Conduct of Parties May Construe Consent to Unilateral Selection of Arbitral Venue and Seat.

The petitioner, a Non-Banking Financial Company (NBFC), provided a loan of ₹2,33,80,237 to the respondents for business expansion under a Business Loan Agreement dated January 31, 2023.

The agreement was signed at the petitioner’s branch office in Kolkata.

Following defaults in repayment, the petitioner issued a demand notice from Kolkata on March 1, 2025, and subsequently filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, before the City Civil Court, Calcutta.

While a Receiver was appointed, the respondents challenged the order before a Division Bench of the High Court, which remanded the matter back to the City Civil Court without the respondents raising jurisdictional objections.

The petitioner then invoked arbitration via a Section 21 notice, unilaterally designating Kolkata as the venue/seat as per a discretionary clause in the agreement.

The respondents failed to respond to the notice and subsequently challenged the maintainability of the Section 11 application, arguing that Kolkata was not the agreed seat.

1. Whether the petitioner could unilaterally determine Kolkata as the venue/seat of arbitration and whether the High Court at Calcutta has jurisdiction to entertain the Section 11 application.

2. Whether the respondents, by participating in Section 9 proceedings and failing to object to the Section 21 notice, waived their right to challenge the jurisdiction of the Kolkata courts.

Section 11 of the Arbitration and Conciliation Act, 1996 regarding the appointment of arbitrators.

Section 20 regarding the place of arbitration.

Section 2(1)(e) defining "Court".

The court distinguished the precedent from B.G.S. Soma JV vs. NHPC Limited [(2020) 4 SCC 234] regarding "venue as seat".

L & T Finance Ltd. vs. Manoj Pathak [2020 SCC OnLine Bom 177] which held that a unilateral choice of venue is generally impermissible unless consensus is reached.

The principle of waiver of objection to jurisdiction under the doctrine of party autonomy.

The Court observed that Clause 11.4 of the agreement expressly allowed the lender the "sole discretion" to determine a venue other than Pune.

While unilateral clauses often conflict with party autonomy, the Court found "contrary indications" in this specific case that prevented Pune from being the exclusive seat.

The Court determined that the respondents’ conduct demonstrated implied consent to Kolkata's jurisdiction. Specifically, the respondents did not object to the Section 21 notice designating Kolkata as the juridical seat and, significantly, contested Section 9 proceedings in the Calcutta City Civil Court and the subsequent appeal at the High Court without raising jurisdictional challenges.

The Court reasoned that by participating in these proceedings and following the Division Bench's remand to the City Civil Court, the respondents accepted Kolkata as the "principal civil court" under Section 2(1)(e) and waived their right to derogate from Section 20.

The Court answered the issues in the affirmative, finding that Kolkata became the valid seat of arbitration by consensus and conduct.

The Section 11 application was allowed, and Mr. Ishaan Saha, Advocate, was appointed as the sole arbitrator to adjudicate the disputes.

All other issues, including limitation and quantification of claims, were left for the arbitrator's determination.