
viz., concerted action based on an agreement/arrangement
between the appellants, resulted in restricting or manipulating
competition or process of bidding, since the said act was collusive
in nature. [Paras 45, 48 and 491 [954-E-G; 955-F-H; 956-A-EI
Dyestuffs, Imperial Chemical Industries Ltd v.
Commission of the European Communities (1972) ECR
619 - referred to.
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4.1 Under Section 27(b) of the Act, penalty of 10% of the
turnover is prescribed as the maximum penalty with no provision
for minimum penalty. CCI had chosen to impose 9% of the
average turnover keeping in view the serious nature of the breach
on the part of these appellants. The COMPAT has maintained
the rate of penalty i.e. 9% of the three years average turnover.
D However, it has not agreed with the CCI that 'turnover' mentioned
in Section 27 would be 'total turnover' of the offending company.
In its opinion it has to be 'relevant turnover' i.e. turnover of the
product in question. [Paras 52, 531 (957-A-Cf
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4 .2 Insofar as the third appellant is concerned, the 'relevant
turnover' and 'total tu.rnover' is the same as this company
produced only APT. CCI had imposed penalty of '1.57 crores
on the basis of their turnover of this product. However, in its
case also, penalty is reduced on the ground that it is relatively a
small enterprise. Moreover, in respect of May 2011 tender, it
could not have taken part since its production capacity was only
25 MT a month. Though, the aforesaid plea was not accepted
while discussing the merits of the case, the COMPAT deemed it
proper to take this aspect into consideration when it came to
imposition of penalty. On the aforesaid basis, COMPAT reduced
the penalty to 1110"' of penalty awarded by CCI i.e. '15.70 lakhs.
G It, therefore, held that penalty of 9% would be limited to the
product/service in question - in this case, the APT - which was
the relevant product for the enquiry. The penalty, thus, stands
substantially reduced in the cases of the two appellants. (Paras
53, 54] [957-C-D, F-H; 958-A]
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4.3 Section 27(b) of the Act while prescribing the penalty
EXCEL CROP CARE LIMITED v. COMPETITION
COMMISSION OF INDIA
on the 'turnover', neither uses the prefix 'total' nor 'relevant'.
In the absence of specific provision as to whether such turnover
has to be product specific or entire turnover of the offending
company, adopting the criteria of 'relevant turnover' for the
purpose of imposition of penalty will be more in tune with ethos
of the Act and the legal principles which surround matters
pertaining to imposition of penalties. [Paras 73, 741 [965-E-FI
4.4 Under Section 27(b) of the Act, penalty can be imposed
under two contingencies, namely, where an agreement referred
to in Section 3 is anti-competitive or where an enterprise which
enjoys a dominant position misuses the said dominant position
thereby contravening the provisions of Section 4. In case where
the violation or contravention is of Section 3 of the Act, it has to
be pursuant to an 'agreement'. Such an agreement may relate to
a particular product between persons or enterprises even when
such persons or enterprises are having production in more than
one product. There may be a situation, which is precisely in the
instant case, that some of such enterprises may be multi-product
companies and some may be single product in respect of which
the agreement is arrived at. [Para 74[ [965-G-H; 966-A-B[
4.5 Interpretation which brings out such inequitable or
absurd results has to be eschewed. The principle of strict
interpretation of a penal statute would support and supplement
the aforesaid conclusion. Even if two interpretations are possible,
one that leans in favour of infringer has to be adopted, on the
principle of strict interpretation that needs to be given to such
statutes. [Para 74[ [966-C; 970-F; 971-F-GI
Abhiram Singh and Others v. C.D. Commachen (Dead)
by L.Rs. and Ors. AIR 2017 SC 401: [20171'1 SCR
158 - followed.
911
A
B
c
D
E
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4.6 When the agreement leading to contravention of
Section 3 involves one product, there seems to be no justification
G
for including other products of an enterprise for the purpose of
imposing penalty. This is also clear from the opening words of
Section 27 read with Section 3 which relate to one or more
specified products. It also defies common sense that though
penalty would be imposed in respect of the infringing product,
the 'maximum penalty' imposed in all cases be prescribed on the
H
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basis of 'all the products' and the 'total turnover' of the enterprise.
It would be more so when total turnover of an enterprise may
involve activities besides production and sale of products, like
rendering of services etc. It, therefore, leads to the conclusion
that the turnover has to be of the infringing products and when
that is the proper yardstick, it brings home the concept of 'relevant
turnover'. [Para 741 [971-G-H; 972-A-BJ
4. 7 Even the doctrine of 'proportionality' would suggest that
the Court should lean in favour of 'relevant turnover'. No doubt
the objective contained in the Act, viz., to discourage and stop
anti-competitive practices has to be achieved and those who are
perpetrators of such practices need to be indicted and suitably
punished. It is for this reason that the Act contains penal
provisions for penalising such offenders. At the same time, the
penalty cannot be disproportionate and it should not lead to
shocking results. That is the implication of the doctrine of
proportionality which is based on equity and rationality. It is, in
fact, a constitutionally protected right which can be traced to
Article 14 as well as Article 21 of the Constitution. The doctrine
of proportionality is aimed at bringing out 'proportional result or
proportionality stricto sensu '. It is a result oriented test as it
examines the result of the law in fact the proportionality achieves
balancing between two competing interests: harm caused to the
society by the infringer which gives justification for penalising
the infringer on the one hand and the right of the infringer in not
suffering the punishment which may be disproportionate to the
seriousness of the Act. (Para 741 1972-C-EI
4.8 No doubt, the aim of the penal provision is also to ensure
that it acts as deterrent for others. At the same time, such a
position cannot be countenanced which would deviate from
'teaching a lesson' to the violators and lead to the 'death of the
entity' itself. (Para 74] 1972-FI
4.9 If the criteria of total turnover of a company by including
within its sweep the other products manufactured by the company,
which were in no way connected with anti-competitive activity, it
would bring about shocking results not comprehended in a country
governed by Rule of Law. Cases at hand itself amply demonstrate
H that the CCI's contention, if accepted, would bring about
EXCEL CROP CARE LIMITED v. COMPETITION
913
COMMISSION OF INDIA
anomalous results. (Para 741 [972-G)
A
4.10 The doctrine of 'purposive interpretation' may again
lean in favour of 'relevant turnover' as the appropriate yardstick
for imposition of penalties. There is a legislative link between
the damage caused and the profits which accrue from the cartel
activity. There has to be a relationship between the nature of B
offence and the benefit derived therefrom and once this
co-relation is kept in mind, while imposing the penalty, it is the
affected turnover, i.e., 'relevant turnover' that becomes the
yardstick for imposing such a penalty. In this hue, doctrine of
'purposive interpretation' as well as that of 'proportionality'
overlaps. (Para 74) [973-C-El
c
4.11 The purpose and objective behind the Act is to
discourage and stop anti-competitive practice. Penal provision
contained in Section 27 of the Act serves this purpose as it is
aimed at achieving the objective of punishing the offender and
acts as deterrent to others. Such a purpose can adequately be
D
served by taking into consideration the relevant turnover. It is
in the public interest as well as in the interest of national economy
that industries thrive in this country leading to maximum
production. Therefore, it cannot be said that purpose of the Act
is to 'finish' those industries altogether by imposing those kinds
E
of penalties which are beyond thefr means. It is also the purpose
of the Act not to punish the violator even in respect of which
there are no anti-competitive practices and the provisions of the
Act are not attracted. [Para 74) [973"F-Hl
4.12 In the countries where the principle of 'total turnover'
was prevalent, in some of the jurisdictions, the guidelines are
also framed which ensure that the penalty does not become
disproportionate, for example, in the UK, the Office of Fair Trade
(OFT) has 'guidelines as to the appropriate amount of penalty'.
In contrast, there are no similar guidelines issued as far as India
is concerned and in the absence thereof imposition of penalty,
taking into consideration total turnover, may bring about
disastrous results which happened in the instant case itself with
the imposition of penalty by the CCI. Thus, there is no error in
the approach of the order of the COMPAT interpreting Section
27(b). [Para 74) [974-B-E)
F
G
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•
A
B
c
D
E
F
State qf Jharkhand and Another v. Govind Singh (2005)
10 SCC 437 : [2004) 6 Suppl. SCR 651; Commissioner
of Income Tax, Bangalore v. J.H Yadagiri (1985) 4 SCC
343 : [1985] 2 Suppl. SCR 711; Southern Motors v.
State of Karnataka and Others AIR 2017 SC 476 -
relied on.
Prabhudas Damodar Kotecha & Ors. v. Manhabald
Jeram Damodar & Am: (2013) 15 SCC 358 : 12013) 9
SCR 52; Raghunath Rai Bareja & Anr. v. Punjab
National Bank & Ors. (2007) 2 SCC 230 : [2006) 10
Suppl. SCR 287; V.L.S. Finance Ltd. v. Union of India
& Ors. (2013) 6 SCC 278: [20131 8 SCR 849; Bharat
Aluminium Company v. Kaiser Aluminium Technical
Services Inc. (2012) 9 SCC 552 : [2012) 12 SCR 327;
Suresh Chand v. Gulam Chisti (1990) 1 SCC 593 :
[1990) 1 SCR 186; Raghubans Narain Singh v. Uttar
Pradesh Government through Collector of Bijnor [1967)
1 SCR 489; Arvind Mohan Sinha v. Amulya Kumar
Biswas & Ors. (1974) 4 SCC 222 : [1974] 3 SCR 133;
State of Haryana & Ors. v. Sant Lal & Am: (1993) 4
SCC 380 : [19931 2 Suppl. SCR 238; Bhagat Ram v.
State of Himachal Pradesh & Ors. (1983) 2 SCC 442 -
referred to.
Southern Pipeline Contractors Conrite Walls (Pty) Ltd.
v. The Competition Commission Case No. 105/CAC/
Dec 10) (106/CAC/Dec 10); Ontario vs. Canadian
Pacific Ltd. [19951 2 SCR 1031 - referred to.
Per N. V. Ramana, J.: (Concurring)
HELD: 1. A plain reading of Section 27 of the Act elucidates
that the Commission is empowered to impose penalty and to the
extent as it deems fit but not exceeding ten percent of the
G turnover. Section 27(b) emphasize that penalty is to be levied on
'person or enterprise' who have contravened Section 3 or Section
4 of the Act. [Para 6) [978-C]
2. Change brought about by the amendment to Section
27(b) is that the mandatory nature of the Proviso was made
H discretionary by substitution of'shall' with 'may'. This amendment
EXCEL CROP CARE LIMITED v. COMPETITION
915
COMMISSION OF INDIA
was done to bring the proviso in tune with the rest of Section 27,
A
which uses the expression "it may pass all or any of the following
order" and main part of clause (b), which confers discretion upon
the Commission to impose penalty as it may deem fit, subject to
the rider that it shall not be more than 10% of the average of the
turnover for the last three preceding financial years. Clauses (c)
B
and (d) of Section 27 also use the word 'may', which signifies that
the Commission has the discretion to pass a particular order,
which it may deem proper in the facts and circumstances of the
case. (Para 6) (978-E-Gl
3. As the interpretative exercise, as in the present case,
involves various equitable facets, literal interpretation might not C
be conclusive. An interpretation should sub-serve the intent and
purpose of the statutory provision. Therefore the Court would
have to look beyond the plain and simple meaning, to extract the
intention of the Act and rationalize the fining policy under Section
27 (b) of the Act. !Para 8) (979-DI
D
BCN Aduanasy Transporters, SA v. Attorney General
Judgment of the Supreme Court of Spain No. 112/2015,
Case 2872/2013, OCL 183 (ES 2015) dated 29'"
January 2015; Southern Pipeline Contractors Conrite
Walls (Pty) Ltd. And the Competition Commission 105/
E
CAC/DeclO (South Africa) - referred to.
4. The Competition Act, 2002 is a regulatory legislation
enacted to maintain free market so that the Adam Smith's concept
of invincible hands operate unhindered in the background.
Further it is clear from the Statement of objects and reason that
this law was foreseen as a tool against concentration of unjust
monopolistic powers at the hands of private individuals which
might be detrimental for freedom of trade. Competition law in
India aims to achieve highest sustainable levels of economic
growth, entrepreneurship, employment, higher standards of living
F
for citizens, protect economic rights for just, equitable, inclusive
G
and sustainable economic and social development, promote
economic democracy, and support good governance by restricting
rent seeking practices. Therefore an interpretation should be
provided which is in consonance with the aforesaid objectives.
(Para 9] (979-E-GJ
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CCI v. SAIL (2010) 10 sec 744 : (20101 11 SCR 112
- relied on.
5. The usage of the phrase 'as it may dee in fit' as occurring
under Section 27 of the Act, is indicative of the discretionary
power provided for the fining authority under the Act. As the law
abhors absolute power and arbitrary discretion, this discretion
provided under Section 27 needs to be regulated and guided so.
that there is uniformity and stability with respect to imposition of
penalty. This discretion should be governed by rule of law and
not by arbitrary, vague or fanciful considerations. [Para 101 [979G-H; 980-A-BI
Dilip N. Shro.fJv. Joint CIT (2007) 6 SCC 329 : [20071
7 SCR 499; Hindustan Steel Ltd. vs. State of Orissa AIR
1970 SC 253 : [19701 1 SCR 753 - relied on.
6. Any penal law imposing punishment is made for general
D good of the society. As a part of equitable consideration, only
those should be punished who deserve it and to the extent of
their guilt. Further it is well established that the principle
of proportionality requires the fine imposed must not exceed what
is appropriate and necessary for attaining the object pursued.
[Para 111 [981-D-EJ
E
F
G
Coimbatore District Central Co-operative Bank v.
Coimbatore District Central Co-operative Bank
Employees Assn. (2007) 4 SCC 699 - relied on.
7. In consonance of established jurisprudence, the principle
of proportionality needs to be imbibed irito any penalty imposed
under Section 27 of the Act. Otherwise excessively high fines
may over-deter, by discouraging potential investors, which is not
the intention of the Act. Therefore the fine under Section 27(b)
of the Act should be determined on the basis of the relevant
turnover. [Para 111 (982-A-BI
8. The starting point of determination of appropriate
penalty should be to determine relevant turnover and thereafter
the tribunal should calculate appropriate percentage of penalty
based on facts and circumstances of the case taking into
consideration various factors while determining the quantum. But
H such penalty should not be more than the overall cap of 10% of
EXCEL CROP CARE LIMITED v. COMPETITION
917
COMMISSION OF INDIA
the entity's relevant turnover. Such interpretation of Section 27
A
(b) of the Act, wherein the discretion of the Commission is guided
by principles established by law would sub-serve the intention of
the enactment. [Para 141 [982-G-H; 983-AI
Case Law Reference
In the Judgment of A. K. Sikri, J.:
B
[20101 11 SCR112
relied on
Para 22
[19951 1 SCR 715
relied on
Para 26
[2004] 5 Suppl. SCR 272
relied on
Para 26
(2010) 4 Comp. LJ 557 (Born)
approved
Para 27
c
[2008] 12 SCR 248
relied on
Para 34
[19741 1 SCR 178
relied on
Para 34
[1955] 2 SCR 374
relied on
Para 34
D
[20131 9 SCR 52
referred to
Para 58
[2006] 10 Suppl. SCR 287
referred to
Para 58
[2013] 8 SCR 849
referred to
Para 58
[2012] 12 SCR 327
referred to
Para 58
E
[1990] 1 SCR 186
referred to
Para 61
[1967] 1 SCR 489
referred to
Para 61
[1974) 3 SCR 133
referred to
Para 68
[1993) 2 Suppl. SCR 238
referred to
Para 68
F
(1983) 2 sec 442
referred to
Para 68
106/CAC/Dec 10
referred to
Para 71
[1995) 2 SCR 1031
referred to
Para 74
[2004] 6 Suppl. SCR 651
relied on
Para 74
G
[1985] 2 Suppl. SCR 711
relied on
Para 74
AIR 2017 SC 476
relied on
Para 74
[2017) 1 SCR 158
followed
Para 74
H
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In the Judgment of N.V. Ramana, J.:
[2010) 11 SCR 112
relied on
Para 10
[2007] 7 SCR 499
relied on
Para 10
[1970) 1 SCR 753
relied on
Para 10
(2007) 4 sec 699
relied on
Para 11
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2480
of2014.
From the Judgment and Order dated 29.10.2013 of the Competition
Appellate Tribunal in Appeal No. 79 of2012
WITH
C. A. Nos. 53-55, 2874 and 2922 of2014.
N. K. Kaul, ASG, Krishnan Venugopal, Sr. Adv, Rahul Goel,
Ms. Anu Monga, N eeraj Lalwani, Rishabh Arora, Ni tish Sharma, Gourav
D
Ray, Rohit K. Singh, Arjun Krishnan, Sanyat Lodha, Vaibhav Gaggar,
Ankur Singh, Ms. Neha Mishra, Saksham Dhingra, B. Vivekananda,
Ravinder Narain, Ms. Kanika Gomber, Kishan Rawat, Siddharth Banthia,
Rajan Narain, Neeraj Choudhary, Mohit Paul, Ms. Diksha Jhingan, Kirt
Agarwal, Vikas Arora, Mohit Paul, Ajit Pudussery, K. Vijayan,
E
S. H. Hazarika, Advs., for the appearing parties.
The Judgments of the Court were delivered by
A. K. SIKRI, J. 1. All these Civil Appeals arise out of the
common judgment and order dated October 29, 2013 passed by the
Competition Appellate Tribunal (for short, 'COMPAT'). These
F
proceedings have their origin in the letter dated Febrnary 04, 2011 written
by the Food Corporation of India (for short, 'FCI') to the Competition
Commission oflndia (for short, 'CCI') complaining ofan anti-competitive
agreement purportedly arrived at between Mis. Excel Crop Care Limited,
Mis. United Phosphorous Limited (for short, 'UPL'), Mis. Sandhya
G
Organics Chemicals (P) Ltd. respectively (the appellants in CA Nos.
2480, 2874 and 2922 of 2014 and hereinafter referred to as the
'appellants') and Agrosynth Chemicals Limited, in relation to tenders
issued by the FCI for Aluminium Phosphide Tablets (for short, 'APT')
of 3 gms. between the years 2007 and 2009.