Bombay High Court Flags 'Industrial Scale' Bank Recovery Proceedings Through Self-Chosen ODR Platforms

The Bombay High Court recently cautioned that banks conducting recovery proceedings “at an industrial scale” through self-chosen Online Dispute Resolution (ODR) platforms risk concentrating multiple disputes before the same arbitrator.

The court held that banks cannot sidestep the requirement of independent arbitral appointments by offering borrowers a purported choice from a list of ODR platforms curated by the bank itself.

“In any case, for a bank to conduct recovery proceedings at an industrial scale across multiple accounts through a self-chosen ODR Platform, from its curated pool of arbitrators, can lead to multiple cases being handled by the same individual arbitrator. The ODR Platforms would need to enhance their catchment area and expand their pools, but recovery proceedings where orders under Section 17 are passed with barely any display of facts much less complex facts, would hardly fall within the ambit of the kinds of arbitration where it is a custom and practice to appoint from a specialised pool of arbitrators.”

Justice Somasekhar Sundaresan made the observations while hearing a petition by borrower Ajazul Haque Khan, who challenged an ex parte interim order passed by an arbitrator appointed through an ODR platform selected by ICICI Bank, freezing his bank accounts.

The dispute arose from a personal loan granted by ICICI Bank to Khan. He alleged that the bank had mis-sold the loan product and induced him to refinance earlier loans without disclosing additional charges. On January 15, 2026, the arbitrator passed an interim order attaching various bank accounts linked to Khan's PAN, directing disclosure of assets and furnishing of security.

Rejecting ICICI Bank's reliance on Explanation 3 of the Seventh Schedule to the Arbitration and Conciliation Act, the court said banks must comply with Supreme Court rulings requiring arbitrator appointments to involve both parties or be made by the court.

“What banks, particularly large ones need to do is to be compliant with the law declared by the Supreme Court and ensure that the process of appointment of arbitrators is genuinely independent and informed by consent of the parties, rather than control who can make the appointment, and thereby hope that the process of appointment would become independent. Indeed, such a practice can lead to concentration of multiple arbitration proceedings with individual arbitrators, necessitating invocation of Explanation 3 to claim specialisation akin to maritime law or complex commodities transactions.”

The court rejected ICICI Bank's argument that borrowers had a meaningful choice because they could select from ODR platforms listed on the bank's website, holding that the list remained entirely within the bank's control.

“Needless to say, who gets on to the list on ICICI's website and who stays out of it is purely a matter of ICICI's sole choice. It is a list curated by ICICI. There is no element of choice or exercise of party autonomy that lies at the foundation of arbitration agreements that would be in play.”

The court further held that merely offering a choice from a list of ODR platforms selected by one party could not cure the defect in unilateral appointment procedures, particularly where the initiating party enjoyed a “first-mover advantage” in triggering mediation and arbitration.

By consent of the parties, the court quashed the impugned order, directed immediate lifting of the debit freeze on Khan's bank accounts, and appointed Presolv360 as an independent ODR institution to administer fresh arbitration proceedings in accordance with law.