Supreme Court Affirms Arbitrability of Trademark Disputes in Private Agreements

 

Overview

The Supreme Court of India has recently addressed a pivotal question in the realm of intellectual property and arbitration: Are all trademark disputes excluded from arbitration? The answer, as clarified in the case of K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr., is a definitive no—at least when the dispute arises from private contractual arrangements rather than statutory rights.

Case Title and Citation

• Case Title: K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
• Citation: SLP (C) No. 13012 of 2025
• Bench: Justice J.B. Pardiwala

Factual Matrix

The dispute involved family members contesting the right to use the trademark “Sri Angannan Biriyani Hotel.” The plaintiffs sought a permanent injunction and damages, alleging that the defendants had forged assignment deeds and engaged in misconduct. The defendants, in turn, invoked arbitration clauses present in the assignment deeds, seeking referral of the matter to arbitration.

Procedural Journey

• The Commercial Court in Coimbatore, upon examining the arbitration clauses in the assignment deeds, referred the parties to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.
• The plaintiffs challenged this referral before the Madras High Court, which upheld the Commercial Court’s decision.
• The matter was escalated to the Supreme Court, which dismissed the special leave petition, affirming the arbitrability of the dispute.

Legal Issues and Reasoning

• Nature of the Dispute: The courts consistently held that the dispute was not about the statutory right to the trademark itself, but rather about the contractual rights arising from the assignment deeds. The reliefs sought—injunction and damages—were rooted in the alleged breach of these private agreements.
• Right in Personam vs. Right in Rem: The distinction between rights in personam (against specific individuals) and rights in rem (against the world at large) was central. The courts found that the claims were personal and contractual, not affecting the public at large or the statutory status of the trademark.
• Arbitrability Despite Allegations of Fraud:  Even though the plaintiffs alleged forgery and fraud, the courts determined that such allegations did not, by themselves, render the dispute non-arbitrable. Unless the allegations permeate the entire contract or involve serious questions of public policy, arbitral tribunals can adjudicate such matters.
• Non-Signatory Parties: The courts also addressed the issue of non-signatories to the arbitration agreement. It was held that successors or legal representatives deriving rights through the original parties to the assignment deeds could be bound by the arbitration clause.

Important Case Laws Discussed

Vidya Drolia v. Durga Trading Corporation: This precedent clarified the test for arbitrability, emphasizing that disputes concerning rights in personam are generally arbitrable unless expressly excluded by law.

A. Ayyasamy v. A. Paramasivam: This case discussed the arbitrability of disputes involving fraud, holding that not all fraud-related disputes are excluded from arbitration.

Glossary

• Arbitrability: The suitability of a dispute for resolution by arbitration.
• In Personam: Legal rights or obligations enforceable between specific parties.
• In Rem: Legal rights or obligations enforceable against everyone.
• Assignment Deed: A legal document transferring rights from one party to another.
• Section 8, Arbitration and Conciliation Act, 1996: Provision mandating courts to refer parties to arbitration if a valid agreement exists.

Conclusion

The Supreme Court’s ruling marks a significant development in Indian arbitration law, particularly for intellectual property disputes. It establishes that contractual disputes over trademark assignments or licenses—where the core issue is a private agreement—are arbitrable, even when allegations of fraud are involved. This decision reinforces party autonomy and the enforceability of arbitration clauses in commercial contracts, aligning domestic practice with international standards.

Authored by Abhishek Jat, Advocate

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