Virendra Kumar Singh Vs Nandal Finance & Leasing Private Limited (Competition Commission of India)
As regards the allegation of interconnection between the bidders on the basis that one of the directors is common in the group companies of both the Opposite Parties, the Commission, in the facts and circumstances of the instant case, observes that merely having common directors/partners may not, ipso facto, give rise to anti-competitive concerns, in the absence of other material factors to indicate that such common relationship facilitated a few entities to come together and manipulate the bid process. The Commission recently, vide its order dated 04.04.2022, in Case No. 25 of 2021 held that “It may not be entirely uncommon, where a common Promoter/Director acts as a link between two entities, to facilitate anti-competitive behaviour. However, there is no presumption that it has to be that way at all times; instead it will depend upon the attendant factual matrix. Thus, the Commission is of the view that merely having common business linkages between the bidders as projected by the Informant, in itself, cannot be the sole basis to suggest meeting of minds or assentio mentium between the bidders in the bidding process.”
With regard to other allegations qua the disinvestment process, the Commission observes that the disinvestment of CEL has been impugned by the Informant, which is a policy decision of GoI, and the Commission is not the appropriate forum to determine the merits of such disinvestment in relation to issues such as the adequacy of Reserve Price. With regard to the allegation of Nandal not being eligible to bid on account of proceedings before Hon’ble NCLAT involving the said company, the Commission observes that the issue of eligibility falls within the domain of DIPAM.
In view of the foregoing, the Commission is of the opinion that there exists no prima facie case of contravention of any of the provisions of Section 3 of the Act against the Opposite Parties and therefore, the matter be closed forthwith under the provisions of Section 26(2) of the Act. Consequently, no case for grant of relief(s) as sought under Section 33 of the Act arises, and the same is also rejected.
FULL TEXT OF THE ORDER OF COMPETITION COMMISSION OF INDIA
Order under Section 26(2) of the Competition Act, 2002
1. The present information has been filed by Mr. Virendra Kumar Singh, General Secretary, Central Electronics Limited Employees Union (Regd.) (‘Informant’) under Section 19(1)(a) of the Competition Act, 2002 (the ‘Act’) against M/s Nandal Finance & Leasing Private Limited (‘OP-1’/ ‘Nandal’) and M/s JPM Industries Ltd. (‘OP-2’/ ‘JPM’) for alleged contravention of the provisions of Section 3 of the Act in the disinvestment process of Central Electronics Limited (CEL).
2. CEL, established in 1974, is stated to be a Government of India (GoI) Enterprise under the Department of Scientific and Industrial Research (DSIR), Ministry of Science & Technology. Its objective is to commercially exploit indigenous technologies developed by National Laboratories and Research & Development (R&D) institutions in the country.
3. The Informant states that CEL is known for the development of products in the domain of strategic electronics through its own R&D efforts as well as in collaboration with the Council of Scientific and Industrial Research (CSIR), Defence Research and Development Organisation (DRDO) laboratories, and other institutions. CEL has developed a number of strategic electronics products for the first time in the country, including the first solar cell and solar modules in 1977 and 1978, respectively, the first solar plant in 1992, Phase Control Module (PCM), Electronics Radar and Development Establishment (LRDE) for use in Rajendra Radar, Cadmium Zinc Telluride (CZT) for defence application, and Axle Counter for the use of railway signaling system. In recognition of its efforts, CEL was given a number of prestigious awards, including the National Award for Research and Development by DSIR.
4. The Informant avers that CEL is being disinvested to a private company by the Department of Investment and Public Asset Management (DIPAM), Ministry of Finance and Ministry of Science and Technology at a very low price and without adhering to any transparency in the disinvestment process. Further, there is no clarity about the disinvestment process to employees working in CEL as well as to the public at large.
5. It is also averred that the estimated value of assets of CEL is approximately Rs. 957 crores. However, the Asset Valuers (AV) appointed by GoI for assessing the Reserve Value of CEL have underestimated the Reserve Price to Rs. 194 crores only.
6. The Informant has stated that, under the disinvestment process of CEL, bids were received from only two bidders, namely, Nandal and JPM, who quoted Rs. 210 crores and Rs. 190 crores, respectively.
7. Further, the Informant has averred that there is a relation between the directors of the group companies of Nandal (company of Sharda Group) and JPM (Company of JPM Group). To elaborate on this relation, the Informant has provided the names of directors of the companies and their group companies, which is reproduced as below:
