Faqir Chand Gulati vs. Uppal (Supreme Court)

DATE: (Date of pronouncement)
DATE: August 7, 2008 (Date of publication)

(i) A development agreement is one where the land-holder provides the land. The Builder puts up a building. Thereafter, the land owner and builder share the constructed area. The builder delivers the `owner’s share’ to the land-holder and retains the `builder’s share’. The land-holder sells/transfers undivided share/s in the land corresponding to the Builder’s share of the building to the builder or his nominees. The land-holder will have no say or control in the construction or have any say as to whom and at what cost the builder’s share of apartments are to be dealt with or disposed of. Such an agreement is not a “joint venture” in the legal sense. It is a contract for “services”.

(2) On the other hand, an agreement between the owner of a land and a builder, for construction of apartments and sale of those of apartments so as to share the profits in a particular ratio may be a joint venture, if the agreement discloses an intent that both parties shall exercise joint control over the construction/development and be accountable to each other for their respective acts with reference to the project.

(3) The title of the document is not determinative of the nature and character of the document, though the name may usually give some indication of the nature of the document. The use of the words `joint venture’ or `collaboration’ in the agreement will not make the transaction a joint venture, if there are no provisions for shared control and losses.