Collaborator’s Connection

If you are in joint venture where you are equally responsible for delivery, you’ve got the same seat at the table of resoving dispute.

The Supreme Court’s judgment dated 7 May 2026 in Engineering Company vs. Bhartiya Rail Bijlee Company Ltd. & Anr. clarifies that collaborators in joint undertakings are veritable parties to contracts and can invoke arbitration clauses, even if they are not direct signatories.

For business owners, this ruling reinforces the importance of joint liability in collaborations and ensures that arbitration remains accessible when disputes arise in complex projects.

The case revolved around a coal handling plant contract awarded for the Nabinagar Thermal Power Project, where the contractor had qualified only through collaboration with a technical partner. The bid documents required a Deed of Joint Undertaking (DJU), executed jointly by the contractor and collaborator, making both jointly and severally liable for successful performance.

When the contractor later went into liquidation, the collaborator was called upon to fulfill obligations, and disputes arose over payments and responsibilities. The collaborator sought arbitration under Section 11(6) of the Arbitration and Conciliation Act, 1996, but the High Court rejected the request, citing lack of privity of contract.

The Supreme Court overturned this, holding that the collaborator was an inseparable part of the contract and entitled to invoke arbitration.

The Court emphasized that the DJU and subsequent tripartite agreements clearly established the collaborator’s role and liability. Communications from the employer repeatedly called upon the collaborator to complete obligations, reaffirming its responsibility.

The Court ruled that arbitration clauses in the contract extended to both contractor and collaborator, and that the High Court erred in denying arbitration. Consequently, the Supreme Court appointed a sole arbitrator to adjudicate disputes, directing proceedings to begin within 15 days.

For business owners, this judgment carries vital lessons. First, collaborations in bids create binding obligations—partners cannot later escape liability by claiming non-signatory status.

Second, arbitration clauses apply broadly to all parties integral to the contract, ensuring disputes can be resolved efficiently.

Third, tripartite agreements and DJUs strengthen enforceability, making collaborators accountable for performance even if the main contractor defaults.

Finally, the ruling underscores the need for businesses to carefully assess risks before entering collaborations, as liability is joint and several.

In essence, the Supreme Court has reinforced that arbitration is not limited to signatories but extends to all parties who are integral to contract execution.

For business owners, this means greater certainty in dispute resolution, stronger accountability in collaborations, and a reminder to draft joint undertakings with precision to avoid future conflicts.

This judgment strengthens the reliability of arbitration as a mechanism for resolving complex commercial disputes in India.