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Querist : Anonymous (Querist) 20 August 2022 This query is : Resolved
My client is an Indian company that has entered into a consortium agreement with company B to bid for a Government project in India. The consortium agreement states that my client and company B shall both be jointly and severally liable to the Government for execution of the project. My client will sign this clause with Company B and the Government on the required bid documents but wants to enter into a separate agreement with just Company B, stating that my client will not be responsible for any of the liabilities arising from the project. If anything goes wrong, can the Government still sue my client in spite of the clause exonerating it from liability, that it signed with just Company B?

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Adv. Ravish Bhatt, ADIT, CIOT (Expert) 22 August 2022
As far as the concerned government or PSU is concerned, both, company B and your client are jointly and severally liable.
Any agreement you separately execute with Company B will not bind the Government concerned or PSU and your client shall continue to be jointly and severally liable.
Such separate agreement could provide your client with rights to proceed against Company B in case of recovery from your client; however legality of such agreement also will be required to be tested as there exists a separate Consortium agreement providing differently.

kavksatyanarayana (Expert) 22 August 2022
To my best, I opine that the two companies A & B will enter into a "Consortium Agreement" as such the two companies are jointly and severally liable to the Government for a project. And the consortium( the two companies) and the Government will enter into a "Project Agreement". So your client cannot execute a separate agreement.

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