Dear Editor,
I have read your article titled Queuing up to leave, published in the July/August 2012 edition of India Business Law Journal, and found it very interesting.
To my mind, the scenario is similar to watching a movie.
Nowadays, we go to watch a movie in a new age, swanky, state-of-the-art multiplex. We are accorded a real red carpet and warm welcome. Escalators or lifts help us to reach the cinema hall surrounded by wonderful furniture, kiosks, retail outlets, etc. However, when the movie is over, we are left in the backyards of the complex to find our own way back through multiple doors and stairwells, sometimes dark and dingy with no directions.
In India, we follow the dictum “atithi devo bhava” – guests are like God and we should welcome them with folded hands, but no one ever cares about how we should behave when they are leaving. Our government seems to be no different and is indifferent to foreign investors’ plight while they pack up.
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On the one hand, we have liberalized our economy and invited foreign investors to invest in virtually all possible sectors. Entry routes and modes of investment have been simplified to a great extent. Today, without stepping outside the office, one can incorporate a company (thanks to online filings). A certificate of incorporation comes in one day (in my personal experience in many cases). On the other hand, the cost, time and formalities involved in winding up an existing company, even a closely held private one, are enormous.
Having overseen a number of formations and the break-up of joint ventures, another question is – why is it so difficult to part ways on a happy note?
Apart from money, joint venture partners should also be interested in investing in relationships.
I recommend that parties have well-drafted, stringent exit options in their agreements. They should take into account that a joint venture works on mutual trust, understanding, peace and compromises (the same as marriage). If one party is not happy with the mutual arrangements then the other party should let it go. An investor should understand that a happy parting will always leave a scope for business partnerships in the future. An amicable divorce is much better than an acrimonious marriage. Parties who know they can’t live happily together would be better off letting go, counting their losses and moving on.
Bhumesh Verma
Partner
PKA Advocates
New Delhi
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