-Report by Kanishka
It was held by the Supreme Court of India in the case of ITD CEMENTATION INDIA LIMITED Vs SSJV-ZVS JOINT VENTURE & ORS that a shared interest in the enterprise’s assets or subject matter, as well as contributions of money, supplies, labor, or knowledge from each party, may be necessary for the foundation of a joint venture.
FACTS:
An application has been made to strike Respondent No. 2 from the list of parties in the current petition. The execution proceedings are a result of an Award made on March 9, 2019, according to which the Enforcement Petitioner is now entitled to receive Rs. 6,65,55,228/- plus interest at 12% from November 7, 2013, till the amount is realized, as well as fees.
A joint venture between M/s SSJV Projects Private Limited and M/s Zarubezhvodstroy formed the first respondent. According to the applicant’s own admissions, the aforementioned joint venture was established in order to carry out the contract for the building of a barrage and a desilting chamber for the Tapovan-Vishnugad Hydroelectric Power Project. The documents provided in these proceedings make clear that on February 6, 2009, the Respondent had signed a contract for the building of an upstream cut-off wall. Due to disagreements, the subject was ultimately sent to arbitration. The process eventually resulted in the declaration of an Award, whose enforcement is demanded in the current suit.
The second Respondent, SSJV Projects, was unquestionably a part of the joint venture. The joint venture was represented by an array of respondents before the arbitral tribunal.
The Applicant Respondent No. 2 nevertheless argues that the execution procedures as framed against it are unmaintainable since it was not individually given notice by the Arbitral Tribunal.
The second respondent is a legal entity that has been lawfully incorporated, giving it a separate and distinct character in law, and as such, the counsel representing the applicant would argue that no execution actions may be brought against it.
COURTāS DECISION:
In addition, learned counsel cited a ruling made by the court in Consulting Engineers Group Ltd v. National Highways Authority of India (NHAI) to bolster her arguments. However, it must be made plain right away that Consulting Engineers cannot be taken as an authority defending the claims made on the applicant’s behalf. If a consortium member had been acting alone, might they have requested interim relief or invoked arbitration? Consulting Engineers were debating this issue. The learned Court finally decided that a member of a joint venture could not independently petition for interim measures, although negating the right of an individual member to initiate such a petition. Moreover, the court ruled that a consortium member cannot unilaterally request relief from the court and that only the joint venture has the power to employ the dispute resolution provision. Hence, the ruling in Consulting Engineers actually contradicts the arguments made in favor of the applicant.
When describing the idea of a joint venture, Dr. George initially cited a decision made by the Gujarat High Court Division Bench in the case of Asia Foundations & Constructions Ltd., Bombay v. State of Gujarat. The aforementioned High Court defined the fundamental characteristics of a joint venture when rendering its decision in the context of a contestable tendering procedure.
As may be seen from the remarks made in paragraph 14 of the report, the Gujarat High Court restated the opinions made in Asia Foundations in Continental Construction Ltd. and Ors. v. State of Gujarat & Anr.
Corpus Juris Secundum provides a more thorough explanation of the joint venture idea and provides the following definitions of the nature of such businesses:
An alliance of two or more people to operate a single profitable business company is typically referred to as a joint venture. This legal relationship was established by American courts.
According to the aforementioned, clearly stated concepts, a joint venture may be defined as a quasi-partnership when two or more entities work together to carry out a specific transaction or contract for mutual benefit. In essence, it illustrates the idea that two or more people might jointly assume the responsibility for carrying out a contract or starting a business in order to make money. A joint venture enters into a contract and binds itself to the numerous responsibilities set thereunder and exercises all rights granted therein, even if it is not strictly speaking considered to be a legal person under the law. Another option is a consortium, in which two or more people or businesses band together to fulfill their duties.
Unquestionably, the joint venture itself, acting for and on behalf of all of its members, signed the contract in this case. Respondents Nos. 2 and 3 collaborated on the business endeavor and agreed to split the earnings. It is obvious that the Enforcement Petitioner has the legal right to pursue action against the Respondents jointly and severally. The Court additionally determines that the individual joint venture participants were neither required nor placed under a responsibility to be arrayed as party respondents by the Enforcement Petitioner. For the purposes of deciding the claims that eventually came to be made by the Petitioner, it was evidently sufficient that the joint venture itself was before the Arbitral Tribunal.
The trial of such conflicts cannot be requested by the individual joint venture partners based on their own agreed-upon or imagined personal duties and obligations. They obviously wouldn’t bind other parties. It is obvious that the person granting a contract in favor of a joint venture has the right to continue with the assumption that all of the consortium’s members would be held jointly and severally accountable. Naturally, any contract or agreement to the contrary will apply to this. In any scenario, a joint venture’s member cannot avoid the responsibility that has been raised or resulted from that endeavor. It would still be held jointly and severally accountable, as stated above.
As a result of the aforementioned factors, the Court is unable to uphold the petition as it is stated. The application will be rejected.
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