Introduction: This case deals with the fundamental interplay between contractual agreements and the statutory framework governing trademarks. Specifically, it addresses the arbitrability of trademark disputes where the underlying contention stems from contractual assignment deeds containing arbitration clauses. The Supreme Court of India had to determine whether the matter should be referred to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, despite allegations of fraud and forgery surrounding the execution of the assignment deeds.
Detailed Factual Background:The plaintiffs (petitioners herein) K. Mangayarkarasi and her daughter Sreedevi filed a commercial suit against N.J. Sundaresan and Manonmani Angannan, seeking injunctive relief and damages concerning the use of the mark “SRI ANGANNAN BIRIYANI HOTEL.” The mark had emotional and commercial significance as it was associated with Mangayarkarasi’s late father Angannan, a renowned culinary figure in Coimbatore.
Following the death of Angannan in 1986 and subsequently her husband in 1990, Mangayarkarasi and her family allegedly retained control over the business and trademarks associated with “Sri Angannan.” Sundaresan, the son of Mangayarkarasi’s brother-in-law Jagadeeswaran (who had assisted in the family business), later claimed rights over the same trademark on the basis of two deeds of assignment dated 20.09.2017 and 14.10.2019, purportedly signed by Mangayarkarasi. The plaintiffs disputed the validity of these deeds, alleging fraud and forgery, stating they never consented to irrevocably assign the mark.
Detailed Procedural Background: A commercial suit (C.O.S. No. 147 of 2023) was filed by the plaintiffs before the Commercial Court, Coimbatore, seeking permanent injunctions and damages for the misuse of the trademark. In response, Sundaresan filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, relying on the arbitration clauses embedded in the alleged assignment deeds.
The Commercial Court allowed the application, referring the parties to arbitration. This decision was affirmed by the Madras High Court in C.R.P. No. 1272 of 2024. Dissatisfied with these concurrent findings, the plaintiffs approached the Supreme Court through Special Leave Petition (Civil) No. 13012 of 2025.
Issues Involved in the Case:Whether the disputes involving trademark rights, arising out of assignment deeds containing arbitration clauses, are arbitrable in nature? Whether allegations of fraud in execution of assignment deeds bar the matter from being referred to arbitration?Whether non-signatory parties can be subjected to arbitration based on their derivation of rights under the agreement?
Detailed Submissions of Parties:The petitioners argued that the assignment deeds were fraudulently executed using blank stamp papers and that the arbitration clauses contained therein were not validly consented to. They contended that the alleged forgery and fraudulent inducement vitiated the contract entirely, making arbitration untenable.
Conversely, the respondents submitted that the disputes arose entirely from the contractual assignment deeds and not from any statutory violation under the Trade Marks Act. They emphasized that the arbitration clause clearly provided for disputes to be resolved through conciliation or arbitration, and that the plaintiffs' claim to the contrary was an afterthought to avoid arbitration.
Detailed Discussion on Judgments Cited:
Kvaerner Cementation India Ltd. v. Bajranglal Agarwal, (2012) 5 SCC 214: The Court emphasized that the arbitral tribunal is competent to rule on its own jurisdiction, including the validity of the arbitration agreement under Section 16 of the 1996 Act.
A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386: The Court held that mere allegations of fraud do not bar arbitration unless such fraud permeates the entire contract or involves serious questions of public interest.
Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532: This judgment clarified that rights in rem are generally not arbitrable, whereas rights in personam are. Disputes over assignment contracts are rights in personam and hence arbitrable.
Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1: Reinforced the distinction between arbitrable and non-arbitrable disputes and reiterated that matters involving rights in personam are subject to arbitration.
SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754: The Court ruled that even if a discharge voucher was allegedly signed under coercion or fraud, the dispute remains arbitrable and should be determined by the arbitral tribunal.
National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd., (2009) 1 SCC 267: This case supported the proposition that an arbitration clause survives even if the contract's validity is challenged due to coercion or undue influence, making the dispute arbitrable.
Detailed Reasoning and Analysis of the Judge: The Supreme Court, carefully dissected the arbitrability of the present trademark dispute. The Court held that although the matter involved the use of a trademark, the rights claimed by both parties stemmed not from any statutory entitlement under the Trade Marks Act, but from private assignment deeds.
The Court emphasized that rights asserted under such agreements are personal in nature, and hence, arbitrable. Referring to Booz Allen and Vidya Drolia, it held that since the suit did not pertain to grant or cancellation of trademark registration—a sovereign function—but to contractual rights flowing from private deeds, it fell within the arbitral domain.
Further, the Court rejected the petitioners' allegations of fraud as being insufficient to oust arbitration jurisdiction. It noted that the existence of signatures, notarization, and evidence of consideration in the form of periodic payments made the plea of fraud unsubstantiated. Referring to Ayyasamy and Krish Spinning, the Court held that arbitrators are empowered to assess such claims.
The Court also addressed the issue of the third respondent being a non-signatory to the arbitration clause. It concluded, following the doctrine of “claiming through or under,” that a person deriving rights through a signatory (in this case, by a gift deed) is bound by the arbitration agreement, as per Section 8 of the Act.
Final Decision: The Supreme Court upheld the decisions of the Commercial Court and the Madras High Court, reaffirming that the dispute was rightly referred to arbitration. The Special Leave Petition was dismissed.
Law Settled in this Case: This judgment settles the position that: Trademark disputes arising out of assignment agreements are arbitrable as they concern private rights (in personam). Allegations of fraud, unless affecting the public domain or permeating the entire contract, do not bar arbitration.Parties deriving rights through or under signatories to an arbitration agreement are also bound by it.The scope of judicial interference under Section 8 of the Arbitration and Conciliation Act is limited; courts must favor arbitration where a valid agreement exists.
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.:09 May 2025:: Special Leave Petition (Civil) No. 13012 of 2025: 2025 INSC 687: Supreme Court of India:Hon'ble Justice J.B. Pardiwala and Justice R. Mahadevan
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Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
