Case Title: M. Ramesh Vs. V. Balu & Ors.
Order Date: 10.10.2025
Case Number: Appeal (CAD) No.21 of 2023
Neutral Citation: 2025:MDHC:21
Name of Court: High Court of Judicature at Madras
Name of Hon'ble Judge: Dr. Justice G. Jayachandran and Mr. Justice Mummineni Sudheer Kumar
Facts
In the world of family-run businesses, where trust and shared legacies often mix with gold and jewels, this case begins with a partnership formed back in 2012. A group of individuals, including the plaintiffs and defendants 1 to 3, came together to create a partnership firm called "Sri Valli Vilas M.V. Pavadai Chettiar Sons." This firm was all about making, buying, and selling precious items like bullion, gold jewelry, diamond pieces, silver ornaments, and related articles. To protect their brand in this competitive market, the partners registered the trademark "Sri Valli Vilas" under the Trade Marks Act, 1999. This registration covered classes 14 and 35, which include jewelry, precious stones, and even showroom services, complete with label marks to make their identity stand out.
Fast forward to recent times, and trouble brews within the family. Defendants 4 to 6, who are close relatives of defendants 1 to 3—like siblings or in-laws—decide to start their own venture. They incorporate a private company named "Aum Valli Vilas Jewellers Private Limited," with its office in Cuddalore, Tamil Nadu. The name "Aum Valli Vilas" sounds too close to "Sri Valli Vilas" for comfort, at least according to the original partners. The plaintiffs see this as a sneaky move to copy their hard-earned trademark, especially since defendants 1 to 3, their co-partners, seem to be in on it, colluding quietly behind the scenes. The new company plans to dive into the same business: manufacturing and selling gold, silver, and jewelry items. This isn't just a family spat; it's a threat to the plaintiffs' brand identity, which they've built over years.
The plaintiffs, feeling their trademark under siege, rush to court. They file a commercial suit, asking for a permanent injunction to stop the defendants from using "Aum Valli Vilas" or anything similar that could confuse customers—visually, deceptively, or even just by sound. They also want protection against "passing off," where the new company might trick people into thinking its products come from the original firm. Other reliefs include damages and costs, all to safeguard their registered mark. In the suit, they name defendants 1 to 3 as parties too, but make it clear they're not against them personally; in fact, the plaintiffs say they'd happily switch them to the plaintiff side since everyone in the partnership has a duty to protect the shared trademark. The suit values the claim below Rs. 3 lakhs, but it's treated as a commercial dispute because it revolves around intellectual property like trademarks.
Procedural Detail
The suit lands in the Principal District Court at Cuddalore, labeled as Commercial O.S. No.1 of 2023. It's a busy commercial court, handling disputes tied to trade and business under the Commercial Courts Act, 2015. Right away, defendants 1 to 3 fire back with an application under Order VII Rule 11(a), (c), and (d) read with Section 151 of the Code of Civil Procedure, 1908 (CPC). This is a tool courts use early on to weed out weak cases by rejecting the plaint if it doesn't disclose a cause of action, is undervalued, or barred by law. Their main pitch? There's an arbitration clause in the 2012 partnership deed, so the suit should go to arbitration, not court. They also challenge the court's jurisdiction, saying the low valuation (under Rs. 3 lakhs) means it doesn't qualify as a "commercial dispute" under Section 6 and Section 12(1)(d) of the Commercial Courts Act, 2015, which sets a pecuniary threshold for such cases.
The commercial court hears arguments and, on July 31, 2023, allows the application—but only on the arbitration ground. It rejects the plaint, saying the parties are bound by the partnership's arbitration agreement, making the suit non-maintainable. The jurisdiction objection gets shot down: the court notes the suit is squarely about trademark infringement under the Trade Marks Act, 1999, so as the Principal District Court, it has the power to hear it anyway. No one appeals that part, so it sticks.
Upset by the rejection, the second plaintiff (M. Ramesh) alone files this appeal under Section 96 CPC read with Section 13 of the Commercial Courts Act, 2015. He arrays the other original plaintiffs as respondents 4 and 5, who support him fully. Defendants 1 to 3 become respondents 1 to 3, and the company folks (original defendants 4 to 7) are respondents 6 to 9. The appeal is heard by a division bench: Dr. Justice G. Jayachandran and Mr. Justice Mummineni Sudheer Kumar. Arguments fly from senior counsel and juniors—Mr. P.S. Raman for the appellant, Mr. C.B. Vishnudasan for respondents 1-3, Mr. R. Sathishkumar for 4-5, and Mr. C. Suraj for 6-9. The bench reserves judgment on September 22, 2025, and delivers it on October 10, 2025. Throughout, the focus stays narrow: only challenging the arbitration-based rejection, as the jurisdiction finding is final.
Dispute
At its heart, this case is a clash between family loyalty and business protection. The plaintiffs argue their suit isn't about partnership squabbles—it's a straight-up trademark fight against outsiders (defendants 4-7) using a confusingly similar name that could fool customers and dilute their brand. They point out defendants 1-3 are just nominal parties; the real battle is with the new company, which isn't bound by the old partnership deed. Forcing arbitration here, they say, would leave the trademark vulnerable, as arbitration can't easily handle injunctions against non-signatories.
Defendants 1-3 counter that everything stems from the partnership: any misuse of the name traces back to internal disagreements, so Clause 15 of the deed kicks in, mandating arbitration for partner disputes. They insist the suit is barred because all plaintiffs and they (as defendants 1-3) signed that deed. Respondents 6-9 (the company side) jump in, reviving the jurisdiction angle—not appealed earlier but worth noting—claiming the low suit value knocks it out of commercial court entirely under the 2015 Act. The core dispute boils down to: Does an internal partnership arbitration clause derail a public trademark enforcement suit involving non-parties? And can the court peek beyond the plaint at this early stage without turning the rejection power into a mini-trial?
Detailed Reasoning Including on Judgement with Complete Citation Referred and Discussed
The High Court dives straight into the basics of rejecting a plaint under Order VII Rule 11 CPC. In simple terms, this rule is like a gatekeeper: at the suit's doorstep, the court only glances at the plaint and attached documents to check if the case has legs. It can't dig into evidence or defenses yet—that's for later. The court draws from settled law, emphasizing that rejection is strict: if the plaint shows a valid cause, it stays, no matter how defendants twist it. Here, the plaint paints a clear picture—the suit targets defendants 4-7 for launching "Aum Valli Vilas," a name eerily like "Sri Valli Vilas," with defendants 1-3 allegedly helping from the shadows due to family ties. The plaintiffs even offer to realign defendants 1-3 as co-plaintiffs, underscoring the suit's focus on external infringement, not internal partnership woes.
Turning to the arbitration hurdle, the court zooms in on Clause 15 of the April 1, 2012, partnership deed. This clause says: "Any dispute or difference between the partners arising in regard to the construction or terms of this deed or any part thereof or in respect of the accounts or of the rights and liabilities of the partners under this deed or any other matter relating to the partnership, shall be referred to arbitration, each party appointing one arbitrator or the partners mutually agreeing upon to a single arbitrator and the provisions of the Indian Arbitration Act, 1940 and any statutory modification thereof shall apply." In plain English, it's a family rulebook for fights among partners only—about deed interpretation, money matters, rights, or partnership basics. It invokes the old Arbitration Act, 1940 (now updated by the 1996 Act, but the clause sticks to 1940 as modified).
The court reasons sharply: This clause binds only the signatories (plaintiffs and defendants 1-3). Defendants 4-7? Not partners, not signers—they're outsiders, even if family. The suit's grievance—trademark violation by the new company—doesn't fit the clause's narrow box. It's not about partnership accounts or deed terms; it's a standalone intellectual property claim under the Trade Marks Act, 1999, seeking injunctions against confusion in the market. Even if stretched, arbitration can't rope in non-parties without their consent, per basic principles under Section 7 of the Arbitration and Conciliation Act, 1996 (which echoes the 1940 Act's intent). The commercial court below missed this: by lumping everyone under the clause, it wrongly barred the whole suit, ignoring that reliefs target mainly defendants 4-7.
On jurisdiction, the bench sidesteps deep dive since no appeal challenges it. But it nods to the lower court's logic: Trademark suits qualify as "commercial disputes" under Section 2(1)(c) of the Commercial Courts Act, 2015, regardless of value, as they involve IP rights. Section 6 and 12(1)(d) set Rs. 3 lakhs as a floor for specified value suits, but explanatory notes clarify IP cases like this bypass it if tied to trade. Still, the court leaves the door open—parties can re-raise it below, as jurisdiction questions never sleep. With the suit stalled since 2023, the bench urges quick disposal. No costs awarded, keeping it neutral.
This reasoning aligns with precedents like Vidya Drolia v. Durga Trading Corporation (2021) 2 SCC 1, where the Supreme Court clarified arbitration clauses don't auto-bar suits if non-arbitrable rights (like public IP injunctions) are at stake, or non-signatories involved. It echoes Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532, limiting arbitration to private rights, not statutory protections like trademarks. The judgment reinforces that Order VII Rule 11 is plaint-centric, per T. Arivandandam v. T.V. Satyapal (1977) 4 SCC 467— no fishing expeditions into defenses. By setting aside the rejection, the court restores balance: partnerships can't hide behind private clauses when public trademarks are infringed by third parties.
Decision
The appeal succeeds. The High Court sets aside the commercial court's order and decreetal order in I.A. No. 214 of 2023 in Commercial O.S. No. 1 of 2023 dated July 31, 2023, rejecting the plaint on arbitration grounds. The suit revives, with directions for the lower court to decide jurisdiction afresh if raised and to wrap up proceedings fast—no more delays after two years. No costs to either side.
Suggested Titles for this Legal Analytical Article:
Family Ties and Trademark Fights: When Partnership Clauses Can't Shield Brand Infringement
Beyond the Deed: Arbitration's Limits in Multi-Party Trademark Disputes
Unbinding the Clause: High Court Revives Suit Against Non-Signatory Trademark Violators
From Gold Deeds to Court Decrees: Decoding Arbitration in Family Business IP Wars
Rejecting Rejection: Order VII Rule 11 and the Trademark's Triumph Over Partnership Pacts
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation. Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
