Bengal Tools Limited, in Re, 1986 SCC OnLine MRTPC 11

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1986 SCC OnLine MRTPC 11 : (1988) 63 Comp Cas 468
Before the M.R.T.P. Commission

(BEFORE D.C. AGGARWAL AND M. SATYAPAL, MEMBERS)
Bengal Tools Limited, In re

RTPE No. 120 of 1984
Decided on April 25, 1986
Page: 469
The order of the Bench was delivered by

D.C. AGGARWAL, MEMBER:— This is an enquiry instituted under section 10(a)(iv)
read with section 37 of the Monopolies and Restrictive Trade Practices Act, 1969,
against the abovesaid four respondents for their having quoted identical rates in
concert with each other in response to tender No. PU(7)/149, dated April 12, 1982,
floated by M/s. Salem Steel Plant and opened on June 8, 1982. They are also said to
have quoted identical rates in concert in response to tender No. PU7/(89) opened on
November 9, 1981. Notice of enquiry under regulation 58 of the Monopolies and
Restrictive Trade Practices Commission Regulations, 1974, dated November 24, 1984,
was issued and the instances of collusive tendering in response to these two tenders
were attached with the notice of enquiry, vide annexures I and II.
2. The respondents manufacture and deal in shear blades/knives of different sizes
and slitting cutters. Annexure I gives quotations with respect to the supply of crop
shear knives, crop chopper, circular shear, crop shear blades, resquaring shear,
notching tools, etc., while annexure II gives the quotations for slitting cutters. All the
four respondents filed their respective replies to the notice of enquiry and controverted
the allegations of collusive tendering. It is stated that the notice of enquiry is silent
with respect to differentials as respects the validity period of the offer, excise duties,
sales tax, delivery terms, freight, discount and earnest money deposits, etc. It is
further stated that there was no shortage of these items in the market and that Salem
had placed orders outside India rather than procuring supplies from the respondents.
According to them, the rates quoted by them individually are the lowest rates keeping
in mind the cost of the raw material, import duty where the same is obtained from out
of India, wages, oil, machining cost, installed capacity, overheads and above all the
desire to obtain the order.
Page: 470
So far as respondent No. 1 is concerned, it says that in the wake of negotiations with
Salem Steel Plant, revised rates were offered but only a partial order was placed with
it even at the revised prices. Respondent No. 2 says that some negotiations took place
on August 19, 1982, and it agreed to give discount at 5% but even then an order for a
few items only was given on trial basis. Subsequently, the Government increased the
import duty on raw material. On this account, it was constrained to offer revised rates
in the course of direct talks with Salem Steel Plant but they did not place any order
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with it. Respondent No. 3 says that he was not at all called for negotiations for the
purpose of revising the rates quoted by it in response to the tenders but some other
parties were called for negotiations. Respondent No. 4 stated that on July 26, 1982,
and August 2, 1982, it addressed a communication to Salem Steel Plant in reply to
various queries but even then no order was placed for any supplies. In this way, it is
pleaded that the tenders submitted by them were not acted upon by M/s. Salem Steel
Plant and they did not suffer any loss or injury. Alternatively, they claim that the trade
practice in this particular case is not prejudicial to public interest under clause (h)
read with the balancing clause of section 38 of the Monopolies and Restrictive Trade
Practices Act and that there is no direct or indirect restriction on, or discouragement
of, competition to any material degree.
3. On these premises, according to the respondents, the notice of enquiry is liable

to be discharged.
4. The Director-General filed a rejoinder controverting the pleas made by the
respondents in their respective replies to the notice of enquiry and emphasized that so
far as the question of non-furnishing a copy of the preliminary investigation report was
concerned, no request had been made on behalf of the respondents of the same. On
March 5, 1985, as per request of learned counsel for the respondents, a copy of the
preliminary investigation report was directed to be furnished.
5. It may be mentioned that the Director-General also applied for leave to deliver
interrogatories to the respondents under regulation 74 of the Monopolies and
Restrictive Trade Practices Commission Regulations, 1974, whereby the ex-factory
costs of shear blades/knives of various sizes at the time of submitting the tenders
which were opened on June 8, 1982, and the ex-factory cost of 10mm, 15mm and
20mm slitting cutters the tenders in respect of which were opened on November 9,
1981, were sought.
6. In the context of the pleadings of the respondents and the allegations in the
notice of enquiry, the following issues were framed for the purpose of enquiry:
Page: 471
1. Whether the enquiry is not maintainable for the preliminary grounds alleged by
the respondents in their reply to the notice of enquiry?
2. Whether the respondents have been indulging in the trade practices as
mentioned in the notice of enquiry dated November 24, 1984?
3. If the answer to issue No. 1 is in the affirmative, then whether the said trade
practice(s) is/are restrictive trade practices within the meaning of section 2(o) of
the Monopolies and Restrictive Trade Practices Act, 1969?
4. If the answer to issue No. 2 is in the affirmative, then whether the respondents
are entitled to avail of the gateways provided under section 38(1) and the
balancing clause thereunder.
5. To what reliefs are the parties entitled?
Issue No. 1:
7. Learned counsel for the respondents did not canvass before this Commission any
specific point that would render the enquiry unmaintainable. As a matter of fact, the
instances of collusive tendering are to be found elaborately described in annexures I
and II appended to the notice of enquiry. The question as to whether the identity of
the rates quoted by the respondents was fortuitous or due to concert amongst them is
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a matter to be decided on due appraisal of the evidence brought on the record.

Therefore, the objections, if any, raised by the respondents in their respective replies
to the notice of enquiry in this respect are without any merit. The issue is decided
against the respondents.
Issues Nos. 2 and 3:
8. Shri B.K. Rajgopal, AW-1, is the Deputy Chief Materials Manager, Salem Steel
Plant. He referred to the complaint, exhibit A-1, vide letter dated October 10, 1983,
addressed to the Commission. Exhibit A-2 is the comparative statement of prices
quoted by the respondents in response to the tenders opened on June 8, 1982. Mr.
B.K. Rajgopal stated that this tender was for supply of shear blades/knives for various
units of the plant. He also referred to the letter dated January 31, 1984, addressed to
this Commission whereby details of collusive tendering in the matter of the tender
opened on November 9, 1981, were also sent to this Commission. The letter and the
statement are respectively exhibit A-3 and exhibit A-4. The terms and conditions and
the quantities required to be supplied are to be found in exhibit A-5 and exhibit A-6.
Exhibit A-7 is an attested copy of the detailed statement relating to the tenders
opened on November 9, 1981.
Page: 472
9. Mr. B.K. Rajgopal referred to the letter, exhibit A-8, dated July 26, 1982,
addressed to M/s. Bengal Tools Ltd., respondent No. 1. In para. 16 of this letter,
exhibit A-8, dated July 26, 1982, it is stated:
“On opening the tender, we find that your quoted prices are the same as that of
your competitors for most of the items. Subsequent to the tender opening, your
competitors have expressed their willingness to reduce their prices. We will not be
considering your offer if your prices are the same as those of your competitors. To
enable you to requote your correct and realistic prices, we give you a final
opportunity to reduce your quoted prices and requote the best prices. There may
not be any negotiations after the revised offer is sent in a sealed envelope
indicating on the top our tender reference and due date, so as to reach Dy. Chief
Materials Manager, Steel Authority of India Ltd., Salem Steel Plant, Salem-13,
before 13.00 hours on August 6, 1982, along with your specific confirmation to the
above points. The tender shall be opened on the same day at 14-00 hours.”
10. This will show that the identity of the prices quoted by respondent No. 1 with
the prices quoted by other parties was disturbing the mind of the authorities of the
Salem Steel Plant and on this account they had discussions with the tenderers
individually. Exhibit A-9, dated August 3, 1982, is the letter written by respondent No.
1 to the Chief Materials Manager, Steel Authority of India Ltd., Salem, in reply to
letter, exhibit A-8, dated July 26, 1982. Mr. B. Rajagopal, Dy. Chief Materials Manager,
Salem Steel Plant, exclaimed that he was wonderstruck as to to how these four parties
belonging to different parts of the country could have quoted the same rates and so he
thought it a fit case for being brought to the notice of the Monopolies and Restrictive
Trade Practices Commission.
11. In the course of the cross-examination by Shri J.M. Mukhi, learned counsel for
the respondent, the witness stated that the Salem Steel Plant is a unit of the Steel
Authority of India Ltd. and that their total turnover per annum would be in the range
of Rs. 78 crores though the turnover of SAIL as a whole would be much higher.
Invitation to tender was taken by 26 parties as named in the list, exhibit B-1. After
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going through the records, the witness stated that M/s. Bombay Alloy Steel Industries
Pvt. Ltd., respondent No. 2, agreed to give 5% discount but the other three
respondents did not make any such offer. He also referred to letters, exhibit B-3,
dated August 2, 1982, of M/s. Galaxy Knives Pvt. Ltd. (respondent No. 4); exhibit B-4,
dated August 5, 1982, of M/s. Zenith Rolls and Shears (respondent No. 3) and stated
that they did not reduce the rates. The letters of M/s. Bombay Alloy Steel Industries
Pvt. Ltd.
Page: 473
(respondent No. 2) referred to by him are exhibit B-2, dated July 30, 1982, and
exhibit B-5, dated August 19, 1982.
12. Thus, there is no denying the fact that the rates given by the respondents in
respect of these two tenders were identical for various items and the same have been
extracted in annexures I and II to the notice of enquiry for facility of reference. The
same are reproduced hereunder:
Vide annexure I regarding tender opened on Tune 8, 1982.
Description Bengal Bombay Galaxy Zenith
tools alloy
1. Crop shear knife 100 × 5500 5500 5500 5500
32 × 1700
2. Shear knives of welding 5500 5500 5500 5500
M/C 100 × 30 × 1700
3. Crop shear 82-8 × 40 × 4750 4750 4750 4750
1300
4. (a) Scrap chopper 200 200 200 200
50×25×120-6×110
5. Circular shear 3850 3850 3850 3850
400/250×30
6. Crop shear 82-8 × 40 × 4750 4750 4750 4750
1500
7. (a) Crop shear top blade 5100 5100 5100 5100
120×30×1550
(b) Crop shear bottom 3200 3200 3200 3200
blade 60×35×1550
8. (a) Flying shear top blade 5100 5100 5100 5100
120×30×1550
(b) Flying shear bottom 3200 3200 3200 3200
blade 60×35×1550×1500
9. & Circular shear (a) 2350 2350 2350 2350
10. 400/250 × 10
(b) 400/250×15 2700 2700 2700 2700
(c) 400/250×20 3050 3050 3050 3050
11. Resquaring shear 9500 9500 9500 9500
100×25×4100
12. Notching tool 4000 4000 4000
209×45×250
13. Circular slitting shear 8200 8200 8200
400/250/20
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Vide Annexure No. II regarding tender opened on November 9, 1981.

Name and address of the Unit rate (Rs.) Slitting Terms and conditions
supplier cutters
10mm 15mm 20mm
M/s. Bengal Tools Ltd., 2750 3120 3366 F.O.R. destination; ED, CST
Calcutta and other statutory levies
extra; Payment 98% against
documents; 2% within 30
days; Delivery: 10-12 months.
M/s. Bombay Alloy Steel 2750 3120 3360 F.O.R. destination; ED, CST
India Pvt. Ltd., Bombay extra; Payment 100% against
invoice in 30; days Dly: 3-4
months.
M/s. Galaxy Knives Pvt. 2750 3120 3360 F.O.R. Nasik: ED, CST extra;
Ltd., Bombay DLY: 10-12 months; payment
98% through bank; 2% within
30 days.
M/s. Zenith Rolls and 2760 3125 3360 F.O.R. Khopoli, Taxes and
Shears duties extra. Payment 90%
through, bank 10% within 30
days; Dly. 50% 3-4 months;
50% 12-14 months.
Page: 474
The ex-factory cost of these items as culled out from the replies given by the
respondents to interrogatories is tabulated hereunder:
Ex-factory cost of shear blades/knives at the time of submitting tenders opened
on June 8, 1982 (in rupees).
Description Bengal Tools, Bombay Galaxy, Zenith,
alloy,
respondent respondent respondent respondent
No. 1 No. 2 No. 4 No. 3
No. 1 No. 2 No. 4 No. 3
1. Crop shear knife 5115.0 5313.30 5360.0 5450.0
2. Shear knives of 5115.0 5313.30 5360.0 5450.0
welding M/C
100×30×1700
3. Crop shear 82-8 × 40 4417.50 4536.30 4630.0 4700.0
× 1500
4. (a) Scrap Chopper 50 186.0 each × 1430.0 × 8 1440.0 195 each
× 25 × 120 − 6 × 110 8
mm
(b) do. do. do. × 8 do. do.
5. Circular shear 400/250 3580 3663.30 3755.0 3810.0
× 30mm
6. Crop shear 82 − 8 × 4417.50 4563.30 4615.0 4700.0
40 × 1500
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7. (a) Crop shear top 4743.0 4913.30 4965.0 5050.0

blade, 120 × 30 × 1550m
(b) Crop shear bottom 2976.0 — 3125.0 3170.0
blade 60 × 35 ×
1550/1500
8. (a) Flying shear top 4743.0 4965.0 5050.0
blade
120 × 30 × 1550/1500
(b) 60 × 35 × 1550/1500 2976.0 3013.50 3125.0 3170.0
9. & 10. Circular shear
(a) 400/250 × 10 2836.50 2164.0 2290.0 2325.0
(b) 400/250 × 15 2511.0 2514.0 2640.0 2675.0
(c) 400/250 × 20 2185.50 2863.0 2975.0 3020.0
11. Resquaring shear 8835.0 9313.0 9240.0 9400.0
100 × 25 × 4100
12. Notching tool — 78130 × 2 7855.0 3960.0
209 × 45 × 250
217 × 45 ×
250
13. Circular slitting shear
400 × 250 × 20 8014.30 8000 8120.0
13. Ex-factory cost of 10mm, 15mm and 20 mm slitting cutters at the time of
submitting tenders opened on November 9, 1981.
1. 10mm thick cutter 3124.80 2647.50 2700.0 2735.0
2. 15mm thick cutter 2901.60 3107.50 3065.0 3100.0
3. 20mm thick cutter 2557.50 3257.50 3300.0 3330.0.
Page: 475
14. The details of cost as calculated above will show that the total cost of each item
differs from manufacturer to manufacturer. It is not exactly the same. This being so,
the identity of rates quoted by the respondents in response to the tenders opened on
June 8, 1982, and November 9, 1981, respectively, is intriguing. Of course, positive
evidence is lacking that these respondents had met and decided to quote identical
rates to the Salem Steel Plant. Although the onus of bringing home the charge of
collusive tendering is on the Director-General, yet the peculiar fact or circumstance
that occasioned quoting of identical rates in response to these tenders must be in the
knowledge of the respondents alone and nobody else. Strangely enough, the
respondents have not put forth any facts or circumstances which would incline us to a
view that the identity of rates was not due to a meeting of minds. No doubt the initial
onus of establishing a prima facie case lies on the Director-General, yet it cannot be
gainsaid that in civil proceedings, the onus is never constant but must shift as soon as
he produces evidence which prima facie gives rise to a presumption in his favour.
Thus, having shown that irrespective of the variation in the cost of production, all the
four respondents quoted identical rates, under the provisions of section 106 of the
Evidence Act, a duty lay on the respondents to dispel this presumption by bringing to
the fore some fact which occasioned the identity of rates, for, the burden of proving
any fact which is especially within the knowledge of any person lies upon him. The
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respondents did not produce any evidence in this respect nor did they in the return
reply rely upon any circumstance as would negative the presumption arising from the
identity of rates. If an authority is required on this aspect, we can do no better than
refer to Collector of Customs, Madras v. Bhoormull, (1974) 2 SCC 544 : AIR 1974 SC
859. In the reported case, briefly, the facts were that some packages containing goods
believed to be smuggled with foreign markings were found to have been left in the
premises of M/s. Shah Bhoopajee Rekhab Das of Madras. One Bhoormal claimed the
goods as owner thereof and asked for their release. The goods were confiscated under
section 167(8) of the Sea Customs Act. The said Bhoormal was not able to show how
he came to possess those goods, although these goods were not covered by section
178A of the Sea Customs Act whereunder the onus of showing that the goods are not
smuggled goods was on the person from whose possession the goods were seized. The
Supreme Court applied section 106 of the Evidence Act and held that the initial onus
of proof on the Department was sufficiently discharged by circumstantial evidence. The
Supreme Court observed (at page 867):
“The broad effect of the application of the basic principle underlying section 106,
Evidence Act, to cases under section 167(8) of Act is that the
Page: 476
department would be deemed to have discharged its burden if it adduces only so

much evidence, circumstantial or direct, as is sufficient to raise a presumption in its
favour with regard to the existence of the facts sought to be proved.”
15. According to their Lordships, it is a fundamental rule relating to proof in all

criminal or quasi-criminal proceedings, where there is no statutory provision to the
contrary, that the burden of proving the guilt, i.e., that the goods were smuggled,
would be on the Department but in appreciating its scope and the nature of the onus
cast by it, due regard to the other kindred principles is as much required one of them
is that the prosecution or the Department is not required to prove its case with
mathematical precision to a demonstrable degree; for, in all human affairs, absolute
certainty is a myth and in the words of Professor Brett: “all exactness is a fake”.
16. In the premise, the identity of prices but the cost of production varying from
manufacturer to manufacturer, coupled with the fact that though the matter was
brought to the notice of the respondents, they failed to offer any explanation either at
that time or in the course of enquiry proceedings must buttress the inference that the
identity of prices quoted by the respondent in response to the tenders was the result
of concerted action.
17. As stated above, Mr. B.K. Rajgopal, AW-1, deposed that when going through
the records, he found that the rates quoted by these four parties were identical, he
was wonder-struck as to how four parties coming as they did from far-flung parts of
the country could quote the same rates. In the course of cross-examination, no fact
was brought out which would have suggested some reason for the identity of rates
other than a private understanding amongst the respondents to quote identical rates.
Mr. B.K. Rajgopal in his letter, exhibit A-1, addressed to this Commission specifically
says that at times they were “successful in breaking this ring by negotiating with the
parties individually and persuading them to reduce the prices. However, it is seen that
by and large the above firms quote uniform prices”.
18. This sort of method deployed by the Salem Steel Plant is evident from the letter
dated July 26, 1982, exhibit A-8, written by the Salem Steel Plant to M/s. Bengal Tools
Ltd., respondent No. 1, in para 16 whereof there is a reference to the identity of rates
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quoted by it (i.e., respondent No. 1) and its competitors for most of the items. It was
conveyed to respondent No. 1 that subsequent to the opening of tenders, the
competitors of respondent No. 1 expressed their willingness to reduce the prices and
as such the offer of respondent No. 1 would not be considered if the prices were not
quoted again on realistic basis. Consequently, respondent No. 1 was asked to send a
revised offer in a sealed envelope before August 6, 1982.
Page: 477
Thus, by letter dated August 3, 1982, exhibit A-9, respondent No. 1, M/s. Bengal Tools
Ltd., quoted revised rates. The grievance of this respondent is that in spite of this,
only a partial order was placed even at the revised rates. M/s. Bombay Alloy Steel
Industries Pvt. Ltd., respondent No. 2, vide letter dated July 30, 1982, stated that the
rates quoted by them were F.O.R. destination and that the offer would be valid for a
maximum period of 120 days. Some other terms were also relaxed. Anyhow,
subsequently, vide letter, exhibit B-5, dated August 19, 1982, this respondent agreed
to give 5% discount on the quoted rates with a rider that the Salem authorities would
be allowed to negotiate for further discount. Respondent No. 2, Zenith Rolls and
Shears, declined to reduce the rates (vide telex message, exhibit B-4) pleading that in
fact the prices had been revised with effect from July 1, 1982. Respondent No. 4, M/s.
Galaxy Knives Pvt. Ltd., vide letter dated August 2, 1982 (exhibit B-3), declined to
reduce the rates but agreed to despatch the goods F.O.R. Salem inclusive of the cost
of freight and insurance. This respondent too grieves that no order was placed upon it
even in the wake of subsequent negotiations.
19. All this beckons that the initial quotations in response to these two tenders
were somehow or other pre-arranged and when it was brought to the notice of the
respondents, even then they were not able to assert that the precise identity of rates
was fortuitous or due to a peculiar circumstance. Learned counsel for the respondent
referred to the decisions of this Commission in Alkali and Chemicals Corporation Ltd.,
In re (RTPE No. 21 of 1981), Hyderabad Asbestos Cement Products, In re (RTPE No. 17
of 1979) and Chloride India Ltd., Calcutta, In re (RTPE No. 46 of 1977).
20. In Alkali and Chemicals Corporation Ltd., In re (RTPE No. 21 of 1981) it was a
question of price parallelism maintained by M/s. Alkali and Chemicals Corporation of
India Ltd. in following the price leader M/s. Bayer (India) Ltd. These two
manufacturing companies command a dominant share of the total market in rubber
chemicals. The allegation was that they almost simultaneously increased the prices of
their various products on a number of occasions between March 1, 1979, and October
1, 1980. It came in evidence that M/s. Bayer (India) Ltd., before increasing the prices,
would inform their branches as well as the customers allowing a gap of 8 to 10 days
between the date of announcement and the date of implementation, with the result
that other chemical manufacturers would come to know of the proposed increase in
prices. It also came in evidence that the supplier of two of the most important raw
materials used by the manufacturers was the same undertaking, viz., Hindustan
Organic Chemicals. Even some other major raw materials were supplied by M/s. Nocil
and Herdillia Chemical on the same terms and prices.
Page: 478
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21. In the ultimate analysis, the decision turned upon evidence of the cost of
production. Both the manufacturing companies had shown that the price increase was
dictated by the increased cost of raw material. This being so, it was pointed out that in
the absence of any plus factor to bolster the circumstance of price parallelism, it would
be unsafe to conclude that the respondent indulged in any cartel for raising the prices.
22. The facts in the instant case are entirely distinguishable from the facts of Alkali
and Chemicals Corporation Ltd., In re (RTPE No. 21 of 1981).
23. In Hyderabad Asbestos Cement Products, In re (RTPE No. 17 of 1979) the
allegations were that M/s. Hyderabad Asbestos Cement Products and M/s. Shree
Digvijay Cement Company Ltd. had quoted identical prices in response to tender
enquiries due on January 28, 1976, April 19, 1977, and October 27, 1978. These
tender enquiries related to the supply of A.C. pressure pipes, etc. The facts show that
with respect to the tender due on January 28, 1976, only M/s. Hyderabad Asbestos
Cement Products made a bid. M/s. Shree Digvijay Cement Company Ltd. offered a bid
after the tender of the former had been accepted. The supply, vide tender due on April
19, 1977, was not offered to either of these two manufacturers and the contention was
that the prices offered by one were different from the other. As regards the third
tender, the prices were no doubt identical, but the contention of the first party was
that it had offered the same prices as it had done in respect of the earlier tender and
the same were known to everybody including party No. 2. Party No. 2 had admitted
that it had quoted the same price in order to be able to get the supply order but even
then it was the first party that was given the order for full supply. So, in these
circumstances, the inference of collusion could not be drawn. There is mention of a
fourth tender also showing price parallelism, but the party No. 2 had stated that the
rates quoted by it were the same as published on August 1, 1978, and, therefore,
being already in circulation were known to party No. 1. In this respect also, therefore,
no inference of collusion could be drawn. In the premises, this case too cannot be said
to be parallel to the instant case.
24. In Choloride India Ltd., In re (RTPE No. 46 of 1977) no doubt the allegation
revolved around quoting of prices for storage batteries in concert because of the
identity or near identity of prices quoted by the three respondents therein. In regard
to some alleged quotations in response to tenders invited by D.G.S. & D., it was found
that they were not identical. Where the prices are found to be identical, for instance, in
the matter of tenders invited by the Association of State Road Transport Undertakings,
it was discovered that the prices were the wholesale prices prevalent at that time.
Page: 479
25. It was observed, “in view of this, it was not possible to make allegation of
concert against the first respondent, being the bulk supplier of batteries, having a
large share of the market, the other respondents could not be blamed for treating him
as a price leader and quoting prices either identical with or similar to the prices quoted
by it…
“Although the allegation in the notice is confined to the prices initially quoted, when
there is negotiation of prices between the Association and the tenderers individually
and the prices ultimately determined were prices indicated by the Association, it
was not possible to sustain the allegation of concert.”
26. It may be added that it also came to light that in practice, the D.G.S. & D.
would call the tenderers for negotiations and make counteroffers in the matter of
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prices. It was at that stage that the tenderers quoted prices which were more or less
similar. With respect to the tenders in regard to the prices quoted initially, the
Commission observed that “it was not possible to impute any parallel pricing”. The
judgment shows that this very procedure was followed by the Association of State
Road Transport Undertakings. In the premises, the facts of Chloride India Ltd., In re
(RTPE No. 46 of 1977) cannot be said to be in pari materia with the facts of the instant
enquiry.
27. In the instant enquiry, the identity of prices is to be found in the initial
quotations given by the four respondents, though of course, subsequently, respondent
No. 2 agreed to give 5% discount and respondent No. 1 to revise the rates. It is not a
case where the identity of rates was observed in the negotiated prices subsequent to
the submission of tenders individually by the respondents. At any rate, the difference
in the ex-factory cost of the items as reported by each respondent demonstrates that
but for mutual understanding or arrangement amongst them, the quotations of rates
in response to these two tenders should have varied from manufacturer to
manufacturer. It is submitted on behalf of the respondents that there was some
variation in the terms of supplies to be made by each respondent. For instance, Bengal
Tools Ltd., wanted 98% payment against documents and the remaining 2% within 30
days, the delivery period being 10 to 12 months. M/s. Bombay Alloy Steel Industries
Pvt. Ltd. wanted 100% payment against invoice in 30 days, the delivery period being
3 to 4 months. M/s. Galaxy Knives Pvt. Ltd. asked for 98% payment through bank and
the remaining 2% within 30 days, while M/s. Zenith Rolls and Shears asked for 90%
payment through bank and 10% within 30 days with a rider that 50% of the delivery
would be made within three or four months and 50% within 12 to 14 months. As
regards place of delivery, even Galaxy-Knives, respondent No. 4, subsequently had
offered delivery F.O.R. destination.
Page: 480
28. It seems that there is no significant difference in the collateral termas and
conditions with respect to their respective offers by these respondents. What
conspicuously strikes one's mind as a cartel is the precise identity of rates quoted by
the respondents even though located not in one place and the cost being variant. Mr.
B.K. Rajgopal, AW-1, was questioned by learned counsel for the respondents as to the
considerations which would weigh in accepting tenders from various parties. His reply
was that the determinative considerations were technical acceptability and commercial
aspect but the foremost consideration would be the technical aspect. The query was
not pursued further by learned counsel to show that despite the identity of rates, the
technical aspect would have straightaway been decisive in preferring or choosing a
particular product from the other while accepting the tender. Mr. B.K. Rajgopal, AW-1,
added that in 1982 an order was placed on some other parties whose rates were lower
than the rates offered by the respondents. In this respect, reference has been made
by him to exhibit B-7 dated October 14, 1982, whereby an order was placed with M/s.
Ekohsa Gauges and Tools Pvt. Ltd. of Calcutta for supply of shear blades. According to
the terms and conditions as spelt out therein, 90% of the contract value was to be
paid through the State Bank of India on presentation of documents and the delivery of
the goods was to be made F.O.R. Calcutta within 6½ months from the date of A/T. The
total price for all contractual obligations under the contract is mentioned to be Rs.
80,360. The rates of different items are given in annexure I to the A/T, exhibit B-7.
29. It is pointed out by learned counsel for the respondents that the identity of
-----------------------------------------------------------------------------------------------------------------------------------------------------------
prices is to be adjudged from the landed cost of the article and not from the basic
prices as quoted by the respondents. According to learned counsel, it would be the
total landed cost of a product, otherwise similar in quality or standard that would
determine whether the tender of a particular manufacturer should or should not be
accepted for the supply to be made and not the basic price only. Therefore, the
identity of the basic price of a product would be immaterial for an inference of
collusive tendering or a cartel. The line of reasoning adopted by learned counsel does
not commend itself to us. The incidental expenses on transportation and other related
matters must vary from place to place and will also depend upon the distance from the
place of despatch to the place of destination. No doubt these are factors for
consideration by the buyer. But the question is whether there is in vogue a trade
practice which is destructive of free competition and thus tendential of manipulating
prices or conditions of delivery. In this case, there was no choice left to the buyer on
the basis of the prices. There is no evidence to distinguish a product of one
manufacturer from the other on the basis of quality. All except one who was
Page: 481
not called for negotiations, had agreed to supply F.O.R. destination. The quoting of
identical rates by the suppliers/manufacturers of a particular product as a result of
mutual understanding amongst them is the central point that concerns the economic
policy and it is needless to say that the policy of the law is that there should be free
competition between sellers or suppliers. The law frowns upon inhibition of
competition because it is believed that wholesome competition in production and
supply of goods would be conducive to better quality and rationalisation of prices. Can
the dealers in a particular trade be allowed to so arrange their dealings as to
manipulate the prices by stifling competition and leaving little choice for the buyer to
distinguish between one supplier and another?
30. The above discussion inclines us to the conclusion that the identical price-
quotations in the two tenders in controversy submitted by the respondents were
actuated by mutual understanding/arrangement or in other words concert amongst
them. These issues are decided against the respondents.
Issue No. 4:
31. In para 7 of the written reply, the respondents canvassed that even if they
quoted identical prices by any mutual understanding amongst them, the Act would not
call for a “cease and desist” order inasmuch as it could not be taken to be prejudicial
to public interest. According to them, there is no direct or indirect discouragement to
competition in a material degree in this particular trade. Respondent No. 1
subsequently revised its rates and in so far as respondent No. 2, Bombay Alloy Steel
Industries Pvt. Ltd. is concerned, though it agreed to give 5% discount, yet a small
order for a few items only was given on a trial basis. Respondent No. 3 laments that
an order just for a few items was placed in respect of the tender dated September 11,
1981. To the same effect is the contention of M/s. Galaxy Knives Pvt. Ltd., respondent
No. 4, who says that in the wake of negotiations commencing on July 26, 1982, it
addressed a communication agreeing to F.O.R. supply including despatch by road
transport and some other points as well, yet no order was placed on it by the Salem
Steel Plant. It is also pointed out by learned counsel for the respondent that in fact
substantial supplies were obtained from foreign sources, not indigenous. In this
respect, a specific question was also put to Mr. B.K. Rajgopal, AW-1. He replied that
the answer to this query could not be given without going through the records. The
respondents too did not produce any evidence with a view to substantiate this plea.
-----------------------------------------------------------------------------------------------------------------------------------------------------------
Not only that, in the course of cross-examination of Mr. B.K. Rajgopal, AW-1, learned
counsel attempted to elicit as to what would
Page: 482
be the considerations in the matter of accepting the offers of supply. He replied that
the considerations which weigh with the Salem Steel Plant are technical acceptability
and commercial aspects but the foremost place is given to the technical aspect. This
query was not pursued further and by this information it is not possible to determine
the applicability of clause (h) and the balancing clause of section 38(1) of the
Monopolies and Restrictive Trade Practices Act. Nevertheless, Mr. B.K. Rajgopal
averred that they had placed an order on some other parties in 1982 who had offered
lower rates. Exhibit B-7 is an instance of such an order given to M/s. Ekhosa Gauges
and Tools Pvt. Ltd., Calcutta, by A/T dated October 14, 1982. The statement, exhibit A
-2, shows that with respect to the tender opened on June 8, 1982, only eight
manufacturers including the four respondents had submitted their quotations in
response to the tenders floated by the Salem Steel Plant. Two of them, namely, Dewas
and Parannath Kapoor, had submitted quotations just for a few items only. Obviously,
the rates quoted by M/s. Ekhosa Gauges and Tools Pvt. Ltd. and M/s. Boyd Smith,
though identical, were lower than the rates quoted by the respondents. As these four
respondents were in a position to supply almost all the items, it cannot be gainsaid
that they do command a market share which by no means could be regarded as
insignificant.
32. As regards the applicability of clause (h) read with the balancing clause of
section 38(1) of the Monopolies and Restrictive Trade Practices Act, it is necessary for
the respondents to show:
(a) the restriction does not directly or indirectly restrict or discourage competition
to any material degree;
(b) it is not likely to do so; and
(c) the restriction is not unreasonable having regard to the balance between
attendant circumstances and detriment resulting or likely to result from the
operation of the restriction.
33. The respondents have not been able to satisfy these ingredients in their
endeavour to rebut the presumption of prejudice to public interest arising under the
introductory part of sub-section (1) of section 38. There is no explanation how and
why precise identity of prices came about. So, this issue is decided against the
respondents.
Relief
34. As a result of our above discussion, a cease and desist order is hereby passed
under section 37(1) of the Monopolies and Restrictive Trade Practices Act directing
that the respondents shall discontinue the practice of quoting rates for their various
products in concert or by mutual understanding/arrangement expressly or impliedly
and they shall not repeat
Page: 483
the same in future.
35. The respondents are also held liable to pay costs in the sum of Rs. 5,000 (five
-----------------------------------------------------------------------------------------------------------------------------------------------------------
thousand) only jointly and severally.

36. Pronounced in open court.
———
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Page 1 Monday, March 18, 2024

1986 SCC OnLine MRTPC 11 : (1988) 63 Comp Cas 468

Before the M.R.T.P. Commission

Bengal Tools Limited, In re

The order of the Bench was delivered by

3. On these premises, according to the respondents, the notice of enquiry is liable

a matter to be decided on due appraisal of the evidence brought on the record.

Vide Annexure No. II regarding tender opened on November 9, 1981.

7. (a) Crop shear top 4743.0 4913.30 4965.0 5050.0

department would be deemed to have discharged its burden if it adduces only so

15. According to their Lordships, it is a fundamental rule relating to proof in all

the same in future.

thousand) only jointly and severally.

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