• PAGE ONE
• INDEX
• HOME

FICCI call to enforce joint venture pacts

Our Bureau

NEW DELHI, May 28

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has said that in order to restore confidence among joint venture partners about the sanctity of contracts they have entered into, the provisions contained in the Articles of Association s hould be made enforceable under Indian law.

In a communication addressed to the Department of Company Affairs (DCA), FICCI said that shareholders' joint venture agreements provide for mutual covenants and obligations to each other which govern their inter se relationship in the operations of the j oint ventures. Honouring of these obligations is primary and fundamental to another joint venture company and hence the intending joint venture partners need to be assured that their partners do not resile from the provisions of the shareholders' agreeme nt after availing themselves of the benefits.

Stating that there has been widespread apprehension among joint venture companies about the fulfilment of obligations by partners, FICCI said that an amendment to Section 9 of the Companies Act, 1956 has to be effected at the earliest, retrospectively, to restore confidence among joint venture partners. Many of the defaulting joint venture partners are said to have resiled their obligations.

According to FICCI, the amendment to be made in Section 9 should explicitly mention that nothing in the Section shall affect any agreement or contract validity entered into, and such contract agreement will be inter se binding upon the contracting partie s.

FICCI is of the opinion that since the Government has adjudged the joint venture route as an ideal arrangement for investment in the country, all obstacles should be eliminated.