IN RE: VAN OORD ACZ. BV Vs. STATE

JUDGEMENT

(1.) THE applicant, Van Oord ACZ, BV (VOACZ), is a company incorporated in the Netherlands, having its registered office at 2, Jan Blankenweg, 4207, HN Gorinchem, P.O. Box No. 458, 4200 AL Gorinchem, The Netherlands. The applicant is engaged in the business of dredging and marine contractors. The Board of Directors manages the business of the applicant. All the Board members are non -resident foreign nationals. The control and management of the affairs of the company is situated wholly outside India.

(2.) IN the year 1996, Chennai Port Trust floated a tender for the Breakwater Construction of Ennore Port, the contract known as Ennore Coal Port Project -ECPP/C4. VOACZ possesses technical knowledge and capabilities to perform a part of the work. It participated in the said contract in joint venture with an Indian company known as Hindustan Construction Company Ltd. (HCC). The purpose of the agreement as stated in cl. 1.1 is that VOACZ and H.C.C. would associate themselves in an unincorporated joint venture in the form of consortium, the sole object of which was to fulfil the obligations of the contract. Art. 23 defines the relationship of the parties as "The relationship of the parties shall be that of an unincorporated association formed for the purposes of collaborating in respect of the Contract. Each of the parties expressly agrees that it is not their intention through the joint venture to carry on business in common with the other parties with a view to profit and that it is their intention to utilise the joint venture safely for the better co -operation of their relationships with the employer and the division of the works and gross income arising under the contract. Each party shall bear its own losses and retain all profits arising from the performance of its requisite work's package. Nothing in this agreement shall be deemed to give rise to a partnership between the parties or to any contract for services between the parties and each of the parties undertakes to use all reasonable endeavours not to do any act or thing which would cause such a relationship to arise. "Thus, the joint venture agreement specifically provides that each party shall bear its own losses and retain all profits. Therefore, there would be no sharing of the profits between the two parties. Both the parties have decided the work each party shall carry out. The total price of the contract is Rs. 2, 62, 01, 03, 120 out of which applicant's share of work is for Rs. 44, 52, 78, 920, which is about 17 per cent of the total price. It is submitted on behalf of the applicant that the association was not incorporated to earn profit but the main objective was to co -ordinate for the completion of the contract.

(3.) THE project comprises a number of construction contract, including :