Calcutta High Court
M/S Electronica Finance Limited vs Quality Offset Printers & Ors on 30 April, 2026
Author: Shampa Sarkar
Bench: Shampa Sarkar
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IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
BEFORE :-
THE HON'BLE JUSTICE SHAMPA SARKAR
A.P.COM No. 610 of 2025
M/s Electronica Finance Limited
vs.
Quality Offset Printers & Ors.
For the Petitioner : Mr. Sakya Sen, Sr. Adv.
Mr. Sayan Ganguly, Adv.
Mr. Sormi Dutta, Adv.
Mr. Sumeet Chowdhury, Adv.
For the Respondents : Mr. Satadru Chakraborty, Sr. Adv.
Mr. Bhaskar Dwivedi, Adv.
Ms. Jyoti Rauth, Adv.
Mr. Hareram Singh, Adv.
Mr. Vicky Mahato, Adv.
Reserved on : 16.04.2026
Judgment pronounced on : 30.04.2026
Judgement uploaded on : 30.04.2026
Shampa Sarkar, J.
1. This is an application under Section 11 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as the said Act”). The
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application has been filed by the lender, which is a Non-Banking
Financial Company. The petitioner is engaged in the business of asset
finance and provides loan for assets, equipments and vehicles on lease,
on hire purchase and hypothecation basis. The registered office of the
petitioner is in Pune and the branch office is at 16, Strand Road,
Diamond Heritage Building, 5th Floor, Room No. 525, P.S – Hare Street,
Kolkata – 700001, which is within the ordinary original jurisdiction of
this court.
2. It has been averred in the application that, the respondent no. 2
as the proprietor of the respondent no. 1 sometime in August 2024
approached the petitioner for a loan of Rs. 1,64,40,000/- for expansion
of the business of the respondent no. 1. The respondent nos. 2 and 3
stood as guarantors of the said loan.
3. According to the case run by the lender/petitioner, all
discussions and deliberations with regard to the said loan took place at
the Branch Office at 16, Strand Road, Diamond Heritage Building, 5th
Floor, Room No. 525, P.S – Hare Street, Kolkata – 700001. The
petitioner agreed to provide a loan of Rs. 1,64,40,000/- and accordingly
a Business Loan Agreement (hereinafter referred to as the said
agreement) bearing number APPL00246869 dated August 24, 2024 was
executed between the parties. It has been specifically averred that the
agreement was signed, sealed and concluded by the petitioner at its
Branch Office within the jurisdiction of this court. For the purpose of
securing the loan, the respondents hypothecated a machine. The
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machine was installed in the premises of the respondent no. 1 at New
Delhi. As per the terms and conditions of the agreement, the
respondents were required to repay the loan along with the applicable
interest and other charges incidental thereto, in monthly instalments.
The lender/petitioner claimed to have a first charge on the machine
which was the secured asset. That apart, under the said agreement, the
lender/petitioner also claimed the right to repossess the machine in the
event of default committed by the respondents. Allegedly, the
respondent no. 1 paid some of the instalments, namely, first to the fifth
and thereafter failed and neglected to pay further instalments. The last
payment made by the respondent no. 1 was for an amount of Rs.
480739/- on June 1, 2025. On March 1, 2025, the petitioner had
already issued demand notice to the respondents through a learned
Advocate, demanding the outstanding dues with interest, amounting to
Rs. 441045/-. The notice was issued from the office of the petitioner
situated at 16, Strand Road, Diamond Heritage Building, 5th Floor,
Room No. 525, P.S – Hare Street, Kolkata – 700001. The petitioner
claimed to be also entitled to terminate the agreement upon occurrence
of any breach or any default. When the notice dated March 1, 2025
went unheeded and the petitioner was aggrieved by the breach of
obligations emanating from the said agreement, an application under
Section 9 of the said Act being Misc. Case No. 2954 of 2025 was filed
before the learned Chief Judge of the City Civil Court, Calcutta, inter
alia, praying for appointment of a receiver in order to take possession of
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the secured asset. By an order dated April 22, 2025, the learned 13th
Judge, City Civil Court, Calcutta, inter alia, was pleased to appoint a
learned Advocate as the receiver for the purpose of taking over
possession of the secured asset. The receiver failed to take possession
of the asset and accordingly filed a report. Being aggrieved by the order
of the learned Judge, an appeal was preferred by the respondents being
F.M.A.T (ARB) No. 25 of 2025, which was disposed of by the Division
Bench, inter alia, remanding the matter to the learned 13th Judge, City
Civil Court at Calcutta for further hearing.
4. In view of the failure of the respondents to make payments and
on the allegation that the respondents had committed breach of the
agreement, the lender was of the view that disputes had arisen between
the parties which should be referable to arbitration in terms of the
arbitration clause, incorporated in the said agreement. Accordingly, the
petitioner issued a notice dated June, 17, 2025 under Section 21 of the
said Act, thereby invoking the arbitration clause and calling upon the
respondents for reference of the dispute to arbitration. The notice
indicated that the claim of the petitioner on the date of issuance of the
notice was Rs. 1,94,05,916/- and paragraph 16 of the application
indicates that after deductions under various heads, the net
outstanding on July 16, 2025 was Rs. 1,55,93,294/-. The petitioner
proposed the names of three persons. The notice mentioned that a sum
of Rs. 1,94,05,916/- had fallen due upon termination of the agreement.
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The notice was received by the respondents. The respondents did not
react to the said notice.
5. Mr. Sakya Sen, Learned senior Advocate for the petitioner relied
on clause 13.5 of the agreement which provided that disputes or
differences arising between the parties with regard to the interpretation
of the agreement or in connection with the agreement or any covenant
or condition thereto, as also dispute as regards the rights, duties and
liabilities of any party thereunder and performance or non-performance
of any of the said rights, liabilities would be referred to a sole arbitrator,
to be appointed by the petitioner/lender in accordance with the
provisions of the said Act and Rules framed thereunder. The language
of the arbitration would be English. The cost of arbitration including the
learned arbitrator’s fees, advocates’ fees, travelling cost and other
miscellaneous costs would be borne equally by the parties. The venue of
arbitration shall be Pune or such other place as the lender in its sole
discretion may determine and the courts at Pune or such other place
shall be exclusive jurisdiction.
6. According to Mr. Sen, the notice invoking arbitration clearly
indicated that the lender had determined the venue of the arbitral
proceeding and the jurisdiction of courts at Kolkata for all purpose and
events. It was specifically provided that the juridical seat of arbitration
shall be Kolkata, India. An option was given to the respondents to
appear before the concerned tribunal through online or offline mode.
The respondents were requested to expressly record in writing within
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seven days from the receipt of the invocation notice about any objection
as to the choice of arbitrator, the venue and juridical seat, at Kolkata.
7. As no response was received from the respondents despite service
of the notice invoking arbitration, the said application was filed.
8. Mr. Shatadru Chakraborty, learned senior Advocate appearing on
behalf of the respondents raised a question of maintainability of the
said application before this Court. The question raised by Mr.
Chakraborty was, whether the petitioner, at its own discretion, could
unilaterally decide or shift the venue or seat from Pune to Kolkata and
whether the selection of the venue at Kolkata could be imposed upon
the respondents in the absence of any consent from the respondents.
Such action was contrary to the doctrine of party autonomy.
9. According to Mr. Chakraborty, clause 13.5 of the said agreement
had two parts. The first specified that, the venue would be either Pune
or such other place that the lender may in the sole discretion determine
and the second part provided that the courts in Pune or such other
place that the lender may in its sole discretion determine, would have
jurisdiction.
10. Mr. Chakraborty referred to Section 20 of the said Act which
mandated party autonomy also on the choice of venue or seat. One of
the parties to the dispute could not unilaterally lay down the terms and
impose them on the other. The very expression “or such place that the
lender may in its sole discretion determine” conferred upon the
petitioner the unilateral discretion to choose or shift the venue of the
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arbitration without any approval or consent of the respondents. Such
clause in the agreement was contrary to the principle of party
autonomy and as such, unenforceable in law. He prayed for dismissal
of the application, inter alia, on the ground that the clause was not only
contrary to the provisions of Section 20 of the said Act, but also
antithetic to Article 14 of the Constitution of India. Each and every
party had an equal right not only of participation in the arbitral
process, but also in the choice of arbitrators, the venue or seat and
jurisdiction. The fact that the venue of arbitration shall be Pune and the
courts at Pune shall have jurisdiction was specifically provided for in
the agreement. The parties had intended to anchor the arbitral
proceedings to a particular place, i.e. Pune, thereby placing Pune as the
seat of the arbitral proceedings. As seat was not mentioned, venue
should be read as seat and as such, the second part of clause 13.5 that
the lender/petitioner could also at its discretion choose a venue apart
from Pune should be ignored as the same was redundant. He relied on
B.G.S. Soma JV vs NHPC Limited reported in (2020) 4 SCC 234.
11. He referred to the documents on record in order to substantiate
that the respondents carried on their business in New Delhi. The
machine or the secured asset was installed at New Delhi. The
respondents signed the agreement at New Delhi and no part of the
cause of action had arisen within Kolkata. The address of the
respondents in the agreement was also that of New Delhi. He further
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referred to the Term Loan Cum Hypothecation Schedule- I to
substantiate that the document was executed at Ghaziabad.
12. Reliance was placed on the following decisions in support of his
contention that the lender could not unilaterally choose a venue and
the second part of the clause should be ignored as it was contrary to
law :-
i. L & T Finance Ltd. vs. Manoj Pathak and Another reported in
2020 SCC OnLine Bom 177.
ii. Cholamandalam Investment and Finance Company Limited
vs. Uma Earth Mover and Another reported in 2024 SCC
OnLine Cal 1922.
13. Heard the parties and considered their submissions. The specific
averments in paragraph 1 and 3 of the petition indicates that the
petitioner has a Branch Office at 16, Strand Road, Diamond Heritage
Building, 5th Floor, Room No. 525, P.S – Hare Street, Kolkata –
700001and the petitioner signed, sealed and concluded the agreement
within the jurisdiction of this court. The clause 13.5 of the said
agreement provides, that the venue of the arbitration shall be either
Pune or such other place that the lender may in its sole discretion
determine and the courts at Pune or such other place would have
exclusive jurisdiction. The argument of Mr. Chakraborty that Pune is
the seat cannot be accepted as there is a contrary indication that the
venue shall be either Pune or the lender may at its sole discretion
determine the venue of arbitration and jurisdiction of the court in
respect of disputes arising out of the subject agreement. This clause
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was agreed to by the parties meaning thereby, the respondents had
agreed that the venue will be either Pune or the lender would have
exclusive right to choose the venue and the jurisdiction of the court.
The use of the expression “or such other place”, demonstrates a
contrary indication, insofar as, the selection of venue is concerned.
Secondly, the demand notice was issued from Kolkata by the lender
through its advocate having its office at Kolkata. The notice of March 1,
2025 not only indicated the amount due but also indicated that on
account of dishonour of cheques, an ECS proceeding under Section 138
of the Negotiable Instruments Act would be initiated. In the said notice
it was clearly mentioned that for the purpose of settlement of the loan
along with interest and pending charges, the respondents were required
to contact the Branch Office. The last paragraph of the notice indicated
that, as per the agreement, the venue of arbitration shall be Pune or
such other place the lender may in its sole discretion determine.
14. Accordingly, the respondents were informed that the venue of the
arbitration shall be Kolkata and the courts at Kolkata would have
jurisdiction in the matter. The relevant clause and the last paragraph of
the notice dated March 1, 2025 are quoted below :-
“Please note that as per the said agreement the venue of
Arbitration shall be Pune or such other place that the
lender may in the sole discretion determine and courts in
Pune or such other place shall have exclusive jurisdiction.
Under the instruction of our client, we hereby intimate you
that the venue of Arbitration shall be at Kolkata and
therefore jurisdiction of the court is also confined to the
Courts in, of and at Kolkata.”
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15. The relevant clause in the notice dated June 17, 2025 is quoted
below:-
“6. That we state that pursuant to our rights as per
clause 13.5 to determine the venue of the arbitral
proceedings and all other jurisdiction of Courts, we
determine the same to be in Kolkata for all purposes
and events.
7. That, pursuant to the above and with a view to
ensure a fair and impartial process arid to provide each
party full opportunity to present its case, fairly and
conveniently, we hereby propose following list of
neutral Arbitrator for your perusal, for selecting an
arbitrator of your choice from the given list along with
the consent of the Guarantor/Co-Borrowers. For the
purpose of convenience the Juridical Seat of
Arbitration shall be at Kolkata, India. Your may opt to
appear before the concerned Arbitral Tribunal through
online mode and/or offline mode. The Arbitral Award
shall be final and binding upon the Parties.
Sr. No. Name
Souma Bhattacharya (Advocate),
1.
5, K.S. Roy Road, 3rd Floor,
Kolkata – 700 001
Avijit Ghoshal (Advocate), 7C,
2.
Kiran Sankar Roy Road, Hastings
Chamber, Unit BL, Room No. – 12,
Basement, Kolkata – 700 001.
Joyjit Roy Choudhury (Advocate),
3.
Delta House, 4 Govt Place (N), 9th
Floor, Room No. 918, Kolkata –
700 001
8. Please note that a copy of this Notice will be served
upon you through Postal Services as well as, through
Hand Delivery, wherever possible and since it is
mandatory to either accept or reject the above proposal
of appointment of Arbitral Tribunal, you may expressly
intimate us in writing within a period of 7 days from
the date of receipt of this letter, about your objections
and/or choice of arbitrator whose Judicial Seat shall
be in Kolkata, India, IF any, failing which we shall
proceed with proper actions as stated hereinabove and
under. Needless to say that we shall be at liberty to
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appoint any of the abovementioned arbitrator for
adjudication of the dispute arisen between us due to
the non-payment of the outstanding amount without
any further notice and communication in the event
that we do not hear from you about your choice of
Arbitral Tribunal/Arbitrator as stated hereinabove.
16. The arbitration clause is quoted below:-
“13.5 ARBITRATION AND JURISDICTION
All the disputes or differences arising between the
Parties hereto as to the interpretation of this
Agreement or in covenants or conditions thereof as to
the rights, duties, or liabilities of any Party hereunder
or as to any act, performance or non-performance of
any act, deed or thing as agreed under this Agreement
or matter or thing arising out of or relating to or under
this Agreement (even though the Agreement may have
been terminated), the same shall be referred to the sole
Arbitrator to be appointed by the EFL (Lender),
according to the provisions of Arbitration and
Conciliation Act 1996, and rules there under and any
amendment thereto from time to time. The Language of
arbitration shall be English. All cost of arbitration
including the arbitrator’s fees, advocate fees, travailing
cost other miscellaneous expenses shall be borne
equally by the Parties hereto. The award of the
arbitrator shall be a speaking award and shall be final,
conclusive and binding on all the Parties whether on
question of law or of fact. In the event of death, refusal,
negligence, inability, incapability of the persons so
appointed to act as a sole arbitrator, a new arbitrator
shall be appointed by the EFL (Lender). The venue of
arbitration shall be Pune or such other place that the
Lender may in the sole discretion determine and
Courts in Pune or such other place, shall have
exclusive jurisdiction. This Agreement shall be
governed by and construed in all respects with Indian
laws and the Parties hereto agree that any matter or
issues arising hereunder or any disputes hereunder
shall, at the option/discretion of the EFL (Lender) the
subject to the non- exclusive jurisdiction of the courts
of the city of Pune. This shall not however limit the
rights of the EFL (Lender) to take proceedings in any
other Court of competent jurisdictions.”
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17. The respondents did not raise any objection with regard to the
selection of the venue by the petitioner. Thereafter, the petitioner
approached the City Civil Court at Kolkata by filing an application
under Section 9 of the said Act for interim protection and by order
dated April 22, 2025, a learned Advocate was appointed as a receiver.
The relevant portion of the order is quoted below :-
“Accordingly, Puja Mandal [Enrollment No.
F/1771/1557/2021, Mob No. 8927731284], Ld.
Advocate and the Member of City Civil Court Bar
Association, be appointed as Receiver for the purpose of
taking possession of 2 nos. of machine being 1Komori
Enthrone Sheet fed four colour offset printing
machine, Model E 429, 2016 Manufacturing year
Manufacturer being Komori and 2. Komori GL 437
Printing Press One Set Komori Brand 4 Colour Sheet
Fed Offset Press Komori Lithrone G37 model GL 437
with Std Accessories, Manufacturer being Komori.
The Receiver is authorized to take all necessary steps in
accordance with law, including appointment of agent. The
Police authority of the nearby Police Stations or the
Superintendent of Police, under the jurisdiction of whom
the machine in question is intercepted, would render
assistance as is required lawfully by the Receiver, if at all
necessary, who shall submit the Report before this Court.
So long the machine in question shall remain in the
custody of the Receiver or her authorised agent and she
shall remain responsible for any loss and damage, if any,
caused to the said machine in question.
The fee of the Receiver is fixed at Rs. 6,000/-.
The Petitioner is directed to make payment to the Receiver
directly and submit the receipt with the Court.
Issue writ accordingly on payment of the Receiver’s fee.
The Petitioner is directed to submit papers by the next
date fixed, showing that the Arbitration proceeding has
commenced, in default, the above Order shall stand
vacated.
Issue notice upon the Respondents, to show cause within
15 (fifteen) days from the date of receipt thereof.
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Let a copy of this Order along with Writ be handed over to
the Ld. Receiver for information and necessary compliance.
The Office is directed to acquire signature of the Ld.
Receiver at the time of receiving the Writ and the Order
sheet.
Fix 12.08.2025 for S/R and submission of the report by
the Receiver.
Requisites at once. Petitioner is given strict direction to
comply with the order.”
18. The order dated April 22, 2025, was challenged by filing an
appeal before the High Court at Calcutta bearing No. F.M.A.T
(ARBAWARD) 25 of 2025. By consent of the parties, the appeal and the
application were taken up together by the Division Bench. The Division
Bench recorded the submissions of the respective parties and relegated
the respondents to the learned City Civil Court, to ventilate all
grievances. The order is quoted below :-
1. By consent of the parties, the appeal and the
connected application are taken up together for
hearing.
2. This appeal is directed against an order dated
April 22, 2025, passed by the learned 13 th Bench,
City Civil Court, Calcutta, on an application under
Section 9 of the Arbitration and Conciliation Act,
filed by the respondent herein being Misc. Case No.
2952 of 2025.
3. It appears that the appellant herein obtained
financial accommodation in connection with a hire
purchase agreement for purchase of certain
equipment. Apparently, instalments fell in arrear.
Accordingly, the respondent/finance company
approached the learned Trial Court under Section 9
of the 1996 Act in view of there being an arbitration
clause in the hire purchase agreement for resolution
of disputes and differences between the parties.
4. The learned Trial Judge noting the submission
made on behalf of the finance company that the
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appellant herein is trying to create third party
interest in respect of the subject
equipment/machines, appointed a learned
advocate of the City Civil Court as receiver and
passed the following direction :
“The Receiver is authorized to take all
necessary steps in accordance with law,
including appointment of agent. The
Police authority of the nearby Police
Stations or the Superintendent of
Police, under the jurisdiction of whom
the machines in question is
intercepted, would render assistance as
is required lawfully by the Receiver, if
at all necessary, who shall submit the
Report before this Court.
So long the machines in question shall
remain in the custody of the Receiver or
her authorized agent and she shall
remain responsible for any loss and
damage, if any, caused to the said
machines in question.
The fee of the Receiver is fixed at
Rs.6,000/-.
The Petitioner is directed to make
payment to the Receiver directly and
submit the receipt with the Court.
Issue writ accordingly on payment of the
Receiver’s fee.
The Petitioner is directed to submit
papers by the next date fixed, showing
that the Arbitration proceeding has
commenced, in default, the above
Order shall stand vacated.
Issue notice upon the Respondents, to
show cause within 15 (fifteen) days
from the date of receipt thereof.
Let a copy of this Order along with Writ
be handed over to the Ld. Receiver for
information and necessary compliance.”
5. Being aggrieved, the respondent in the Section
9 application is before us by way of this appeal.
6. Mr. Tiwari, learned advocate representing the
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appellant says that the receiver, with police force
has taken actual physical possession of the
concerned equipment which has stopped the
appellant’s business altogether. He also says that
the receiver has taken possession of other
machines which were not financed by the
respondent. The finance company is in the process
of selling the equipment/machinery of which
possession has been taken by the receiver.
This will cause irreparable prejudice to the
appellant. Though there was some default in
payment of instalment in the months of January
and February, 2025, thereafter substantial sums
have been paid by the appellant to the respondent.
7. Mr. Sen, learned senior counsel representing
the respondent/finance company says that the
receiver could not locate many of the
equipment/machinery which she was directed to
take possession of and the appellant extended no
co-operation in that regard.
8. Submission made on behalf of the respective
parties are disputed by the respective opposite
parties.
9. We are of the view that the appellant should
approach the learned Single Jude and ventilate his
grievance. However, till the appellant gets such an
opportunity, we direct the respondent not to sell or
create third party interest in respect of the subject
machinery/equipment. This interim protection
granted to the appellant will continue for a period
of one month from date and will be subject to any
further order that may be passed by the learned
Trial Court.
10. Likewise the appellant shall also not deal with or
create third party interest in respect of the
machinery and equipment which have been financed
by the respondent company till further orders of the
learned Trial Court.
11. If the appellant asks for a copy of the minutes
of the meeting at which the receiver took
possession of the concerned machinery, copy of
such minutes will be forthwith supplied to the
appellant.
12. FMAT (ARBAWARD) 25 of 2025 is disposed of
along with the application being I.A. No. CAN 1 of
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2025.
13. Urgent certified photostat copy of this order, if
applied for, shall be given to the parties as
expeditiously as possible on compliance with all the
necessary formalities.”
19. From the order of the Division Bench, it is clear that all the
parties accepted the jurisdiction of the City Civil Court. The fact that
the City Civil Court was treated by the parties as the principal civil
court under Section 2(1)(e) of the said Act attained finality, when the
Division Bench, upon disposal of the appeal filed by the respondents,
relegated the matter to the City Civil Court at Calcutta. Section 2(1)(e) is
quoted below :-
“2. Definitions.–(1) In this Part, unless the context
otherwise requires,–
[(e) “Court” means–
(i) in the case of an arbitration other than international
commercial arbitration, the principal Civil Court of
original jurisdiction in a district, and includes the High
Court in exercise of its ordinary original civil jurisdiction,
having jurisdiction to decide the questions forming the
subject-matter of the arbitration if the same had been the
subject-matter of a suit, but does not include any Civil
Court of a grade inferior to such principal Civil Court, or
any Court of Small Causes;
(ii) in the case of international commercial arbitration,
the High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same
had been the subject-matter of a suit, and in other cases,
a High Court having jurisdiction to hear appeals from
decrees of courts subordinate to that High Court;]”
20. The submissions of the learned Advocate for the respondents as
recorded by Their Lordships, do not indicate that any question of
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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. In the
factual matrix of this case, consent of the respondents to anchor the
arbitral proceeding at Kolkata is available from the conduct. The issue
of lack of jurisdiction was not raised in the appeal from the order of the
City Civil Court. The appeal was disposed of on consent, with a
direction upon the respondents to ventilate their grievances before the
learned City Civil Court.
21. In such view of the matter, the decision of Cholamandalam
Investment and Finance Company Limited (supra) will not be
applicable. The application which was adjudicated upon by Her
Lordship, had been filed under Section 9 of the said Act, seeking
appointment of a receiver in respect of an asset which was financed by
the petitioner. The question which fell for decision was whether, the
High Court at Calcutta was the court as defined under Section 2(1)(e) of
the said Act. The relevant clauses of the loan agreement which fell for
decision before Her Lordship are quoted below :-
“29. Arbitration :
………………
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The venue of arbitration proceedings shall be at Channai
or such place/location/city which the company at its
discretion may decide from time to time.
30. Jurisdiction : Subject to the arbitration clause
contained herein, the Courts in Chennai alone shall have
exclusive jurisdiction over any matter arising out of or
concerning this Agreement. However, the parties hereby
agree, confirm and undertake that the Company has a
right to file its claim in relation to any amount payable by
the Borrower and or Guarantors or any other connect
matter/s as mentioned in this Agreement in any other
competent Court in India at its sole discretion.”
22. Under clause 29 above, a similar clause as in the subject
agreement had been incorporated i.e. the venue of arbitration shall be
at Chennai or such place/location/seat which the Company at its
discretion may decide from time to time. Her Lordship was of the view
that the lender could not unilaterally decide the venue of arbitration.
The clause was arbitrary. Such decision was taken on the premise that
the lender had approached the City Civil Court at Calcutta and then
withdrawn the proceedings on the ground that the City Civil Court did
not have any jurisdiction to entertain the matter. Thereafter, the lender
approached the High Court on the self-same cause of action with the
self-same reliefs as were before the City Civil Court. Her Lordship
observed that venue must be chosen by both the parties.
23. In the case in hand, the lender exercised the option to choose
the venue of arbitration as Kolkata with a further choice that the courts
at Kolkata would be exclusive jurisdiction. This option / choice was
informed to the respondents by the first notice of demand and also by
the second notice under Section 21 of the said Act. The paragraphs
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which have been quoted hereinabove clearly indicate that the petitioner
had invited opinion of the respondents with regard to not only the
choice of the arbitrators, but also choice of the venue and the
jurisdiction of the court, but the respondents remained silent.
24. The petitioner approached the City Civil Court at Calcutta under
Section 9 of the said Act treating the said court to be the principal civil
court as defined under Section 2(1)(e) of the said Act. The respondents
approached the High Court in appeal against the order appointing a
Receiver. The High Court remanded the matter to the City Civil Court
and the respondents accepted such order and went back to contest the
matter before the City Civil Court. The order of the Division Bench of
the High Court does not indicate, at all, that at any point of time, the
respondents were aggrieved by the exercise of option on the part of the
petitioner, treating the City Civil Court at Calcutta to have exclusive
jurisdiction over the disputes arising out of the subject agreement.
25. The other decision cited by Mr. Chakraborty i.e. LNT Finance
Ltd. (supra) also does not apply to the facts of the case inasmuch as,
the High Court of Bombay came to the conclusion that unless there was
a contrary indication, venue would be treated as seat. Paragraphs 24,
25 and 29 of the said decision are quoted below :-
“24. But this only answers the first portion of the argument.
Mr. Rebello’s construct proceeds on the footing that
the whole of the selection of the seat (or venue=seat) provision
is rendered bad because of the discretion impermissibly
conferred on L&T Finance to choose some other place in its
sole discretion. That is not so. All that this means is that L&T
Finance cannot pick any venue other than New Delhi, and
202026:CHC-OS:150
that the stated venue, New Delhi, will be the seat (since there
is nothing to indicate that it is a ‘mere venue’, a meeting place
of convenience). Mr. Rebello may have been correct had the
clause simply said the venue of the arbitration will be at such
place as L&T Finance may in its sole discretion decide. That
would have rendered the entire clause void, and then there
would be no designated venue/seat at all. Instead, in its
current form, the clause does name a venue. It does not say it
is merely a venue or meeting place of convenience. This venue,
New Delhi, is therefore the seat. It then goes on to give L&T
Finance additional discretion to unilaterally select some other
venue/seat. What is bad and would be unacceptable is L&T
Finance exercising its choice to pick any other venue. This
would not dislodge the consensus arrived at between the
parties designating New Delhi as the chosen venue.
25. Once we see it like this, and once we have the settled law
that in domestic arbitrations where a venue is specified it
connotes the seat unless there is a specific indication to the
contrary, then obviously no question of any other cause of
action jurisdiction can survive for the purposes of selecting the
competent Court.
29. There emerges the following trifecta of propositions in
regard to a domestic arbitration:
(a) A stated venue is the seat of the arbitration unless there
are clear indicators that the place named is a mere venue, a
meeting place of convenience, and not the seat;
(b) Where there is an unqualified nomination of a seat (i.e.
without specifying the place as a mere venue), it is courts
where that seat is situated that would have exclusive
jurisdiction; and
(c) It is only where no venue/seat is named (or where it is
clear that the named place is merely a place of convenience for
meetings) that any other consideration of jurisdiction may
arise, such as cause of action.”
26. In the present case, there is a contrary indication that the venue
of arbitration would be either Pune or such other place as per the
choice of the lender. This does not demonstrate consensus of the
parties to anchor the arbitration proceedings exclusively at Pune.
Moreover, the specific conduct of the respondents in the proceedings
21
2026:CHC-OS:150
before the City Civil Court and the High Court would indicate that the
choice of venue as Kolkata and the jurisdiction of the court at Kolkata,
made by the lender had been accepted by the respondents and
objection, if any, with regard to such option was waived. The
respondents derogated from the provisions of Section 20 of the said Act
in this particular case. The respondents, though called upon to convey
their objections, if any, with regard to the choice of Kolkata as the
venue and jurisdictional seat, did not raise any objection. No such
objection with regard to the jurisdiction of the City civil court at Kolkata
was urged in the appeal before the Division Bench.
27. Under such circumstances, the application is allowed. All other
issues with regard to admissibility of the claim, quantification of the
claim, limitation etc. are kept open to be decided by the learned
arbitrator.
28. Mr. Deepan Kumar Sarkar, learned Advocate Bar Library Club,
Mobile No. 8420473075 is appointed as the sole arbitrator to arbitrate
upon the disputes between the parties. The learned arbitrator shall
comply with the provisions of Section 12 of the said Act. The learned
Arbitrator shall be at liberty to fix his remuneration as per the schedule
of the said Act.
29. Urgent Photostat certified copies of this judgment, if applied for,
be supplied to the parties upon fulfilment of requisite formalities.
(Shampa Sarkar, J.)
