Can a business face cartel liability if it receives competitively sensitive information from a competitor and says nothing?
That is the practical question at the heart of the National Company Law Appellate Tribunal’s (NCLAT) recent ruling, dismissing two appeals by Mr. Keshav Bihani and his partnership firm, M/s Hari Narayan Bihani (collectively, the appellants), affirming the Competition Commission of India’s (CCI) findings of bid‑rigging in Indian Railways tenders for polyacetal protective tubes and upholding penalties imposed on both the enterprise and the individual under Sections 27 and 48 of the Competition Act, 2002 (Competition Act). T
he CCI found that M/s Hari Narayan Bihani, along with six other approved vendors, participated in bid-rigging of tenders floated by various railway zones for the supply of polyacetal protective tubes and imposed a penalty on Mr. Keshav Bihani under Section 48 of the Competition Act.
The ruling is significant because it reinforces two points: (i) passive receipt of competitively sensitive information from competitors is not risk-free, and the absence of protest or dissociation, continued participation in the tender process and conduct consistent with the information received may be used as evidence of cartel participation; (ii) individuals continue to face exposure under Section 48, even as the broader legal position remains pending before the Supreme Court.
For businesses, the compliance message is clear: if the room turns anti-competitive, your disassociation and exit must be visible.
The case began with a leniency application filed by Jai PolyPan Pvt. Ltd., following which the CCI investigated alleged bid-rigging and cartelisation in tenders floated by Indian Railways for the supply of polyacetal protective tubes for axle box guides. The Director General’s (DG) investigation and the CCI’s order found that seven approved vendors had coordinated tender allocation, pricing and bid withdrawals between 2015 and 2020. The alleged involvement of M/s Hari Narayan Bihani was confined to a narrower period, from July 2019 to June 2020. Mr. Keshav Bihani, an active partner of the firm, and the firm itself challenged the CCI’s decision before the NCLAT.
The appellants’ challenge had two strands: they attacked both the cartel finding and the penalty imposed on the individual. On cartelisation, they focused on procedural unfairness and non-disclosure of evidence. They argued that the DG report provided to them was heavily redacted and did not contain several emails and other materials relied upon by the CCI in its final order. According to the appellants, this denied them a fair hearing and violated principles of natural justice, particularly because the CCI, as a quasi-judicial authority, was required to disclose the material relied upon and give them an effective opportunity to respond.
On individual liability, the appellants argued that the provision contemplates “punishment” and not “penalty”, and therefore cannot be used to impose monetary penalties in the same manner as Section 27. They also contended that income cannot be equated with turnover. The CCI’s response was that the phrase “punished accordingly” permits imposition of penalty on individuals in the same proportion as on the enterprise, and that income is the appropriate equivalent metric for individuals.
On cartelisation, the CCI’s answer was direct. It stated that the record contained direct evidence, including emails showing tender allocation, price coordination and bid withdrawals. The CCI argued that receipt of competitively sensitive information from competitors, without protest or dissociation, was sufficient in the circumstances to establish a meeting of minds. It also submitted that cartel cases are assessed on the standard of preponderance of probabilities, and that once Section 3(3) of the Competition Act is attracted, a statutory presumption of appreciable adverse effect on competition (AAEC) follows. It further pointed to ten emails exchanged between July 2019 and June 2020, of which eight specifically allocated tenders to the appellants. According to the CCI, these emails showed a sustained pattern of coordination on tender allocation, pricing and directions to withdraw bids, to which the appellants never objected and from which they never dissociated.
The CCI further contended that the penalty imposed on Mr. Keshav Bihani under Section 48, as it stood prior to the 2023 amendment, was legally valid and had been imposed at the same rate of 5% of the average annual income of the previous three financial years as was applied to the firm under Section 27. According to the CCI, the expression “punished accordingly” in Section 48(1) meant that the penalty on the individual had to be in the same proportion as that on the enterprise; and, since an individual earns income rather than turnover, income was the appropriate equivalent measure.
Passive receipt matters: The NCLAT upheld the CCI’s finding that the appellants had received emails from competitors containing details of allocated tenders, prices and tender-related instructions. Ten emails exchanged between July 2019 and June 2020 were placed on record, of which eight specifically allocated tenders to the appellants.
The critical point was not simply that the emails existed. The appellants did not deny receiving them, and failed to show that they had objected to, or distanced themselves from the communications. Against that backdrop, the NCLAT treated their silence, coupled with continued participation in the bidding process, as evidence that they were privy to the cartel arrangement and that their independent decision-making had been compromised. In a cartel investigation, silence can start looking like agreement.
That approach is consistent with the CCI’s earlier treatment of passive participation. In In Re: Anti-competitive conduct (Suo Motu Case No. 05 of 2016), the CCI rejected the defence that a party was merely a passive attendee of a meeting, making clear that silence in the face of cartel discussions does not, by itself, insulate a participant from liability.
Similar positions have been taken in other jurisdictions. In the European Union, in T-Mobile Netherlands (Case C-8/08), it was held that exchange of information between competitors is anti-competitive where it is capable of removing uncertainty regarding their intended market conduct, including the timing, extent and details of future commercial changes. This decision is instructive because it did not involve a long-running secret cartel or a written agreement. It arose from a single meeting of Dutch mobile operators, where the discussion included a planned reduction of standard dealer remunerations for postpaid subscriptions and confidential information came up between competitors. The court made clear that what matters is not so much the number of meetings, but whether the exchange gave participants the opportunity to take account of competitor information in deciding their market conduct. The practical lesson is simple: if sensitive information is shared, a clear objection and visible distancing may be necessary.
In the US, in In re Flat Glass Antitrust Litigation (U.S. Court of Appeals for the Third Circuit - 385 F.3d 350 (3d Cir. 2004)), it was recognised that a collusive agreement may be inferred from circumstantial evidence showing sustained competitor communications and awareness of coordinated pricing conduct, even in the absence of direct proof of an express agreement.
Failure to rebut presumption of AAEC: The NCLAT reiterated that once conduct falls within Section 3(3) of the Competition Act, there is a statutory presumption that the arrangement causes or is likely to cause AAEC, and the burden shifts to the parties to rebut that presumption. In this case, the NCLAT held that the appellants failed to do so.
Individuals remain exposed under Section 48: The NCLAT rejected the appellants’ argument that Section 48 does not permit imposition of monetary penalty. It held that the expression “punished accordingly” includes penalty and that Section 48 can be read with Section 27 of the Competition Act. The NCLAT upheld the CCI’s approach of applying the same percentage of penalty to the individual’s average annual income as was applied to the enterprise’s turnover.
The NCLAT also clarified that the liability of the enterprise and the individual is independent and co-extensive. While the appellants pointed out that the issue of individual liability is pending before the Supreme Court, the NCLAT did not treat that pending issue as a bar to the imposition of penalty in the present case.
The ruling carries important practical implications. Businesses cannot treat passive receipt of competitively sensitive information from competitors as harmless. If pricing, bid allocation, market sharing, production plans or other competitively sensitive information is discussed or circulated in a trade association meeting, industry forum, WhatsApp group or email chain, the recipient should actively object, avoid engaging on the subject, distance itself from the discussion where necessary, and create a contemporaneous record of that objection. The objection cannot be subtle or ambiguous. If a competitor raises or circulates illegal anti-competitive proposals in your presence and you fail to openly object, distance yourself and make clear that your business does not intend to be bound by any such arrangement, as your silence can be treated as tacit approval and may be sufficient to establish participation in a concerted practice. This should also be escalated to the legal team to determine next steps. The NCLAT's reasoning in the present case follows essentially the same logic. If the room turns anti-competitive, your exit must be visible, immediate and leave no room for doubt that you wanted no part in it.
The order also reinforces that individual exposure under Section 48 of the Competition Act remains a real and continuing risk. Senior management and persons in charge of the conduct of business cannot assume that liability ends with the enterprise. Where the CCI can establish involvement in, knowledge of, or responsibility for the contravening conduct, separate monetary penalties may be imposed on such individuals in addition to the penalty imposed on the company or firm.
About the authors: Rohan Arora is a Partner, Ritesh Puri is a Senior Associate and Khushi Dharewa is an Associate at Shardul Amarchand Mangaldas & Co.
Disclaimer: The opinions expressed in this article are those of the author. The opinions presented do not necessarily reflect the views of Bar & Bench.
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