Unilateral Determination of Arbitral Venue Valid Where Party Conduct Establishes Consent and Waiver of Jurisdictional Objections

The petitioner, a Non-Banking Financial Company (NBFC) with a branch office in Kolkata, provided a business loan of Rs. 17,10,000 to the respondents for business expansion.

A Business Loan Agreement was executed on November 1, 2023, which included an arbitration clause (Clause 11.4).

After the respondents defaulted on monthly installments, the petitioner issued a demand notice from its Kolkata office and subsequently filed a Section 9 application for interim relief before the City Civil Court at Calcutta, where a receiver was appointed.

The respondents challenged the Section 9 order before a Division Bench of the High Court, which remanded the matter to the City Civil Court by consent, without the respondents raising jurisdictional objections.

The petitioner then invoked arbitration via a Section 21 notice, unilaterally designating Kolkata as the "juridical seat" and venue per Clause 11.4, which allowed the lender discretion to determine the venue.

The petitioner moved the High Court under Section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator.

1. Whether the application under Section 11 is maintainable before the Calcutta High Court given that the agreement initially mentions Pune as a venue and the respondents are based in New Delhi.

2. Whether the petitioner could unilaterally shift the venue/seat to Kolkata and whether the respondents' conduct constituted consent or a waiver of objection to such jurisdiction.

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

Section 2(1)(e) defining the "Court" as the principal Civil Court of original jurisdiction.

Section 20 of the Arbitration and Conciliation Act, 1996 regarding the place of arbitration and party autonomy.

B.G.S. Soma JV vs. NHPC Limited (2020) 4 SCC 234: Noting that a specified venue is the seat unless there is a "contrary indication".

Principles from Cholamandalam Investment and Finance Company Limited vs. Uma Earth Mover, 2024 SCC OnLine Cal 1922 and L T Finance Ltd. vs. Manoj Pathak, 2020 SCC OnLine Bom 177: Holding that unilateral discretion to shift venue cannot override consensus unless conduct implies otherwise.

The Court found that Clause 11.4 contained a "contrary indication" to Pune being the exclusive seat, as it allowed the lender's discretion to choose "such other place" for venue and jurisdiction.

The Court determined that the respondents had waived their right to object to Kolkata’s jurisdiction through their conduct by participating in Section 9 proceedings and a subsequent appeal without challenging territorial jurisdiction.

The Court reasoned that by accepting the remand to the City Civil Court (the principal civil court under Section 2(1)(e)), the parties had effectively anchored the proceedings in Kolkata.

The Court noted that the respondents remained silent following the Section 21 notice which explicitly invited objections to the choice of Kolkata as the juridical seat, satisfying party autonomy under Section 20 through implicit consent.

The Court allowed the application and appointed Mr. Ishaan Saha, Advocate, as the sole arbitrator to resolve the disputes, directing compliance with Section 12 disclosure requirements.