Calcutta High Court Says Parties Can't Object To Kolkata Arbitration Venue After Failing To Do So Earlier

The Calcutta High Court has held, in the facts of a loan dispute, that borrowers who failed to object to the choice of arbitration venue despite notice and participated in earlier proceedings before Kolkata courts could not later challenge jurisdiction, as their conduct amounted to consent.

A Single Bench of Justice Shampa Sarkar allowed an application filed by Electronica Finance Limited and appointed advocate Deepan Kumar Sarkar as the sole arbitrator to adjudicate disputes with Quality Offset Printers and others.

“The submissions of the learned Advocate for the respondents as recorded by Their Lordships, do not indicate that any question of jurisdiction was raised in the appeal, which means that the respondents did not have any objection with regard to the choice of venue of the arbitration being Kolkata and jurisdiction of the courts at Kolkata over the subject matter of the dispute. The notice invoking arbitration clearly mentioned in paragraphs 6, 7 and 8 that the lender had chosen Kolkata as the venue of the arbitral proceedings and the courts at Kolkata to have jurisdiction over the said agreement,” the Court noted, before adding:

“In the factual matrix of this case, consent of the respondents to anchor the arbitral proceeding at Kolkata is available from the conduct.”

The dispute arose from a Business Loan Agreement dated August 24, 2024, under which Electronica Finance Limited sanctioned a loan of Rs 1.64 crore to Quality Offset Printers for the expansion of its business. The borrowers, along with a guarantor, hypothecated printing machinery installed in New Delhi but defaulted after paying the first five installments.

A demand notice dated March 1, 2025 was issued from the lender's Kolkata office seeking repayment of Rs 4,41,045 due as on that date. When the notice went unheeded, the lender approached the City Civil Court at Kolkata under Section 9 of the Arbitration and Conciliation Act, 1996. By an order dated April 22, 2025, a receiver was appointed to take possession of the secured asset.

The borrowers challenged this order before a Division Bench of the High Court. The appeal was disposed of by relegating the parties to the City Civil Court, and the order did not indicate that any objection to Kolkata's jurisdiction had been raised.

Clause 13.5 of the agreement provided that disputes would be referred to arbitration, with the venue being Pune or such other place as the lender may determine, and courts at such place having jurisdiction.

As the defaults continued, the lender invoked arbitration under Section 21, initially claiming Rs 1.94 crore, with the net outstanding pegged at about Rs 1.55 crore as on July 16, 2025. The borrowers, however, did not respond to the notice.

Electronica Finance then moved the High Court under Section 11 of the Act, seeking the appointment of an arbitrator.

Resisting the plea, the borrowers argued that Pune was the agreed seat of arbitration and that the lender's unilateral decision to choose Kolkata violated party autonomy under Section 20 of the Act. They also pointed out that their business operations and the secured assets were based in New Delhi

The lender submitted that the agreement expressly permitted it to choose “Pune or such other place” and that it had validly designated Kolkata. It further pointed out that the borrowers neither objected to the notices nor to earlier proceedings before courts in Kolkata.

The court held that the arbitration clause contained a “contrary indication” against Pune being the exclusive seat, particularly due to the lender's contractual right to choose another venue.

It further found that the borrowers, despite being invited to object, remained silent and participated in proceedings before Kolkata courts and did not raise any jurisdictional objection in the earlier appeal.

Holding that such conduct amounted to consent and waiver of objection, the Court allowed the application and appointed a sole arbitrator, leaving all issues on merits open for adjudication.

For Petitioner (Electronica Finance Limited): Advocates Sakya Sen, Sayan Ganguly, Sormi Dutta, Sumeet Chowdhury.

For Respondent (Quality Offset Printers & Ors.): Advocates Satadru Chakraborty, Bhaskar Dwivedi, Jyoti Rauth, Hareram Singh, Vicky Mahato.