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HomeDocumentsDocument Guides › Joint Venture Agreement

Joint venture agreement — working together without losing control

A family in Rajouri Garden hands its 250-yard plot to a builder for four floors, two for them and two for him, on a four-page agreement and a general power of attorney; three years later the building is half-finished and the builder has sold a floor that was theirs. Two logistics firms bid together for a government tender and discover, after winning, that neither agreed who would absorb the penalty for late delivery. A software company and a distributor launch a product “as a JV” and find they are partners in law, each liable for the other’s debts. Working together is easy to agree and hard to document. This page covers both kinds of joint venture most people in Delhi meet: business ventures, and the landowner-builder collaboration.

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What is a joint venture agreement, and what should it cover?A joint venture agreement is the contract under which independent parties combine resources for a defined business purpose while staying separate. It can stand alone as a contractual venture, be the founding document of a joint venture company or LLP, or take the form of a consortium agreement for a tender. It should record each party’s contribution, the decision-making structure, how profits, losses and costs are shared, ownership of assets and intellectual property created, confidentiality and non-compete terms, deadlock resolution, default remedies and exit. Parties should take care that an unincorporated venture does not become a partnership by accident under section 4 of the Partnership Act, which would make each liable for the other’s business debts. In Delhi the most common joint venture is the landowner-builder collaboration, or joint development agreement, under which a plot owner gives land for redevelopment in return for floors (area sharing) or sale proceeds (revenue sharing); it must deal with title, sanctions, specifications, timelines, delay compensation, temporary rent, limited powers of attorney, registration and stamp duty, RERA where applicable, and the landowner’s tax position.

What a joint venture is

“Joint venture” is not a term Indian statute defines for private business. It is a commercial description for any arrangement in which two or more independent parties pool something — money, land, skills, customers, a licence, a brand — to pursue an opportunity that neither would pursue as well alone, while each remains a separate business.

That flexibility is both the attraction and the danger. Because the law does not supply a ready-made structure, the parties’ agreement has to do almost all the work. If the agreement is silent on who pays for a cost overrun, who owns a design, or what happens when the parties fall out, there is no default rule that answers the question sensibly. The parties will end up arguing about what they meant, or a court will decide what they must have meant.

Joint ventures people meet in practice fall into a few families:

Every one of them needs the same core answers: what each side brings, who decides, how money flows, who owns what, and how it ends. The first half of this page deals with those answers for business ventures. The second half deals with the landowner-builder collaboration, which has its own law and its own traps. Where the parties begin with a letter of intent, our MoU guide explains what a collaboration MoU should and should not try to do.

Contract, company, LLP or consortium

The first decision is the vehicle. It shapes liability, tax, the ease of bringing in money, and how the parties can leave.

Swipe to see the full table
StructureSuitsLiabilityExit
Contractual JVOne project, limited duration, few shared assetsEach party for its own acts, as the contract allocates; risk of partnership if drafted looselyCompletion of the project, or termination
JV company (private limited)A continuing business with its own staff, assets and customersLimited to capital, save guaranteesTransfer of shares, subject to the shareholders agreement
JV LLPA continuing business wanting flexibility and limited liabilityLimited, save wrongful actsTransfer of partnership interest per LLP agreement
ConsortiumA single bid or contract with a third partyOften joint and several to the client, allocated between membersEnd of the contract

A contractual joint venture is quick and cheap to set up. It works well where each party does its own part of a project and they share an outcome. It is poorly suited to anything that needs its own bank account, employees or property, because there is no separate entity to hold them.

A joint venture company is a normal private limited company whose shareholders are the venture parties. The joint venture agreement then usually becomes, or is accompanied by, a shareholders agreement, and the company’s articles must mirror its key terms. Our shareholders agreement guide explains why that mirroring matters, and our private limited company registration service sets up the company.

An LLP gives limited liability with fewer corporate formalities, and its LLP agreement governs the partners’ relationship. Our LLP registration service handles incorporation.

The choice has tax consequences — on profits, on distributions, and on eventual exit — which should be discussed with an accountant before the structure is fixed.

When a joint venture becomes a partnership

The most common legal mistake in contractual joint ventures is to create a partnership without meaning to. The Indian Partnership Act defines partnership by what the parties do, not by what they call it:

“‘Partnership’ is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.” — Indian Partnership Act, 1932, section 4

The Act also says that in deciding whether a group of persons is a firm, regard is to be had to the real relation between them, shown by all relevant facts taken together. A label such as “joint venture” or a clause saying “nothing here creates a partnership” helps, but it does not override the facts.

Why it matters: partners are jointly and severally liable for all acts of the firm done while they are partners, and each partner is an agent of the firm for acts done in the usual way of its business. A party to a loosely drafted venture may find itself liable for a supplier bill its co-venturer ran up, or bound by a contract it never saw. Our partnership deed guide explains that liability.

A contractual venture can stay outside the definition if it is structured so that:

If the parties actually want to share the profits of a common business, they should say so openly and choose a vehicle with limited liability, rather than drift into a partnership without its safeguards.

Where one party only contributes something and takes a percentage of income, without the parties running a common business, a revenue share may be the better structure; our revenue sharing agreement guide explains when such an arrangement is, and is not, a partnership.

Choosing and checking the other party

A joint venture is a long relationship with a counterparty whose problems become yours. The checks before signing are the same in spirit as an employer’s before hiring or a buyer’s before paying.

Identity and authority. Company or firm records, the people authorised to sign, and a board resolution or partners’ authority approving the venture.

Track record. Completed projects, references, and for developers, buildings actually finished and occupied, not just advertised.

Financial capacity. Recent accounts, borrowing and credit history. A partner who needs the venture’s first receipts to fund its own contribution is a risk to plan for.

Legal exposure. Pending litigation, defaults, regulatory action, and for property partners, complaints by earlier landowners or buyers. Court records, consumer commission lists and RERA complaint records are useful sources.

Licences and registrations that the venture will depend on — a contractor licence, a trade licence, an import registration, sector approvals.

Conflicts. Other ventures the partner is in, especially with your competitors, and what it proposes to do in the same field outside the venture.

Before sharing sensitive information during these checks and negotiations, sign a confidentiality agreement; our non-disclosure agreement service drafts one. The information you gather also informs the warranties each party should give in the joint venture agreement: that it has authority, that it is solvent, that it is not in breach of law, and that what it contributes is its own to contribute.

Contributions

Every venture begins with what each party puts in, and most disputes begin with a disagreement about it. Contributions should be listed specifically, with values and dates, in a schedule.

Money: the amount, when it is due, whether it is equity or a loan, and what happens if a party does not pay on time — interest, dilution, suspension of rights or a right for the other party to fund and recover.

Land and premises: whether they are transferred, leased or licensed to the venture, for how long, and what happens to improvements at the end.

Equipment and stock: at what value, who bears the risk of loss, and who owns them after the venture ends.

Know-how and intellectual property: whether it is assigned or licensed, the scope of the licence, and whether it survives termination.

People: employees seconded to the venture, who pays them, and who is liable for them.

Customers, contracts and brand: introductions, existing contracts to be performed through the venture, and use of trade names.

Non-cash contributions need agreed values, because they determine each party’s share. A party that contributes a licence or a brand will value it highly; the party contributing cash will not. An independent valuation, or a fixed formula agreed at the start, prevents the argument from resurfacing when the venture makes money.

The agreement should also state what happens if a contribution turns out to be defective — land with a title defect, equipment that does not work, a licence that is revoked.

Get the contribution and control terms drafted

Control and decision-making

In a venture of equals, control is the hardest term to agree, because each party fears being outvoted. The agreement should separate three levels of decision.

Day-to-day management. Someone has to run the venture. Commonly one party is appointed as operator or project manager, with authority within an approved budget and plan, and reports regularly to the other. Where the venture is a company, this is the managing director or chief executive, appointed by agreement.

Governing body. A management committee for a contractual venture, or the board of a joint venture company, with each party appointing representatives in proportion to its interest or equally. The agreement fixes quorum, meeting frequency, chairperson and casting vote. For a company, the details and their relationship with the articles are covered in our shareholders agreement guide.

Unanimous or special matters. A list of decisions that need both parties’ consent: changing the scope or business plan, taking on debt above a limit, admitting a new party, selling major assets, related-party dealings, starting litigation, and termination. The list protects the smaller party but can paralyse the venture if it is too long.

Two drafting points are specific to ventures. First, where one party is also a supplier, customer or service provider to the venture, decisions about those contracts should be taken by the other party alone, because the first has a conflict. Second, where one party’s representatives run the venture, the other needs information rights — accounts, budgets, bank statements and access — that do not depend on the operator’s goodwill.

Money: profits, losses and funding

Money terms should be written as if the venture will both succeed and fail, because either can happen.

Sharing. Profits are usually shared in proportion to contributions or interests, but ventures often use other measures: a fee for the operating party, a priority return to the party that funded first, or a share of revenue rather than profit for a party that has no control over costs. Each measure needs a definition. “Profit” means nothing until the agreement says what costs are deducted, what overheads may be charged, and on what accounting basis.

Losses. In a contractual venture, the parties should agree how losses are shared and capped. In a company, the parties’ exposure is limited to their capital unless they give guarantees, so the key question becomes who will guarantee the venture’s borrowings and in what proportion.

Further funding. The business plan should state expected funding; the agreement should say what happens when more is needed — pro rata contributions, loans by the parties at agreed interest, outside borrowing, or new equity — and the consequences if a party will not fund its share.

Accounts and audit. Which party keeps the books, how often accounts are shared, and each party’s right to audit. For a contractual venture, a separate bank account, operated jointly or with dual signatures above a limit, keeps venture money distinct.

Tax. Each party is responsible for its own taxes, but withholding, GST on contributions and invoices between the parties and the venture, and the tax status of the venture itself need to be considered at the outset. Where revenue is shared under a separate document, our revenue sharing agreement service drafts it.

The simplest rule for money in a venture is transparency: one account, regular statements, and nothing paid to a party or its relatives without the other’s knowledge.

Intellectual property and what the venture creates

Ventures often create something valuable that neither party owned before: a product design, software, a customer database, a brand, a process. The agreement should say who owns it before it exists, because afterwards each party will believe it is theirs.

Three common approaches:

Pre-existing intellectual property — what each party brought in — should remain with that party, licensed to the venture for its duration, with a clear statement of what happens to the licence on termination.

Brand names used by the venture deserve special care. If the venture trades under one party’s brand, the other party should not later be surprised to find it has built goodwill it cannot use. If a new brand is created, it should be registered in the name of whoever is to own it, early.

Employees and contractors who create material for the venture should sign assignments in favour of the right owner. Without them, ownership can remain with the individual creator.

Confidentiality and competing business

Parties to a venture see each other’s customers, pricing and methods. The agreement should protect that information, and should say whether each party may compete with the venture.

Confidentiality should cover information exchanged before and during the venture, with the usual exceptions, and should survive termination for a stated period or, for trade secrets, indefinitely.

Exclusivity and non-compete during the venture. Parties commonly agree that, while the venture lasts, neither will pursue the same opportunity with a third party, or in the same territory and field. Such covenants operate during a continuing commercial relationship and are generally viewed more favourably than restraints after it ends.

After the venture. Restraints that bind a party after the venture has ended face section 27 of the Indian Contract Act, which makes agreements in restraint of trade void except in the circumstances it permits. Our NDA guide explains section 27 and why post-term non-competes often fail. Non-solicitation of customers and employees for a limited period, and a continuing duty of confidentiality, are more reliable.

Corporate opportunities. Where a party learns of an opportunity within the venture’s field, the agreement can require it to offer the opportunity to the venture first.

For ventures between competitors, competition law also sets limits on what information can be shared and what may be agreed, discussed in the section on regulatory issues below.

Deadlock, default and exit

Joint ventures end, and the agreement should plan for how.

Deadlock. Where the parties cannot agree on a reserved matter, a ladder of steps — referral to senior executives, mediation, expert decision on technical questions, and finally a buy-sell mechanism or termination — prevents paralysis. The mechanisms are explained in our shareholders agreement guide; the same thinking applies to contractual ventures.

Default. Events that allow the other party to act: failure to contribute, material breach not remedied after notice, insolvency, change of control of a party, and serious misconduct. Remedies may include suspension of voting rights, a right to buy the defaulter’s interest at a discount, or termination with damages.

Voluntary exit. A lock-in for an initial period, after which a party may sell its interest subject to a right of first refusal for the other, or may give notice to end the venture.

Termination and wind-up. For a contractual venture: completion of the project, expiry of a term, or agreement. The agreement should say how ongoing contracts are finished, how assets and liabilities are divided, who keeps customers, and what happens to shared intellectual property. For a company: sale of shares, a buy-out, or liquidation.

Valuation for any buy-out should be fixed by a method agreed at the start — independent valuer, formula, or multiple — because it is almost impossible to agree once the parties are in dispute.

The first months of a business venture

Many ventures are signed with enthusiasm and then drift, because nobody turns the agreement into routine. The first months decide whether the document is used or forgotten.

A venture that runs to a written rhythm from the start rarely needs its dispute clauses. One that runs on phone calls usually does.

Consortium agreements for tenders

Many government and large private tenders allow, or require, firms to bid as a consortium or joint venture. The tender document usually dictates part of the arrangement: a lead member, minimum shares for each member, joint and several liability of all members to the employer, and a power of attorney to the lead member to act for the consortium.

What the tender does not dictate is how the members deal with each other. The consortium agreement should record:

Because members are usually jointly and severally liable to the employer, the internal cross-indemnity is the most important protection a member has. It is only as good as the other member’s finances, which is why bank guarantees between members are sometimes agreed.

Competition law and foreign partners

Competition law. Two different parts of the Competition Act may touch a joint venture. First, where the venture involves an acquisition of shares, control or assets, or a merger, above the thresholds in the Act, it may be a combination that needs the Competition Commission’s approval before it takes effect. Small ventures rarely reach the thresholds, but larger ones should check. Second, section 3 prohibits agreements that cause an appreciable adverse effect on competition, and presumes that certain agreements between competitors — fixing prices, sharing markets, limiting output, rigging bids — have that effect. The Act makes an exception for joint ventures that increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services. A genuine venture that combines resources to do something new is treated differently from a cover for a cartel, but ventures between competitors should be designed carefully, and information exchanged between them should be limited to what the venture needs.

Foreign partners. Where a non-resident invests in an Indian joint venture company, foreign exchange rules on sectors, caps, pricing and reporting apply. Investors from countries sharing a land border with India need Government approval in all sectors. Contractual ventures with foreign parties raise questions about where profits are taxed and how payments are remitted. The structure should be confirmed with a chartered accountant or a foreign-exchange lawyer before signing.

Sector licences. Some businesses — insurance, telecom, defence, banking, broadcasting and others — require licences or approvals that restrict who may hold interests and on what terms. A venture in such a sector must be built around those rules.

Builder floor collaboration: how it works

Across South, West and North Delhi, thousands of old single-storey and two-storey houses have been rebuilt as builder floors: a stilt for parking and three or four independent floors above it. Few owners build these themselves. Most enter a collaboration with a builder, known variously as a collaboration agreement, joint development agreement or JDA.

The basic bargain is simple. The owner contributes the plot. The builder contributes money, construction and the work of getting approvals and selling. The new building is divided between them. In practice, the arrangement usually runs like this:

  1. The owner and builder agree the terms and sign the collaboration agreement, usually with a power of attorney in the builder’s favour for specified acts.
  2. The builder’s architect prepares plans, and building permission is obtained in the owner’s name.
  3. The owner vacates, and the builder pays a monthly rent allowance.
  4. The old structure is demolished, with any permission required, and the new building is constructed.
  5. The owner’s floors are handed over complete; the builder sells its floors, with the owner joining the sale deeds or the builder signing under the power of attorney.
  6. The completion or occupancy certificate is obtained, each floor is separately conveyed, mutated and assessed to tax.

Each step carries risk for the owner, who gives up possession of a valuable asset to a builder whose finances may depend on selling floors before the building is finished. The agreement is the owner’s only protection, and it must be written with that in mind. Buyers of the floors, in turn, rely on the collaboration being properly documented, because their title comes through it; our conveyance deed guide explains what the buyer of a builder floor receives.

The alternative, for owners with funds, is to build themselves under a construction contract and sell or keep all the floors; our construction contractor agreement guide covers that route.

Area sharing, revenue sharing, or both

The heart of a collaboration is how the new building is divided.

Area sharing is the most common model for Delhi builder floors. The owner receives specified floors — for example, the ground and second floor — and the builder receives the rest, often with stilt parking spaces and roof rights allocated between them. The owner gets property rather than cash, which suits families who want to live in one floor and rent or keep another. The owner’s return does not depend on the builder’s sale prices.

Revenue sharing means the whole building, or all saleable units, is sold and the proceeds divided in agreed percentages. It suits owners who want cash. It depends entirely on the builder’s sales, pricing and honesty in accounting, so the owner needs access to sale records, a joint or escrow account for sale receipts, and a minimum guaranteed amount.

Hybrid arrangements combine the two: the owner receives one or two floors plus a cash payment, sometimes part at signing as a refundable or non-refundable deposit, and part on sale of the builder’s floors.

Whatever the model, the agreement should state precisely:

A deposit paid to the owner should be addressed expressly: whether it is refundable on termination, and whether it is security for the builder’s performance or an advance against the owner’s share.

Before a landowner signs

A collaboration is only as sound as the owner’s title and the building’s permissibility. Both should be checked before the builder is involved, not after.

Title and ownership. Every co-owner must sign. Where the house passed to several heirs, each heir’s share must be established, and an heir who does not join can later challenge the whole project. Where a minor has a share, a guardian generally needs court permission to deal with the minor’s immovable property. Mutation should be in the current owners’ names. Our property title verification guide explains what a title check covers, and our title verification service carries it out.

Leasehold or freehold. Many Delhi colonies began as leasehold; conversion to freehold, where available, is often a precondition to smooth sale of new floors.

Existing mortgage and occupants. Any loan against the house must be dealt with, and tenants or relatives in occupation must leave lawfully.

What may be built. The permitted floors, coverage, height, stilt and setbacks depend on the plot size, colony and building bye-laws. An owner promised four floors on a plot where only three are permitted is being promised an unauthorised floor, which exposes the owner — not only the builder — to sealing and demolition.

The builder. Buildings actually completed, speaking to owners of earlier projects, financial capacity, and any complaints or cases.

Advice. Owners should have their own architect or engineer review the plans and specifications, and their own lawyer review the agreement. The builder’s draft is written for the builder.

Have your collaboration agreement drafted for you, not the builder

Several owners, heirs and owners abroad

Most Delhi plots offered for collaboration are not owned by one person. They belong to a family — a widow and her children, or brothers who inherited from a father — and the family’s internal position has to be settled before a builder is brought in.

Everyone signs. Each co-owner must be a party to the collaboration agreement and to any power of attorney. A builder who proceeds on the signatures of some owners only, relying on a promise that the others will “sign later”, is building on a dispute.

Decide the family’s division first. If the owners intend to split the floors they receive among themselves — one floor to each brother, say — that division should be agreed and recorded among them, and reflected in the agreement, so that each floor can later be conveyed to the right person. A family settlement or partition document may be needed; our family settlement agreement guide explains the options.

Heirs and succession. Where the recorded owner has died, the heirs must establish their shares through succession documents and mutation before signing. A will, if any, should be checked for whether it needs probate.

Owners abroad. A co-owner living outside India can sign through a specific power of attorney executed abroad and authenticated for use in India, limited to this collaboration. Our apostille guide explains the authentication.

Minors. A minor’s share cannot simply be committed by a parent; court permission is generally needed to deal with a minor’s immovable property.

Families that sort these questions out first negotiate with builders from a position of strength, and their project does not stop halfway because one relative withholds a signature.

What the collaboration agreement must say

Beyond the division of floors, a landowner-builder agreement should cover:

Where a separate contractor will do the building for the builder, the owner is not a party to that contract but should be protected against the contractor’s claims on the property.

Powers of attorney to the developer

Builders almost always ask the owner to sign a general power of attorney, so they can deal with the authorities, utilities and buyers without calling the owner for every signature. It is also the document that has caused more loss to Delhi landowners than any other in these deals.

A power of attorney given to a builder who has an interest in the property can be difficult to revoke:

“Where the agent has himself an interest in the property which forms the subject-matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest.” — Indian Contract Act, 1872, section 202

A builder holding such a power, coupled with an interest in the project, may therefore resist its cancellation even when the owner wants to stop the project. The owner’s protection lies in limiting the power from the start:

A power of attorney is not a transfer of ownership, and sales of property by general power of attorney in place of a registered conveyance do not convey title; our power of attorney guide explains the Supreme Court’s position. Our GPA service drafts a power limited to what the builder actually needs.

Registration, stamp duty and RERA

Registration. The Registration Act requires registration of documents that create or transfer an interest in immovable property, and of contracts for transfer relied on for part performance. A collaboration agreement that gives the builder a share in the land, possession for development, or a power to sell is therefore commonly registered, and registration also matters for the landowner’s tax position described below. An unregistered agreement may be unenforceable for these purposes and cannot safely be relied on by later buyers.

Stamp duty. Duty on development agreements and on powers of attorney given for consideration to sell property is set by State stamp law, and in several States can be substantial because such documents are treated as close to a conveyance. The applicable duty in Delhi should be confirmed on the current schedule for the actual terms before execution; our e-stamp paper guide explains how duty is paid in Delhi.

RERA. The Real Estate (Regulation and Development) Act requires registration of projects above thresholds based on the area of land and the number of apartments. Many single-plot builder floor projects in Delhi fall below those thresholds, but not all. Where a project is registrable, the Act treats the owner of the land and the person who develops it as joint promoters, each responsible for the promoter’s obligations to buyers. Landowners in larger collaborations should understand that exposure before signing, and the agreement should allocate it with indemnities.

The sale of each floor, when it happens, is by a registered conveyance with duty on its value.

Tax for the landowner and developer

Tax often decides whether a collaboration makes sense for an owner. The points below are the long-standing position; the Income-tax Act was re-enacted with effect from April 2026 and renumbered, so every point should be checked with a chartered accountant.

Capital gains for the landowner. Giving land for development in exchange for floors is a transfer for tax purposes. For individual and HUF owners who enter a registered joint development agreement, the tax law has provided that the capital gain becomes chargeable in the year in which the completion certificate for the project is issued, measured by reference to the value of the owner’s share on that date plus any cash received, subject to conditions — including that the owner does not transfer his share before the certificate. Owners who do not meet the conditions, or whose agreement is not registered, may be taxed earlier.

Cash consideration. Where the builder pays the owner money under such an agreement, the builder has been required to deduct tax at source from it.

Later sale of floors. When the owner sells a floor received under the collaboration, a further gain arises, computed from the value used when the first gain was taxed. Reinvestment reliefs may apply.

GST. The treatment of development rights and of floors given to the landowner changed in 2019 and depends on the type of project. The agreement should state which party bears GST on each element.

For the developer, income from the floors it sells is business income, and the cost of construction of the owner’s floors forms part of its cost.

We do not advise on tax; this list is meant to be taken to your accountant before you sign.

When the builder stops

The collaboration that goes wrong usually goes wrong in the same way: the structure rises, the builder sells or books its floors, money runs short, and work slows or stops. The owner is paying rent elsewhere, the site is half-built, and buyers of the builder’s floors are also waiting.

What the owner can do depends on the agreement and on how quickly he acts:

  1. Record everything. Photographs and video of the site, a note of the stage reached, copies of sanctions, payments, and any sale documents executed under the power of attorney.
  2. Give notice. A written notice of default under the agreement, calling on the builder to resume within a period. Our legal notice service drafts it.
  3. Protect the title. Revoke the power of attorney where the agreement and law permit, notify the sub-registrar and the municipal body, and consider a public notice so that buyers are warned.
  4. Claim what the agreement gives — delay compensation, rent, and the right to complete through another contractor.
  5. Deal with buyers. Buyers of the builder’s floors may have rights too. A negotiated solution involving the buyers, completion by a new contractor and a revised division is often better than years of litigation.

Court proceedings, injunctions and arbitration in such disputes are for your advocate, engaged and paid by you directly; we do not quote, collect or share that fee. See find an advocate for choosing one with property experience.

An example: four floors in Rajouri Garden

A family owns a 250-square-yard freehold plot in Rajouri Garden, held by a widow and her two adult sons after her husband’s death. A builder offers the ground and second floors plus a cash deposit, in return for the first and third floors and the right to sell them.

Before signing, the family completes mutation in the three names and confirms, with its own architect, that stilt plus four floors is within the bye-laws for the plot. The agreement fixes the floors, their sanctioned areas, two stilt parking spaces for each of the family’s floors, and roof rights with the family. A specification schedule is attached. The builder pays a monthly rent allowance from vacating, rising by a set percentage after the completion date, plus a monthly delay compensation after a six-month grace period. The deposit is refundable if the family terminates for the builder’s default.

The power of attorney is limited to sanctions, utilities and sale of the first and third floors only, and only after the roof slab of the top floor is cast. The original title documents stay with the family. The agreement and the power of attorney are stamped and registered.

Eighteen months in, work slows. The family’s notice under the agreement, backed by the milestone restriction on sales, gives the builder a reason to find funds: he cannot sell the third floor until the top slab is done. The building is completed eight months late; the delay compensation is paid from the sale proceeds, and the family’s floors are handed over with the certificate. Their accountant had confirmed the timing of the capital gains before they signed.

An example: two firms and one tender

A civil works firm and an electrical contractor in Delhi bid together for a government building contract. The tender requires a lead member with at least a stated share, joint and several liability of both to the department, and a power of attorney to the lead member.

Their consortium agreement divides the scope by trade, matched line by line to the bill of quantities; fixes each member’s share of every payment, paid directly from a consortium account; allocates bid security and performance guarantees in proportion; and provides that liquidated damages imposed by the department are borne by the member whose work caused the delay, as determined by an agreed engineer, with a cross-indemnity if the department deducts from the other member’s share.

Midway through the contract, the department deducts damages for delay in the electrical works from a combined bill. Because the agreement anticipated it, the engineer’s finding settles the allocation in a week, and the civil works firm is reimbursed from the electrical contractor’s next payment. Without it, the two members would have been in arbitration with each other while still working on the same site.

Where joint ventures go wrong

Our fee and what you get

For a joint venture, consortium or collaboration agreement we charge ₹4,999, and the work usually takes 3 – 7 days. We prepare the documents; we are not architects, valuers or tax advisers, and we do not choose partners or builders for you.

Swipe to see the full table
You receiveWhat it protects
A structure note: contract, company, LLP or consortiumThe right vehicle before anything is signed
A draft agreement tailored to your ventureContributions, control, money, IP, deadlock and exit
For landowners: floor division, specifications, rent and delay termsYour home and your return, in writing
A limited power of attorney in place of an open oneYour own floors kept out of the builder’s hands
A stamping and registration checklistA document that holds up for you and your buyers
One revision round, or comments on the other side’s draftTerms you understand before you sign

Stamp duty, registration and approval fees are paid at actual cost, and we tell you the total before we start. Tax and valuation belong with your chartered accountant; plans and specifications with your architect. Litigation or arbitration is for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it.

FAQ

Joint venture agreement — questions people ask

What is a joint venture agreement?
A contract between two or more independent parties who agree to pursue a defined business opportunity together while remaining separate businesses. It records what each contributes, who decides what, how profits, losses and risks are shared, who owns what is created, and how the venture ends. It may stand alone, or sit alongside a company or LLP set up for the venture.
Is a joint venture the same as a partnership?
Not necessarily, but it can become one. Under section 4 of the Indian Partnership Act, persons who agree to share the profits of a business carried on by all or any of them acting for all are partners, whatever they call the arrangement. Partners are jointly liable for the firm’s debts. A contractual joint venture should be drafted so that it does not fall into that definition by accident, unless a partnership is intended.
Should a joint venture be a company or just a contract?
A contract suits a single project of limited duration, such as a bid or a supply arrangement. A separate company or LLP suits a long-term business with its own assets, employees and customers, because it limits liability, holds property in its own name and makes exit by share transfer possible. The choice also has tax and regulatory consequences.
What is a joint development agreement for a builder floor?
An agreement under which a plot owner allows a developer to demolish the existing house and build a new building, in return for a share of the new floors, a share of the sale proceeds, or a payment. Common in Delhi, it covers the plans, the floors each side gets, timelines, temporary accommodation for the owner, approvals, costs, sale rights and what happens on delay or default.
Area sharing or revenue sharing — which is better for a landowner?
In area sharing, the owner receives specified floors or units and the developer sells the rest. In revenue sharing, the whole building is sold and the proceeds divided. Area sharing gives the owner a home or a property to keep, and less dependence on the market; revenue sharing can yield more cash but depends on the developer’s sales and accounting. Many Delhi deals combine the two.
Should a landowner give a power of attorney to the developer?
Developers usually ask for one, to obtain sanctions and to sell their share. If given, it should be limited to specific acts, exclude the owner’s own floors, and ideally allow sale of the developer’s floors only after construction milestones are met. A power of attorney is not a sale; our power of attorney guide explains the Supreme Court’s view on sales by power of attorney.
Does a joint development agreement need to be registered?
Where it gives the developer an interest in the land or is coupled with a power to sell, registration is commonly required or advisable, and some State stamp laws charge specific duty on development agreements. Registration also matters for tax treatment of the landowner. The position depends on the terms and the State; check it before signing.
How is a landowner taxed in a joint development agreement?
The tax law has contained a special rule for individual and HUF landowners who enter a registered joint development agreement: capital gains become taxable in the year the completion certificate is issued, not when the agreement is signed, subject to conditions. Selling the floors received later creates its own tax. The Income-tax Act was re-enacted from April 2026, so confirm the current provisions with a chartered accountant.
Is a builder floor project covered by RERA?
RERA applies to projects above its thresholds — by land area or number of apartments — and many single-plot builder floor projects in Delhi fall below them. Where a project is registrable, RERA treats the landowner and the developer as joint promoters where they are different persons. Whether a particular project must be registered should be checked with the Delhi RERA rules at the time.
What if the developer does not finish the building on time?
Only what the agreement provides, or a claim for damages. A good agreement fixes a completion date with a grace period, pays the owner a monthly amount for each month of delay beyond it, allows the owner to take over or appoint another contractor after persistent default, and ties the developer’s right to sell to progress. Without such terms, the owner’s remedy is a slow suit.
Who pays for the landowner’s temporary accommodation?
Usually the developer, as a monthly rent allowance from the day the owner vacates until the owner’s floors are handed over complete, with an occupancy or completion certificate where required. The agreement should fix the amount, its increase if the project runs late, and the shifting costs.
Can a joint venture partner compete with the venture?
During the venture, parties commonly agree not to compete in its field, and such covenants are generally treated differently from restraints after it ends. Post-termination restraints face section 27 of the Contract Act; our NDA guide explains that section. Confidentiality and non-solicitation are easier to enforce.
Does a joint venture need approval from the Competition Commission?
Only where it amounts to an acquisition or combination above the thresholds in the Competition Act, which small ventures rarely reach. Separately, section 3 prohibits anti-competitive agreements, but it recognises that joint ventures which increase efficiency are treated differently from cartels. Ventures between competitors should be structured with care.
What happens to a joint venture when one party wants to leave?
What the agreement says: typically a lock-in period, then a right for the other party to buy the leaving party’s interest at fair value, or a right to sell to a third party subject to first refusal. For a contractual venture on a single project, exit usually means completing or winding up the project. Deadlock mechanisms decide what happens if the parties simply stop agreeing.
Can a foreign company form a joint venture with an Indian company?
Yes, subject to foreign investment rules on the sector, caps, pricing of shares and reporting, and in some cases Government approval. Investors from countries that share a land border with India need approval in all sectors. The joint venture company’s shareholders agreement then governs the relationship.
What is a consortium agreement?
An agreement among firms bidding together for a contract, commonly a government tender, recording the lead member, each member’s scope and share, their joint and several liability to the client where the tender requires it, and how they will share work, payments and risks between themselves. The tender document usually dictates some of its contents.
What does your joint venture service cost, and what is included?
We charge ₹4,999 and the work usually takes 3 – 7 days. You get a discussion of the venture, a draft agreement — business venture, consortium or landowner-developer collaboration — with contributions, control, money, deadlock, exit and default terms, one revision round, and a stamping and registration checklist. Tax and valuation questions go to your chartered accountant. Litigation or arbitration is for your advocate, whose fee is engaged and paid by you directly.
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Decide who brings what, who decides, and how it ends — before you begin.

A joint venture fails less often from bad intentions than from things nobody wrote down: an undefined profit, a missing deadlock rule, a power of attorney that was wider than anyone meant. For landowners, the plot is usually the family’s biggest asset, and the builder’s draft is written for the builder. Tell us about your venture or your plot. We will draft an agreement that protects your contribution and gives both sides a way through problems.

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