Supreme Court Refers Trademark Dispute To Arbitration | Existence Of Arbitration Clause Is Sufficient To Oust Civil Jurisdiction And Must Be Enforced
Kiran Raj
The Supreme Court of India Division Bench of Justice J.B. Pardiwala and Justice R. Mahadevan dismissed a Special Leave Petition challenging the orders of the Commercial Court and the High Court that referred the parties to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. The Court held that when parties have entered into agreements containing valid arbitration clauses, disputes arising out of such agreements must be referred to arbitration. The Court concluded that "the right that is asserted by the 1st Respondent is not a right that emanates from the Trademark Act, but a right that emanates from the Assignment Deeds" and hence, the subject matter was arbitrable. Consequently, the Court affirmed the orders of the lower courts and dismissed the Special Leave Petition.
The petition arose from the judgment of the High Court of Judicature at Madras dated 09.01.2025 in C.R.P. No. 1272 of 2024, which upheld an earlier order of the Commercial Court (District Judge Cadre), Coimbatore. The suit in question was C.O.S. No. 147 of 2023, filed by the petitioner’s seeking relief against alleged trademark infringement concerning the name "SRI ANGANNAN BIRIYANI HOTEL".
The plaintiffs sought permanent injunction against the defendants from using any mark similar to the one in Application No. 3440505, including the names "SRI ANGANNAN BIRIYANI HOTEL", "ABM SRI ANGANNAN HOTEL", or any format containing "ANGANNAN". They also sought damages of Rs. 20,00,000 and further consequential reliefs.
The respondents, appearing as original defendants, filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, praying for the matter to be referred to arbitration based on two Deeds of Assignment dated 20.09.2017 and 14.10.2019, both of which contained arbitration clauses.
The petitioners contested the authenticity of the Assignment Deeds, alleging fraud, forgery, and lack of intention to assign rights. They asserted that signatures had been obtained on blank papers and used without authority. Despite these allegations, the Commercial Court allowed the Section 8 application, noting that the suit was not for declaration of trademark rights but for injunctive relief arising out of contractual arrangements.
The High Court agreed with the Commercial Court, holding that Clause 15 of the Deed of Assignment dated 14.10.2019 clearly provided for arbitration. The clause stated: "In the event of any dispute, difference or claim arising between the Parties under or in connection with this Agreement, parties agree to get such issues and disputes resolved first through CONCILIATION failing which by ARBITRATION..."
The High Court further recorded that mere allegations of fraud do not oust arbitration unless they permeate the entire contract or affect public interest. Since the dispute was inter partes and centered on the contractual assignment of trademark rights, it was deemed arbitrable.
Before the Supreme Court, the petitioners reiterated their position regarding fraud, misuse of signature, and questioned the arbitrability of intellectual property disputes. The Court, however, found that the petitioners' claims arose from the Assignment Deeds, and the nature of the suit was one of contractual rights, not statutory enforcement.
The Supreme Court observed: "The law on the subject is no longer res integra... the arbitral tribunal is constituted at the instance of one of the parties and other party takes up the position that such proceedings are not valid in law... the civil court cannot have jurisdiction to go into that question."
Quoting from Kvaerner Cementation India Ltd. v. Bajranglal Agarwal, the Court reiterated: "The Arbitral Tribunal has the power to rule on its own jurisdiction... the civil court should not interfere in such matters."
On arbitrability, the Court cited Booz Allen and Hamilton Inc. v. SBI Home Finance Limited: "Every civil or commercial dispute... which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless excluded either expressly or by necessary implication."
Referring to Vidya Drolia v. Durga Trading Corporation, the Court held: "The assumption that all matters relating to trademarks are outside the scope of arbitration is plainly erroneous... Undisputedly, these disputes... are arbitrable as they relate to rights and obligations inter se the parties."
On the plea of fraud, the Court relied on A. Ayyasamy v. A. Paramasivam: "Mere allegation of fraud is not sufficient to exclude arbitration... Allegations must have some implication in the public domain to oust jurisdiction of arbitration."
The Court observed that: "The right that is asserted by the 1st Respondent is not a right that emanates from the Trademark Act, but a right that emanates from the Assignment Deeds. The Assignment of a trademark is by a contract and not by a statutory act."
Additionally, the Court recorded: "Once 1st Petitioner admitted her signatures... and the Assignment Deed is duly executed and attested by a Notary Public, prima facie the contention of the Petitioners cannot be accepted."
The Court also considered the aspect of payments made by the 1st Respondent to the Petitioners, noting: "The 1st Petitioner/K. Mangayarkarasi and the 2nd Petitioner Sreedevi and her Husband Ajith received several payments... from 19.03.2021 to 23.02.2023."
The Court upheld the findings of both the Commercial Court and the High Court. It stated:
"Once there is an arbitration agreement between the parties, a judicial authority before whom an action is brought covering the subject-matter of the arbitration agreement is under a positive obligation to refer parties to arbitration... There is no element of discretion left in the court..."
The judgment concluded: "In view of the foregoing, we are of the view that no error, not to speak of any error of law, could be said to have been committed by the High Court in passing the impugned judgment and order."
Accordingly, the Supreme Court held:
"The Special Leave Petition stands, accordingly, dismissed."
"Pending application(s), if any, stands disposed of."
Advocates Representing the Parties:
For Petitioner(s): Mr. V. Prakash, Sr. Adv., Mr. Aneesh Renganathan, Adv., Ms. Swadha Gupta, Adv., Mr. Karan Dang, Adv., Mr. Vishwam Mishra, Adv., Mr. Prabhat Kumar, AOR
Case Title: K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
Neutral Citation: 2025 INSC 687
Case Number: SLP(C) No. 13012 of 2025
Bench: Justice J.B. Pardiwala, Justice R. Mahadevan
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