Delhi District Court
M/S Delhi Liquors vs M/S Khao Gali Restaurants Private ... on 19 March, 2025
IN THE COURT OF SH. AJAY KUMAR JAIN:
DISTRICT JUDGE COMMERCIAL COURT 03 - SOUTH EAST
DISTRICT SAKET COURTS, NEW DELHI.
CS (COMM) 115/2024
M/S DELHI LIQUORS
Through its Authorized person :
Sh. Nand Kishor Ver,a
B-244, Okhla Industrial Area,
Phase-I, New Delhi-110020 ..... PLAINTIFF
VERSUS
M/S KHAO GALI RESTAURANTS PRIVATE LIMITED
Through its Director
B-115, 2nd Floor, DDA Shed,
Okhla Phase-I, New Delhi-110020
Also at :
E-221, Naraina Vihar
New Delhi-110028 .....DEFENDANT
Date of Institution : 21.02.2024
Date when final arguments heard: 04.03.2025
Date of Judgment : 19.03.2025
JUDGMENT
1. Vide this judgment, I shall decide the suit for recovery of amount of Rs. 57,53,131/- along with interest @ 12% per annum filed by the plaintiff against the defendant.
CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 1/ 27
2. Brief facts of the case are that the plaintiff is the distributor of whisky under the brands of Delhi Liquors. The director of the defendant approached the plaintiff from time to time with the request to purchase the product of the plaintiff. Thereafter, the plaintiff supplied whisky and other liquor to the defendant against excise permit and raised various invoices from their godown at Okhla. The plaintiff has been maintaining regular books of accounts and making debit/ credit entries. The total amount due from the defendant is Rs. 57,53,131/- including principal amount of Rs. 50,25,483/71p and interest of Rs. 7,27,548/- upto 31.08.2023. Rebate discounts given to the defendant from time to time even though the payments were not made. The plaintiff requested number of times to the defendant for payment of balance amount, however defendant not made the payment. The plaintiff issued legal notice dt. 25.08.2023 for payment of which no reply was filed. Thereafter, pre-institution litigation were conducted U/s 12 A of Commercial Courts Act, however defendant has not appeared and non-starter report was issued. Pursuant to which, the present suit was filed alongwith following reliefs :
A. That the suit be decreed for a sum of Rs. 57,53,131/- in favour of the plaintiff and against the defendant.
B. The pendent-lite and future interest @ 12% per annum on the suit amount from the date of the suit and payment till realization of entire amount be also awarded in favour of the plaintiff and against the defendant.
CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 2/ 27 C. Cost of the suit be also awarded in favour of the plaintiff and against the defendants.
3. In written statement, it is stated that the present suit is liable to be dismissed in limine. The plaintiff is purportedly registered as a Joint Venture and it is trite law that association of persons is not a juristic person per se and cannot institute cases unless registered as a partnership or under societies act or any other authority. The authority letter i.e. SPA in favour of the AR of the plaintiff is also not valid. The present suit is barred by law in view of Section 69 of the Indian Partnership Act, 1932. The present suit is also hit by Section 56 of the Indian Contract Act, 1872, therefore no amount is payable to the plaintiff by the defendant.
The invoices relied upon by the plaintiff in the present case were issued by the plaintiff to the defendant in furtherance of certain purchase orders placed by the defendant to the plaintiff under the Delhi Excise Policy 2021-22, which was in force from 17.11.2021 till 31.08.2022. Under this policy, the manufacturer was required to appoint an exclusive distributor/L-1 license holder for the distribution of its products. Another important change in the 2021 Excise Policy was that there was an absolute change in the way retail business was done. Under this policy, the entire retail business was to be done by private entities who had to bid for retail zones at enormous license fees amounts, and invested huge amounts of monies in doing the retail CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 3/ 27 business. The model of business was such that the L-1 license holder i.e. the exclusive distributor was supposed to purchase the stock from the manufacturer in its own name, and then sell it in the market to the retailers i.e. L-7Z license holders. The plaintiff being the L-1 license holder i.e. the exclusive distributor supplied the products to the defendant as per the orders placed on the excise portal from time to time. The plaintiff was responsible for ensuring that the said stock being purchased by the retailer i.e. defendant is sold by making appropriate efforts for marketing the said product and for this reason, the plaintiff offered an interest free credit period of at least 90 days to the defendant and payments were made by the defendant to the plaintiff as and when the said stock was sold. The payment shall be made only upon the said stock being sold at the defendant's end i.e. at the retailer end. The said policy revoked w.e.f. 01.09.2022, thus, any goods purchased by the defendant from the plaintiff under the said policy, as per plaintiff's instructions to the defendant could no longer be sold and the said stock remained unsold. The defendant made several oral as well as written representations to the plaintiff to take back the stock which was lying unsold. Due to change in policy, it was not possible to sell the products as the same was hit by Section 56 of Indian Contract Act.
4. The plaintiff despite various verbal assurances did not take back the unsold stock and the defendant due to change in policy had incurred huge expenses and was constraint to shut down its CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 4/ 27 operations since August, 2022. The plaintiff not taken back the unsold stock and not disclosed the important facts in the present suit. It is also stated that freight was the responsibility of the plaintiff and the stock supplied was faulty and suffered from major breakages and other shortcomings and this fact was duly communicated to the plaintiff from time to time. The assurances were given by the plaintiff that it shall issue credit notes and further trade discounts but plaintiff failed to do the same. The plaintiff even not supplied the invoices to the defendant, however filed first time alongwith the present suit.
5. The plaintiff also failed to comply the mandatory provisions of Section 12A of Commercial Courts Act and even not filed the application for pre-litigation mediation. The present suit is liable to be dismissed on this ground. The order 11 Rule 6(3) of CPC as amended vide the Commercial Courts Act mandates that any party relying upon any electronic document must file the requisite certificate at the time of filing of the suit, however plaintiff failed to do so.
6. In parawise reply, it is denied that Sh. Nand Kishore Verma is duly authorized to file the present suit. It is submitted that it is the plaintiff who approached the defendant with request to procure the products supplied by the plaintiff. It is further submitted that it is the plaintiff who assured the defendant that the plaintiff shall ensure that the goods purchased by the defendant are sold to the end buyers.
CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 5/ 27 The defendant is not liable to pay the amount of Rs. 57,53,131/- alongwith interest.
7. The plaintiff also failed to take into account the discounts and credit notes which were promised to the defendant from time to time. It is also stated that due to non-issuance of such credit notes, no reconciliation of account could be done and the amounts alleged in the present suit are completely fictitious. No legal notice has been issued by the plaintiff to the defendant. Even otherwise, the said legal notice issued based on incorrect facts and the present suit is liable to be dismissed.
8. In replication, the plaintiff reiterated its stand. It is also denied that plaintiff offered interest free credit period of at least 50 days was given to the defendant. It is also denied that as per 2021 Excise Policy, the plaintiff has to take back the stock which was lying unsold. It is also denied that the plaintiff gave verbal assurances that the stock would be collected back from the plaintiff and invoices raised against the said goods would be cancelled. It is stated that defendant is a restaurant having proper license where all stock are sold. It is stated that no intimation given by the defendant to the plaintiff for taking back the unsold stock. It is also denied that no payment is payable by the defendant to the plaintiff as faulty goods were supplied. It is stated that defendant duly admitted that the goods were supplied, and making false avernments regarding the faulty goods and breakages. The defendant was served with the legal notice CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 6/ 27 on 25.08.2023, however not replied and present contentions regarding faulty goods is afterthought. It is further submitted that there is compliance of U/s 12A of Commercial Courts Act.
9. In affidavit of admission denial of documents, the defendant denied the invoices on the grounds that it does not bear the signature of the defendant and never supplied to the defendant. The original ledger was also denied on the ground that it do not bear the signature of the defendant and also not supplied to the defendant. The legal notice was also denied, however defendant admitted the copy of defendant's company master data, copy of GST license of the defendant but denied the joint venture agreement.
10. During proceedings, an application U/o 7 rule 11 CPC was filed by the defendant for rejection of the plaint on the ground that the plaintiff is a joint venture and is to be required to be registered under Partnership Act, however, it is not found to be Partnership firm to be registered under Partnership Act but said joint venture was created for specific purpose. Accordingly, the said application stands dismissed.
11. Vide order dt. 08.10.2024, following issues were framed :
1. Whether the plaintiff is entitled to decree for a sum of Rs. 57,53,131/- against the defendant, as prayed for? OPP
2. Whether the plaintiff is entitled to interest.
If yes, at what rate and for which period? OPP CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 7/ 27
3. Whether the suit of the plaintiff is not maintainable in its present form? OPD
4. Whether the plaintiff has failed to comply with the provisions of Order 11 rule 6(3) of CPC,1908 as amended vide the Commercial Courts Act, 2015? OPD
5. Relief.
The Local Commissioner was appointed for recording of evidence.
12. The plaintiff examined PW1 Sh. Nand Kishore Verma, PW2 Sh. Parvesh Kumar. The defendant examined DW1 Pankaj Kumar.
13. PW1 Sh. Nand Kishore Verma, SPA Holder of the plaintiff tendered his affidavit of evidence Ex.PW1/A and in cross examination stated that he is operation head in the plaintiff company. He further stated that transport permit is originally sent to the vehicle and is given to the defendant through courier. The permit is not uploaded and only the file is to be uploaded on excise portal. He further stated that they have not filed the transport permit, however volunteered that having documents to show that the goods were supplied and duly received by the defendant. They have the proper excise portal documents to show the tracking report regarding the goods supplied. The tracking report is Ex.PW1/D.1 (however objected). The invoice copy is generated through the data on excise CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 8/ 27 portal showing the goods were supplied, however there is no written acknowledgment in the said invoices regarding the delivery of goods. He denied any breakage, however confronted with the account statement showing breakage but stated that there is no breakage at the time of loading of goods. The plaintiff maintained the credit note for breakage and credit of Rs. 9,726/- was given in the account. There is no document regarding the breakage and rebate. It was done through mutual understanding. He further stated that no credit notes filed with the plaint but volunteered is available with him. He further stated that rebate discount was given to the defendant as per mutual understanding. He stated that it is correct that the excise policy was withdrawn under which the plaintiff was supplying the goods, however volunteered time was given to the shops to dispose off its goods as the old policy was about to be withdrawn. He stated that no payment of Rs. 30,00,000/- was made by defendant on 13.07.2022. He further stated that M/s Delhi Liquors (whiskin) Pvt. Ltd. is a different company. He stated that the plaintiff is under the joint venture agreement.
14. PW2 Parvesh Kumar tendered his affidavit of evidence Ex.PW2/A and in cross examination stated that he is the Accountant of the plaintiff company. He stated that one entry in the ledger account is in relation to the breakage but do not remember how many bottles have breakages credited in the ledger account but volunteered to have brought the excel sheet. The rebate was given once in a month at the CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 9/ 27 end of the month. The entry in the ledger account have been made on the instructions of PW1 and the sales. He also stated that no payment of Rs. 30,00,000/- has made on 13.07.2022.
15. DW1 Pankaj Kumar tendered his affidavit of evidence Ex.DW1/A and in cross examination stated that he is Senior Executive (Finance) of the defendant company and stated that he has no other document except the Board Resolution. He stated that it is correct that they had received the goods from the plaintiff, however not aware about the excise portal. He has not used the excise portal perse but aware that the orders have placed through excise portal. He further stated that he do not have knowledge of credit period and also do not remember writing 90 days in the written statement regarding the credit period. He has not filed any document except photocopy of the Board Resolution. He further stated it is correct that there are two entries in the ledger account regarding the rebate discount and the breakages. He stated that he do not remember whether he has initiated any form of communication in writing to the plaintiff regarding the dead stock and return as alleged. He further stated that he do not remember the date, month and year when the credit request was made. He further stated that they have not filed any document to show the payment made to the plaintiff. He further stated that they have received legal notice, however do not aware whether any reply was made. He further stated that they have the knowledge regarding the excise policy being revoked from May, 2022 to August, 2022, and placed the orders also CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 10/ 27 from June, 2022 to July, 2022. There is no written communication regarding the sales promotion or discount.
Material Exhibits :
16. Ex.PW1/1 is the SPA dt. 20.06.2023; Ex.PW1/2 (Colly) is the original bills/ invoices; Ex.PW1/3 (Colly) is the ledger; Ex.PW1/4 is the original legal notice dt. 25.08.2023; Ex.PW1/5 (Colly) are the original postal receipts dt. 26.08.2023; Ex.PW1/6 (Colly) is the copy of tracking report; Ex.PW1/7 is the copy of company master data of defendant; Ex.PW1/8 is the affidavit U/o XI rule 6(3) of CPC as amended vide the Commercial Courts Act r/w Section 65B of Indian Evidence Act; Ex.PW1/9 is the Joint Venture agreement (not tendered in evidence by way of affidavit). Ex.PW1/D.1 is the tracking report record of the documents of supply of goods.
Ex.PW2/B is the affidavit U/o XI rule 6(3) of CPC as amended vide the Commercial Courts Act r/w Section 65B of Indian Evidence Act Mark.DW1/1 is the Board Resolution dt. 18.07.2023; Ex.DW1/2 is the certified true copy of the Board Resolution dt. 18.07.2023.
Submissions of counsels :
17. Ld. Counsel for plaintiff submitted that the delivery of goods are not disputed in the written statement. DW1 also admitted in cross examination to have received the goods. DW1 could not state CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 11/ 27 anything about the credit period and also do not file the documents except the Board Resolution. DW1 also could not state anything about the communication regarding the dead stock and its return. DW1 also stated that the order was placed after getting the knowledge about the date of revocation of the excise policy. Ld. Counsel submitted that the plaintiff able to show the liability towards the defendant through the invoices, the ledger statement which is not discredited during the cross examination of PW1 & PW2. The defendant, on the other hand, not able to prove its defence. The objection regarding the registration of the plaintiff company which is a joint venture U/s 69 of Indian Partnership Act has already been dismissed by this court vide order dt. 09.09.2024 while dismissing application U/o 7 rule 11 CPC. Ld. Counsel submitted that the plaintiff able to prove its case.
18. Ld. Counsel for defendant submitted that the present suit is liable to be dismissed being barred U/s 69 of Indian Partnership Act.
The joint venture agreement is silent whether the same is incorporated in the form of partnership, limited liability partnership or an incorporated entity. The joint venture in the nature of partnership is governed by the Partnership Act, therefore, required to be registered, hence, the unregistered partnership cannot file the suit. The plaintiff even if it is not assumed to be not a partnership then also the suit is not maintainable. (Relied upon Bhawarjit Chetri Vs. Kedarmal Banarasilal, 1953 SCC Online Gau 36; Synergy Ventrues Vs. M/s Rudra Buildwell Projects Pvt. Ltd., CP/(IB)-76/(PB)/2022) . The SPA CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 12/ 27 is issued in favour of Nand Kishore Verma by one of the partner of defendant and not by both the partners. The plaintiff also not filed any certificate U/o 11 Rule 6(3) of CPC in relation to any electronic documents is sought to be relied upon. PW1 & PW2 filed the affidavit in relation to the documents but these affidavits are false and cannot be relied upon. The plaintiff unable to prove the delivery of the goods. The documents of delivery were produced in cross examination without any leave sought from the court. The amount claimed by the plaintiff do not take into account the breakage and other rebates which were granted to the defendant. He further stated that all the payment which is due has already been made. Ld. Counsel submitted that the plaintiff unable to prove its case, hence, the suit is liable to be dismissed.
19. Both the parties also filed written submissions.
20. Arguments heard. Record perused.
21. My issuewise findings are as under :
Issue No. 1 : Whether the plaintiff is entitled to decree for a sum of Rs. 57,53,131/- against the defendant, as prayed for? OPP Issue No. 2 : Whether the plaintiff is entitled to interest. If yes, at what rate and for which period? OPP The case of the plaintiff is the plaintiff is a joint venture and distributor of whiskey and the brands of Delhi Liquors and supplied the defendant whiskey and other liquors against the excise CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 13/ 27 permit under various invoices from their godown at Okhla. The plaintiff is also maintaining the ledger accounts in this regard. The amount due towards the defendant through the invoices Ex.PW1/12 is Rs. 50,25,583/17p as per the ledger statement Ex.PW1/3. Though in affidavit of admission denial of document, the defendant denied these invoices, however DW1 in cross examination categorically admitted the supply of goods in terms of invoices raised. There is nothing in cross examination of PW1 & PW2 to challenge the veracity of the tax invoices Ex.PW1/2 and the ledger statement Ex.PW1/3. PW1 during cross examination also exhibited the tracking report of delivery of the goods (Ex.PW1/D.1). The plaintiff also sent the legal notice dt. 25.08.2023 (Ex.PW1/4) demanding a sum of Rs. 50,25,583/71p.
Though the service of this legal notice is denied by the defendant, however proved by the plaintiff through the tracking report. Even otherwise, the receiving of the said legal notice is admitted by DW1 in cross examination. The defendant did not reply to the said legal notice. The plaintiff, therefore able to prove the liability of Rs. 50,25,583/71p towards the defendant.
22. The defendant in his written statement admitted that the goods were supplied as per purchase order placed on the excise portal from time to time, however raised the defence that plaintiff offered an interest free credit period of at least 90 days and the payments were to be made by the defendant to the plaintiff as and when stock was sold. Furthermore, the excise policy was revoked w.e.f. 01.09.2022, CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 14/ 27 therefore, the un-sold stock has to be taken back by the plaintiff. In the written statement there is nothing to discredit the invoices and ledger statement. However, there is defence of interest free credit period of 90 days but DW1 in his cross examination stated that he had no knowledge of credit period and also do not remember writing 90 days in the written statement regarding the credit period. Admittedly, no document has been filed by the defendant in this regard. The defendant even could not show from the documents of the plaintiff such terms and conditions, hence, this defence of interest free credit period is not proved by the defendant. The defendant also raised the plea that the un-sold stock was not taken back by the plaintiff, however not filed any details of the un-sold stock nor filed any communication regarding the responsibility of the plaintiff to take back the un-sold stock. DW1 even otherwise stated that they have the knowledge of excise policy being revoked from May, 2022 to August, 2022, however placed the orders from June, 2022 to July, 2022. This itself suggests that the plea of non-payment due ot withdrawal of excise policy is flimsy and to avoid the payment. The defendant took the stand in cross examination that they had paid a sum of Rs. 30,00,000/- on 13.07.2022, however this fact is not substantiated through the ledger account (Ex.PW1/3). The defendant did not try to corroborate the said payment through their own statement of account or any other mode, hence, the defendant also not able to prove that they had made part payment of Rs. 30,00,000/- to the plaintiff. The CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 15/ 27 defendant has also taken the plea that no proper rebate and breakage of bottle amount was paid to the plaintiff, however the plaintiff able to show the rebates and amount of breakage of bottles given. The defendant could not point out any defect in the ledger statement with regard to rebate and the breakage. The defendant could not substantiate its defence through any documentary evidence. The defendant is raising the defence in air without substantiating the same through any documentary evidence even not replied to the legal notice (Ex.PW1/4) sent by the plaintiff.
23. The defendant also not participated in the pre-medition proceedings U/s 12 A of Commercial Courts Act initiated by the plaintiff before the Delhi Legal Services Authorities, therefore, non- starter report dt. 01.11.2023 was issued by DLSA. As per the terms and conditions of the invoices, an interest @ 18% per annum will be charged if not paid within 30 days, therefore, there is no infirmity in claiming 18% interest to the tune of Rs. 7,27,548/- upto 31.08.2023 by the plaintiff in the plaint over an amount of Rs. 50,25,583/71p. The plaintiff is, therefore, entitled for a total sum of Rs. 50,25,583/71p + Rs. 7,27,548/- = Rs. 57,53,131/-. As far as the pendent-lite interest is concerned, the interest @ 12% pr annum is reasonable in present facts and circumstances. The issue nos. 1 & 2 is decided in favour of the plaintiff and against the defendant.
Issue No. 3. Whether the suit of the plaintiff is not maintainable in its present form? OPD CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 16/ 27 Issue No. 4. :Whether the plaintiff has failed to comply with the provisions of Order 11 rule 6(3) of CPC,1908 as amended vide the Commercial Courts Act, 2015? OPD
24. Ld. Counsel for defendant raised the plea that the plaintiff is a joint venture, therefore, requires to be registered under Section 69 of Partnership Act. As there is no registration, the suit is not maintainable. The law regarding the joint venture entity is discussed in the judgment of Delhi High Court in case titled ITD Cementation India Ltd. Vs. SSJV-ZVS JV & Ors, in OMP(ENF.) (COMM) 188/2021 dt. 07.03.2023. The relevant paras are re- produced as under :
6. Dr. George while explaining the concept of a joint venture firstly relied upon a judgment rendered by the Division Bench of the Gujarat High Court in Asia Foundations & Constructions Ltd., Bombay v. State of Gujarat2. While rendered in the context of a tendering process that was assailed, the said High Court described the essential attributes of a joint venture in the following terms: -
"47. The different forms "A" to "G" which have been referred to in the facts narrated hereinabove containing requisite particulars to be furnished by the applicants seeking prequalification, inter alia, relate to joint venture also. The particulars which are to be furnished in form "C" relating to joint venture consist of (1) name and address of joint venture; (2) name and address of all the partners of joint, venture; (3) the responsibility of the firm leading the joint venture and the responsibility of the other joint venture partners; (4) the name of bankers and (5) the financial participation of each firm in the joint venture. Thus, it is clear that in case of a group of firms, the applicant-has to give, more particulars which have been set out above, namely, which firm will be CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 17/ 27 responsible for applying for and submission of tender and for completion of the contract document, and also the responsibility of the lead firm as well as other member-firms is to be clearly stated. The effect of the conjoint reading of the Memorandum of instructions and information as well as the forms in which the particulars were to be furnished clearly indicates that the authorities had visualized and envisaged the group of firms as well as the joint venture consortia as different entities which could seek pre-qualification. It appears from the particulars which are required to be furnished in form "C" that the authorities envisaged that there may be cases of joint venture consortia where one of the partner- firms may have a leading role to play, and the responsibility of their joint venture partners may not be so leading and important. It is in respect of such cases that the particulars are to be furnished about the responsibility of the firm leading the joint venture, and the responsibility of the other partners thereof. The legal concept of the joint venture is very well recognised, and we do not think that the authorities in these High Powered Committees can be oblivious of this recognised legal concept. If they are, they have completely misdirected themselves. The common law did not recognise the relationship of co-adventures but with the passage of time, the judicial decisions recognised what is known as „joint adventure‟ of two or more persons undertaking to combine, their property or labour in conduct of particular line of trade or a general business for joint profits. The Courts do not treat a joint adventure as identical with a partnership though it is so similar in nature, and in the contractual relationship created by such adventurers that the rights as between them are governed practically by the same rules that govern the partnership. This relationship has been defined to be a special combination of persons undertaking jointly some specific adventure for profit without any actual partnership. It is also described as a commercial or a maritime enterprise undertaking by several persons jointly; a limited partnership not limited in the statutory sense as to the liabilities of partners but as to its scope and duration. Generally speaking the CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 18/ 27 georgdistinction between a joint adventure and a partnership is that former relates to a single transaction „though it may comprehend a business to be continued over several years‟ while the later relates to a joint business of a particular kind (see: 48 American Law Reports at p. 1055 under the caption "what amounts to a joint adventure" at pages 1056-57 and 1060). It is generally agreed that in order to constitute a joint venture, there must be community of interest and right to joint control. It is recognised on authority that each of the parties must have an equal voice in the matter of its performance and control over the agencies used therein, though one authority may entrust the performance, to another. There, is also an authority to the effect that a joint venture may exist although the parties haveunequal control of operations. The rights, duties and liabilities of joint venturers are similar or analogous to those which govern the corresponding rights, duties and liabilities of the partners. As in the case of partners, joint venturers may be jointly and severally liable to third parties for the debts of the venture (see: American Jurisprudence, Second Edition, Vol. 46, para 12 at pages 33-34 and para 57 to p. 76). Joint Venture groups are internationally recognised in form of cooperation in the joint fulfilment of the construction contract obligations. Joint venture groups in the construction, industry come about through agreements for combination of legally independent contractors for the joint rendering of construction services limited in both time and content. Typically they are restricted to a single project in which case the members of the group act jointly at both the tendering and award stages. Joint venture groups are generally unincorporated associations. The legal systems in general have not kept pace with the growing economic means of joint venture groups and there is no special legal form for this type of co-operation which has come to stay in construction industry. However, in Australia and Germany, joint venture groups as also unincorporated civil law partnerships are subjected to law of partnership. In United States also the law of partnership is applied to joint venture consortia. It is only in France that a special legal form has been created in CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 19/ 27 this behalf. The joint venture groups have got, inter alia, the characteristics of joint organisation, joint action through co-operation of all members of all individual persons acting on the instructions of the members, and joint liability for rendition of services to third parties, and the relation between the partners inter se to be governed according to the joint venture group agreements. The economic importance of joint venture consortia on the one hand, and absence of specific legal provisions on the other has raised a host of problems of interpretation in individual cases since a wide variety of model contracts and pre-printed contract forms are adopted to suit the needs and convenience of a particular construction project. These problems have direct effect on the partners inter se and indirect effect on the third parties, such as customers. If several construction enterprises tender jointly and have been jointly awarded the construction contract, they are obliged to perform the contract jointly as joint venture group. One of the difficult problems which is likely to arise when a construction contract is about to be entered into since the customer when concluding the contract with a joint venture is dealing with all the members of the group, who are jointly committed to rendering the services. The contract has, therefore, to be concluded by an authorised representative of all the members of such a group en- bloc for the simple reason that joint venture groups are unincorporated associations. The services to be rendered by the group are to be allocated amongst the members of the same by internal agreement, and consequently the rights and duties of the members inter se are also regulated by the group agreement. These internal agreements are not effective vis-a-vis the third parties, and they operate amongst the members inter se. Thus, all the members are jointly and severally liable for performance of the construction work jointly undertaken irrespective of internal division of the work. If one member of the joint venture group does not fulfil his commitments, the others are under joint and several obligation to carry out such obligations vis-a-vis the customer. Such a situation may arise when a member of a joint venture group drops out prematurely because of CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 20/ 27 the liquidation or insolvency. When a contract is concluded with a joint venture group all members are made jointly and severally liable even if only one is capable of rendering the service in question. The joint and several liabilities of the members of a joint venture group may cover the marginal areas of the contract performance such as late performance, faults, deficiency of goods and services etc. It is, therefore, very necessary while entering into such contracts with joint venture group that the construction contracts are carefully drafted, and the members of such group must also enter into detailed agreements amongst themselves, (see: Article on Joint Venture Groups -- Effects of construction Contract: Dr. Manfred Straube, Professor of Commercial Law, Technical University, Vienna in "International Business Lawyer", March 1985, a monthly published by a Section of Business Law of International Bar Association, London)
48. In India, a person can become a partner with another person in a particular adventure or undertaking (see: S. 8 of the Partnership Act, 1932). This is described as a particular partnership also since it is confined to a georgparticular adventure or undertaking, or it may be one limited even to a particular advantage or undertaking or an isolated transaction in course of trade or business. However, the three elements of partnership, namely, agreement, business and mutual agency must exist as a matter of course. The only difference between such partnership in nature of joint venture and an ordinary partnership is that in joint venture partners incur no responsibility beyond the limits of the particular adventure or business or undertaking and the rights and obligations are, therefore, partnership (See: Karmali v. Karimji, 39 ILR Bom 261 : (AIR 1914 PC 132))."
7. The views as expressed in Asia Foundations were reiterated again by the Gujarat High Court in Continental Construction Ltd. and Ors. v. State of Gujarat & Anr.3 as would be evident from the following observations as appearing in paragraph 14 of the report:-
CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 21/ 27 "14. It should not be lost sight of that internal agreements between the members of a joint venture group are not generally effective vis-a-vis the third parties, and they merely constitute the basis for mutual services and entitlements within the joint venture group.
The members of joint venture are jointly and severally liable for performance of the construction work jointly undertaken irrespective of the internal division of work. If a member of a joint venture group does not fulfill his commitments, the other members thereof are under obligation to provide the missing services to the customer. If the customer enters into a contract with a joint venture group, it increases the liability of the members of the joint venture for due performance of the construction work. As noted above, when a contract is concluded with a joint venture group, all members are made jointly and severally liable, even if only one is capable of rendering the services in question. The justification for such liability is the possibility of bringing pressure to bear on a member of the group in order to induce him to render his share of the services or, if necessary, to arrange for a substitute. Of course, members of a joint venture group who do not fulfil their commitments remain liable to co-share to indemnify their co-venturers (see : Articles on Join Venture Groups (supra)). The joint and several liability of co-venturers is not only for the execution of the works but also in respect of any claims for damages by the customer and in respect of all joint financial commitments to suppliers, planners and architects and also in respect of fees, dues, penalties or other payments to public authorities. In any case the internal agreements regarding liability have no force vis-a-vis third parties."
8. Dr. George also drew the attention of the Court to the decision of the Supreme Court in New Horizons Ltd. v. Union of India4. which explained the concept of a joint venture in the following terms:-
"24. The expression "joint venture" is more frequently used in the United States. It connotes a legal entity in the nature of a partnership engaged in the joint undertaking CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 22/ 27 of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercial enterprise wherein all contribute assets and share risks. It requires a community of interest in the performance of the subject-matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses. (Black's Law Dictionary, 6th Edn., p.
839) According to Words and Phrases, Permanent Edn., a joint venture is an association of two or more persons to carry out a single business enterprise for profit (p. 117, Vol. 23). A joint venture can take the form of a corporation wherein two or more persons or companies may join together. A joint venture corporation has been defined as a corporation which has joined with other individuals or corporations within the corporate framework in some specific undertaking commonly found in oil, chemicals, electronic, atomic fields.
(Black's Law Dictionary, 6th Edn., p. 342) Joint venture companies are now being increasingly formed in relation to projects requiring inflow of foreign capital or technical expertise in the fast developing countries in East Asia, viz., Japan, South Korea, Taiwan, China, etc. [See Jacques Buhart : Joint Ventures in East Asia -- Legal Issues (1991).] There has been similar growth of joint ventures in our country wherein foreign companies join with Indian counterparts and contribute towards capital and technical know- how for the success of the venture. The High Court has taken note of this connotation of the expression "joint venture". But the High Court has held that NHL is not a joint venture and that there is only a certain amount of equity participation by a foreign company in it. We are unable to agree with the said view of the High Court.
25. As noticed earlier, in its tender NHL had stated that it is a joint venture company established by TPI, LMI and WML and IIPL wherein TPI, LMI and WML and other companies in the same group as well as Mr Aroon Purie own 60% shares and IIPL owns 40% shares. It was also stated that the joint venture has received approval of the Government of India and is currently in operation and CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 23/ 27 that the promoter will increase their capital/contribution to commensurate with the project need and that the company has been established as an information and database management company with expertise in database processing, publishing, sales/marketing and the dissemination of related information. In the tender it is also stated that as a joint venture in the true sense of the phrase, the company will have access to expertise in database management, sales and publishing of its parent group companies. It would thus appear that the Indian group of companies (TPI, LMI and WML) and the Singapore-based company (IIPL) have pooled together their resources in the sense that TPI, LMI and WML have made available their equipment and organisation at various places in the country while IIPL has made available its wide experience in the field as well as the expertise of its managerial staff. All the constituents of NHL have thus contributed to the resources of the Company (NHL). This shows that NHL is an association of companies jointly undertaking a commercial enterprise wherein they will all contribute assets and will share risks and have a community of interest. We are, therefore, of the view that NHL has been constituted as a joint venture by the group of Indian companies and IIPL, the Singapore-based company and It would not be correct to say that IIPL which has a substantial stake in the success of the venture, having 40% of shareholding, is a mere shareholder in NHL.
26. Once it is held that NHL is a joint venture, as claimed by it in the tender, the experience of its various constituents namely, TPI, LMI and WML as well as IIPL had to be taken into consideration if the Tender Evaluation Committee had adopted the approach of a prudent businessman."
9. A more detailed exposition on the concept of a joint venture is found in Corpus Juris Secundum, which defines the nature of such enterprises in the following terms:-
CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 24/ 27 "A. DEFINITION AND NATURE OF JOINT VENTURES Research References A.L.R. Library A.L.R. Index, Joint Ventures West's A.L.R. Digest, Joint Adventures 1, 1.1, 1.13 § 1 Generally Research References West's Key Number Digest, Joint Adventures 1, 1.1, 1.13 xxxx xxxxx xxxx xxxx
13. As would be manifest from the aforesaid principles which stand enunciated, a joint venture may be recognized as a quasi partnership where two or more entities jointly undertake a particular transaction or contract for mutual profit. It essentially represents a concept where two or more persons jointly take on the obligation to implement a contract or undertake an enterprise for gain and profit. While not strictly understood in law to be a legal person, a joint venture by virtue of entering into a contract binds itself to the various obligations that stands placed thereunder and to exercise all rights conferred therein. It could also be a consortium where either two or more persons or companies come together to discharge obligations.
14. Undisputedly, the contract in the present case was executed by the joint venture itself acting for and on behalf of all its constituents. It was an enterprise in which Respondent Nos. 2 and 3 came together and agreed to share profits from the venture. Insofar as the Enforcement Petitioner is concerned, it is clearly entitled in law to proceed against the Respondents jointly and severally. The Court further holds that the Enforcement Petitioner was neither obliged nor placed under a duty to array the individual members of the joint venture as party respondents. As long as the joint venture itself was before the Arbitral Tribunal, the same was clearly sufficient for the purposes of adjudication of claims that came to be laid by the Petitioner. The individual members of a joint venture cannot seek the trial of such disputes based upon their own agreed CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 25/ 27 upon or perceived individual responsibilities and obligations.
Those would clearly not bind third parties. When a contract is executed in favour of the joint venture, the person awarding the same is clearly entitled to proceed on the basis that each of the members of the consortium shall be jointly and severally liable. This subject of course to any contract or agreement to the contrary. In any case, a constituent of the joint venture cannot escape from the liability which stands raised or arises from that venture. It would remain, as noted above, jointly and severally liable.
25. As per mandate of this judgment, the joint venture though similar in nature as partnership but not governed by the rules of the partnership. It is the combination of two or more persons or entities having joint and several liability. Thus, by its very nature, the joint venture is not governed by Partnership Act. It is not generally found to have been registered. Accordingly, the plea of registration as raised by the defendant is not tenable. PW1 Nand Kishore Verma is duly authorized by one member of joint venture which is valid as there is a joint and several liabilities of the members of joint venture. The judgment as relied by Ld. Counsel for plaintiff are of no help in present facts and circumstances.
26. The plaintiff has filed the affidavit U/o 11 Rule 6(3) of CPC as amended under Commercial Courts Act (Ex.PW1/A) during the evidence. The non-filing of the said affidavit alongwith the plaint is a curable defect which is rectified during evidence. There could not be any prejudice cause to the defendant in delay in filing the said affidavit of evidence. Accordingly, the issue nos. 3 & 4 decided in favour of the plaintiff and against the defendant.
CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 26/ 27 RELIEF
27. In view of above discussions, the plaintiff's suit is decreed for a sum of Rs. 57,53,131/- along with interest @ 12% per annum from the date of filing of suit till its realization. Cost of the suit be awarded to the plaintiff. Decree sheet be drawn accordingly.
File be consigned to record room after due compliance.
Digitally signed by AJAY AJAY KUMAR JAIN KUMAR Date:
JAIN 2025.03.19 16:26:57 Announced in the open court +0530 on 19th March, 2025 (Ajay Kumar Jain) District Judge, Comm-03 South-East, Saket Courts, Delhi CS (COMM) 115/2024 Delhi Liquors Vs. Khao Gali Restaurants Pvt. Ltd. dt. 19.03.2025 27/ 27