India's competition regulator is examining allegations that Tata Motors and two finance firms of its $100 billion parent group abused their market position while selling commercial vehicles, according to three sources and legal documents seen by Reuters.

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The Competition Commission of India (CCI) is reviewing a complaint which alleges the country's biggest seller of trucks dictated terms around the quantity and type of vehicles its former dealer in northern India - Varanasi Auto Sales - should stock.

More than a dozen lawyers representing the three Tata companies attended a private hearing at the CCI in January and argued there was no malpractice by the group's firms, said the three sources, who have direct knowledge of the matter.

The Tata Group has faced antitrust reviews in the past. A CCI investigation last year found units of Tata Steel and other firms colluded on prices of bearings. A final ruling on that case is pending.

The latest complaint, filed last year by a family member of the dealer, alleged Tata Motors broke rules by working in concert with Tata Motors Finance and Tata Capital Financial Services while advancing dealer credit.

The automaker would stop supplying vehicles to the dealer if repayment of loans advanced by the two finance firms was delayed, indicating they were colluding, said one of the sources privy to the complaint.

"(The) model of business adopted by Tata Group helped in sustaining and retaining the market share," the complaint document said.

In response to Reuters queries, Tata Motors said it had made submissions to the CCI and would provide full support to the watchdog. It added the CCI was "conducting a preliminary enquiry to determine if there are any merits to the case".

Tata Capital Financial Services denied the allegations and said it would also support inquiries, adding it had separately taken legal action against the dealer, which it said had defaulted.

Tata Motors ended relations with the dealership in 2017 due to poor performance, the documents showed.

The CCI did not respond to Reuters queries, but a fourth source aware of the case said the watchdog would reach a decision within six weeks, which could see a wider probe into the allegations or a dismissal of the complaint.

The details of the complaint and the ongoing proceedings are not public.

The CCI has powers to impose a penalty of up to 10% of the relevant turnover of a company in the last three financial years if it is found to have abused a dominant position.

With an over 40% market share in India, Tata Motors is the biggest seller of commercial vehicles such as pickup trucks. It competes with firms such as Ashok Leyland and Mahindra and Mahindra and has over 3,750 sales and service points across India.