Unilateral Determination of Arbitral Venue Validated Through Parties' Conduct and Waiver of Jurisdictional Objections

The petitioner, a Non-Banking Financial Company (NBFC) with its branch office in Kolkata, provided a business loan of ₹51,29,000 to the respondents for business expansion

A Business Loan Agreement was executed on October 13, 2023, which the petitioner claimed was concluded at its Kolkata branch

Following a default in monthly installments, the petitioner issued a demand notice and subsequently filed a Section 9 application for interim protection before the City Civil Court, Calcutta, where a Receiver was appointed

The respondents challenged this before a Division Bench of the High Court, which remanded the matter back to the City Civil Court without the respondents raising a jurisdictional objection

The petitioner thereafter invoked the arbitration clause, unilaterally designating Kolkata as the venue and seat of arbitration per their discretionary powers under Clause 11.4

The respondents opposed the Section 11 application, arguing that the court lacked jurisdiction as the business and assets were located in New Delhi

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

2. Whether the respondents, by their conduct in prior proceedings, waived their right to object to the jurisdiction of the Kolkata courts

The court primarily applied Section 11 of the Arbitration and Conciliation Act, 1996, regarding the appointment of arbitrators, and Section 20, which emphasizes party autonomy in choosing the place of arbitration

It considered Section 2(1)(e) defining "Court" as the principal civil court of original jurisdiction

The court distinguished the precedent from B.G.S. Soma JV vs. NHPC Limited, which equates venue with seat in the absence of contrary indicators

addressed Cholamandalam Investment and Finance Co. Ltd. vs. Uma Earth Mover, which cautions against unilateral discretionary clauses being used to impose arbitrary jurisdictions

Additionally, the principle of waiver of objection under the Act was applied

The court found that Clause 11.4 contained a "contrary indication" to the venue being fixed at Pune by allowing the lender "sole discretion" to determine another venue

While the respondents argued this clause violated party autonomy, the court highlighted that the respondents had specifically failed to object to the Kolkata venue when invited to do so in the Section 21 notice

Crucially, the court analyzed the procedural history: the respondents had contested a Section 9 application in the City Civil Court at Calcutta and appealed to a Division Bench of the Calcutta High Court without ever raising a jurisdictional challenge

The court reasoned that by participating in these proceedings and accepting the High Court's order of remand to the City Civil Court, the respondents attained finality regarding the choice of Kolkata as the jurisdictional seat and waived their right to object under the doctrine of derogation

The application under Section 11 was allowed

The court appointed Mr. Pourush Bandopadhyay as the sole arbitrator to adjudicate the disputes, directing compliance with Section 12 regarding disclosures and permitting the arbitrator to fix fees as per the statutory schedule