Unilateral Determination of Arbitral Venue Valid where Adverse Party Waives Objection through Procedural Participation

The petitioner, a Non-Banking Financial Company (NBFC), entered into a Business Loan Agreement with the respondents in August 2024 for Rs. 1,64,40,000/-

The petitioner alleged defaults in repayment starting mid-2025

Clause 13.5 of the agreement designated Pune as the venue of arbitration but granted the lender "sole discretion" to determine another venue and jurisdiction

The petitioner invoked arbitration via notice on June 17, 2025, unilaterally designating Kolkata as the juridical seat and venue

Prior to this, the petitioner had obtained interim relief under Section 9 from the City Civil Court, Kolkata. The respondents challenged that order before a Division Bench of the High Court, which remanded the matter back to the City Civil Court without the respondents objecting to the Kolkata court's jurisdiction

The petitioner subsequently filed this Section 11 application for the appointment of an arbitrator in Kolkata.

1. Whether a lender can unilaterally shift the venue/seat of arbitration from the place named in the contract to another location based on a "sole discretion" clause

2. Whether the respondents, by participating in Section 9 proceedings and subsequent appeals in Kolkata without raising jurisdictional objections, waived their right to contest Kolkata as the seat of arbitration

The court primarily applied Section 11 and Section 20 of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators and the determination of the place of arbitration

Section 2(1)(e) defining the "Court" competent to entertain proceedings

The principle of "party autonomy" and the "venue-as-seat" doctrine established in B.G.S. Soma JV vs. NHPC Limited (2020) 4 SCC 234

Distinguished L & T Finance Ltd. vs. Manoj Pathak (2020) and Cholamandalam Investment and Finance Co. Ltd. vs. Uma Earth Mover (2024), which hold that unilateral discretion to shift seats may be unenforceable unless consensus or waiver is evident

The Court observed that while unilateral clauses granting one party sole discretion to determine the venue are generally scrutinized under the doctrine of party autonomy, the specific conduct of the parties is determinative.

The petitioner expressly notified the respondents of the choice of Kolkata as the venue in both the demand notice and the Section 21 invocation notice, inviting objections which were never raised

Crucially, when the petitioner initiated Section 9 proceedings in Kolkata, the respondents participated and appealed to the High Court Division Bench, where they accepted a remand to the Kolkata City Civil Court without challenging its jurisdiction

The Court reasoned that these actions constituted a "contrary indication" to Pune being the exclusive seat and evidenced a waiver of any objection to the revised venue

Consequently, even if the "sole discretion" clause was lopsided, the respondents’ subsequent participation and lack of protest created a consensus for Kolkata

The Section 11 application was allowed, and the Court appointed Mr. Deepan Kumar Sarkar, Advocate, as the sole arbitrator

The Court held that despite the original mention of Pune, the parties had anchored the proceedings in Kolkata by common conduct and litigation history