Supreme Court of India
K. MANGAYARKARASI & ANR.versusN.J. SUNDARESAN & ANR.
- Citation
- 2025 INSC 687
- Decided
- 9 May 2025
- Disposal
- Dismissed
- Bench
- B PARDIWALA
Holding
When a dispute stems from a trademark assignment containing an arbitration clause, the matter is arbitrable and a Section 8 application must be granted, even if fraud is alleged, unless the fraud is of a public nature that defeats the arbitration agreement.
Summary
The petitioners filed a suit seeking a permanent injunction and damages for alleged infringement of the trademark ‘SRI ANGANNAN BIRIYANI HOTEL’. The respondents filed a Section 8 application invoking arbitration clauses in two assignment deeds of the trademark, alleging that the deeds were fraudulently executed. The Commercial Court and the High Court referred the dispute to arbitration, holding that the matter concerned contractual rights and was therefore arbitrable. On SLP, the Supreme Court affirmed that trademark disputes arising from contractual assignments are arbitrable, and that a mere allegation of fraud does not defeat the arbitration agreement unless it has public‑domain implications. Consequently, the Court dismissed the SLP, directing the parties to proceed before the arbitral tribunal.
Issues considered
- Whether a trademark infringement suit arising from an alleged assignment of trademark rights is arbitrable under the Arbitration and Conciliation Act, 1996.
- Whether an allegation of fraud in the execution of the assignment deeds can bar referral to arbitration under Section 8.
- Whether the court has jurisdiction to decide the existence or validity of the arbitration agreement or must refer the question to the arbitral tribunal under Section 16.
- Whether the dispute is a right in rem (non‑arbitrable) or a right in personam (arbitrable).
- Whether Section 8 obliges the court to refer the parties to arbitration when an arbitration clause exists, irrespective of the nature of the dispute.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 11, s. 16, s. 8
- Trade Marks Act, 1999
Headnote
Issue for Consideration Can a trademark infringement suit be referred to arbitration if the defendant questions its maintainability on the ground of existence of an arbitration agreement between the parties and seeks a reference under Section 8 of the Arbitration and Conciliation Act, Act, 1996 – s.8 – Not all trademark disputes are non-arbitrable; those concerning contractual rights can be arbitrated – Petitioners filed a commercial suit against Respondents seeking permanent injunction in relation to trademark “SRI ANGANNAN BIRIYANI HOTEL/ABM
Subjects
ArbitrationFraudTrademark infringementPassing offContractAgreementSection 16JurisdictionSection 8 applicationArbitrabilityOuster of jurisdiction
Judgment
[2025] 5 S.C.R. 1199 : 2025 INSC 687
K. Mangayarkarasi & Anr.
v.
N.J. Sundaresan & Anr.
(SLP (C) No. 13012 of 2025)
09 May 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]
Issue for Consideration
Can a trademark infringement suit be referred to arbitration if the
defendant questions its maintainability on the ground of existence of
an arbitration agreement between the parties and seeks a reference
under Section 8 of the Arbitration and Conciliation Act, 1996 (“Act”).
Headnotes†
Arbitration and Conciliation Act, 1996 – s.8 – Not all trademark
disputes are non-arbitrable; those concerning contractual
rights can be arbitrated – Petitioners filed a commercial suit
against Respondents seeking permanent injunction in relation
to trademark “SRI ANGANNAN BIRIYANI HOTEL/ABM SRI
ANGANNAN HOTEL/ any other name format signifying the term
ANGANNAN” – Respondents filed an Application under Section
8 of the Act and sought reference to arbitration on the basis
of two assignment deeds containing an arbitration clause –
Petitioners disputed execution of the said deeds on the ground
of fraud – The commercial court allowed the said application
holding that the subject matter of suit was arbitrable and the
basis of Respondents’ claim was not rooted in Trade Marks
Act, 1999 (“TM Act”) but in the said assignment deeds – Being
aggrieved, Petitioners filed civil revision application in the High
Court which came to be dismissed inter-alia on the ground that
mere allegation of fraud is insufficient to refuse reference to
arbitration and such an allegation must have an implication
in public domain – Challenged in the Special Leave Petition:
Held: When arbitrability of a dispute is opposed on the ground
of fraud, Courts must examine whether mere allegation of fraud
warrants exclusion of such disputes from the realm of arbitration
and such a challenge can be adjudicated by the arbitral tribunal
in terms of Section 16 of the Act – Reliance placed on A.
Ayyasamy v. A.Paramasivam & Ors. (2016) 10 SCC 386 and
* Author
1200 [2025] 5 S.C.R.
Supreme Court Reports
Kvaerner Cementation India Ltd. v. Bajranglal Agarwal and Anr.,
(2012) 5 SCC 214. [Paras 8, 9]
The “arbitrability” of a dispute depends on following three aspects: (i)
capability of a dispute being adjudicated and settled by arbitration;
(ii) if the dispute was covered by the arbitration agreement; and
(iii) if the parties had referred the disputes to arbitration – All these
factors are required to be determined keeping in mind the express
or implicit exclusion of certain categories of cases from the domain
of arbitration (private fora) as a matter of public policy – Such
excluded cases largely are those which relate to action in rem
which are reserved for adjudication by public fora (Booz Allen &
Hamilton Inc. v. SBI Home Finance Ltd. & Ors., (2011) 5 SCC
532) – It cannot be held that all disputes related trademark are
non-arbitrable, such as those related to in personam rights (Vidya
Drolia v. Durga Trading Corporation reported in (2021) 2 SCC 1) –
Arbitral Tribunal enjoys a wider jurisdiction under Section 16 of the
Act and even cases where a contract stood discharged by way of
a full and final settlement, can be referred to arbitration if such a
settlement is vitiated by fraud, coercion or undue influence (SBI
General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine
SC 1754, National Insurance Company Limited v. Boghara Polyfab
Private Ltd., (2009) 1 SCC 267). [Paras 10-13]
The post 2015 amendment judgments to the Act, such as Mayavati
Trading Private Limited v. Pradyut Deb Burman, (2019) 8 SCC 714
and In Re: Interplay Between Arbitration Agreements under the
Arbitration and Conciliation Act, 1966 and the Indian Stamp Act,
1899, 2023 INSC 1066 provide that at the stage of application
under Section 8 of the Act, the court should take an approach
that focuses on bestowing jurisdiction over the Arbitral Tribunal,
and ousts their own jurisdiction – If jurisdiction is ousted, whether
it’s in terms of statutory framework (wherever applicable) is to be
examined – As long as there exists an arbitration agreement, the
courts must adopt an enabling approach and refer the parties to
the arbitration – As the dispute is held to be in personem, and not
in rem, the dispute is arbitrable in nature, and the Special Leave
Petition is dismissed. [Paras 14-17]
Case Law Cited
Kvaerner Cementation India Ltd. v. Bajranglal Agarwal and Anr.
(2012) 5 SCC 214; A. Ayyasamy v. A. Paramasivam & Ors. [2016]
11 SCR 521 : (2016) 10 SCC 386; Booz Allen and Hamilton Inc. v.
SBI Home Finance Limited & Ors. [2011] 7 SCR 310 : (2011) 5
[2025] 5 S.C.R. 1201
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
SCC 532; Vidya Drolia v. Durga Trading Corporation [2020] 11
SCR 1001 : (2021) 2 SCC 1; SBI General Insurance Co. Ltd. v.
Krish Spinning [2024] 7 SCR 840 : 2024 SCC OnLine SC 1754;
National Insurance Company Limited v. Boghara Polyfab Private
Limited [2008] 13 SCR 638 : (2009) 1 SCC 267; Mayavati Trading
Private Limited v. Pradyut Deb Burman (2019) 8 SCC 714; In Re :
Interplay Between Arbitration Agreements under the Arbitration
and Conciliation Act, 1966 and the Indian Stamp Act, 1899,
2023 INSC 1066 : [2023] 15 SCR 1081 – relied on.
List of Acts
Arbitration and Conciliation Act, 1996; Trade Marks Act, 1999.
List of Keywords
Arbitration; Fraud; Trademark infringement; Passing off; Contract;
Agreement; Section 16; Jurisdiction; Section 8 application;
Arbitrability; Ouster of jurisdiction.
Case Arising From
EXTRAORDINARY APPELLATE JURISDICTION: Special Leave
Petition (Civil) No. 13012 of 2025
From the Judgment and Order dated 09.01.2025 of the High Court
of Judicature at Madras in CRP No. 1272 of 2024
Appearances for Parties
Advs. for the Petitioners:
V. Prakash, Sr. Adv., Aneesh Renganathan, Ms. Swadha Gupta,
Karan Dang, Vishwam Mishra, Prabhat Kumar.
Judgment / Order of the Supreme Court
Order
J.B. Pardiwala, J.
1. This petition arises from the judgment and order passed by the
High Court of Judicature at Madras dated 09.01.2025 in C.R.P.
No. 1272 of 2024 by which the Civil Revision Petition filed by the
petitioners herein (original plaintiffs) came to be rejected thereby
affirming the order passed by the Commercial Court (District Judge
1202 [2025] 5 S.C.R.
Supreme Court Reports
Cadre), Coimbatore allowing application filed by the respondents
herein (original defendants) under Section 8 of the Arbitration and
Conciliation Act, 1996 (for short, ‘the Act of 1996’) and referring the
parties to arbitration.
2. It appears from the materials on record that the petitioners herein
instituted a suit being C.O.S. No. 147 of 2023 in the Commercial
Court seeking following reliefs:-
“(i) Permanent injunction restraining Defendant No. 1, by
himself, partners, business successors, servants, agents,
representatives and every other person claiming through
Defendant No. 1 to offer, sell, open any other shop with the
same name or for any other purpose using the plaintiff No.
1 mark in Application No. 3440505 of “SRI ANGANNAN
BIRIYANI HOTEL” or “ABM SRI ANGANNAN HOTEL” or
any other name format signifying the term ANGANNAN.
(ii) Permanent injunction restraining the Defendant No. 1
by himself, partners, successors in business, servants,
agents, representatives and every other person claiming
through the Defendant No. 1 from using or associating
himself with the mark in Application No. 3440505 of “SRI
ANGANNAN BIRIYANI HOTEL” OR “ABH SRI ANGANNAN
HOTEL” or any other term ANGANAN in any kind of social
media platform or any other media platform until the court
passes further orders.
(iii) to pay for damages of Rs. 20,00,000 /- (Rupees Twenty
Lakhs only) for the loss that the Plaintiffs had incurred due
to the use of the Trademark in Application No. 6440505
of “SRI ANGANNAN BIRIYANI HOTEL” and pass any
other order that this Hon’ble Court may deem fit and thus
render justice.
(iv) For costs of the suit.
(v) and pass such further or other orders as this Hon’ble
Court may deem fit and proper in the circumstances of
the case and thus render Justice.”
3. The defendants appeared before the Commercial Court and preferred
application under Section 8 of the Arbitration and Conciliation
(Amendment) Act, 2019 stating as under:-
[2025] 5 S.C.R. 1203
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
“APPLICATION FILED UNDER SECTION 8 OF THE
ARBITRATION AND CONCILIATION AMENDMENT ACT,
2019
I. Petitioner/1st Defendant
N. J. Sundaresan S/o Jagadeeswaran, Hindu, aged about
45 years, residing at Flat No. 69, Sai Gangotri Apts., N.S.R.
Road, Sai Baba Colony, Coimbatore 641 025.
The address for service of the Petitioner is same as
above and in care of his counsel Mr. P.R. Ramakrishnan /
Advocate, “Ram Prasad , No. 2, Ramar Koil Street, Ram
Nagar, Coimbatore - 641 009.
II. Respondents/ Plaintiffs
1. Mrs. K. Mangayarkarasi, W/o. Late Mr. N. Kadiravadivei,
Hindu, aged about 77 years, residing at A2/1, Sree
Annapporna Apartments, Bharathi Park, 1 st cross,
Saibaba Colony, Coimbatore- 641011 Presently residing
at No. 153, Lakshmi Mills Colony, Coimbatore South,
Pappanaickenpalayam, Coimbatore - 541037.
2. Mrs. K. M. Shredevi, D/o Late N. Kathiravadivel, Hindu,
aged about 48 Years, residing at Flat #503, Kanakadhara’s
Landmark Apts., Virat Nagar Colony, Saket Road, Kapra,
Hyderabad - 500 062,
Both Rep. by their Power Agent Mrs. Jaishree S, W /o.
Mr. Sandeep, Residing at 153, Lakshmi Mills Colony,
Pappanaickenpalayam, Coimbatore - 641 037.
III. Respondent/2nd Defendant
3. Mrs. Manonmani Angannan D/o Late N. Kathlravadivel,
Hindu, aged about 50 years, residing at 4 704 Antebeilum
lane, Mansfield, 75063, Texas, USA.
The address for service of the Respondent is same as
above. FOR THE REASONS stated in the accompanying
affidavit, the petitioner prays that this Honorable Court
may be pleased to refer the parties to Arbitration and thus
render justice.
1204 [2025] 5 S.C.R.
Supreme Court Reports
LIST OF DOCUMENTS
1. 20.09.2017 Deed of Assignment of Trade Marks
(Original)
2. 14.10.2019 Deed of Assignment of Trade Marks
(Original)”
4. The Commercial Court vide order dated 06.02.2024 allowed the
Section 8 application filed by the respondents herein holding as under:-
“15. Right in rem or Right in personam:- Applying the said
principle of law, this court has to consider the facts of the
case on hand. The petitioner has referred Ex.P1 and Ex.P2
Deed of Assignment of Trade Marks dated 14.10.2019 and
dated 20.09.2017 respectively, which contain Arbitration
Clauses. The petitioner claims right through the said
Assignment deeds. The respondents contended in the
counter that they signed in a blank stamp paper, which
was fabricated as Assignment deeds and in Ex. R8 Legal
Notice, they claimed that the petitioner fraudulently included
his name in the Assignment deeds and obtained signature
of the 1st respondent in the Assignment deeds. Further,
the respondents stated in the plaint cause of action that
the signature of the 1st respondent was forged by the
petitioner. The respondents 1 and 2 filed the suit for
permanent injunction in respect of trade mark and not suit
for declaration of any trade mark. The said suit is filed for
the reliefs against infringement and passing off, which by
their very nature would fall within the jurisdiction of the
arbitrator. The right that is asserted by the petitioner is not
a right that emanates from the Trademark Act, but a right
that emanates from Ex.P1 and Ex.P2 Assignment deeds.
The assignment of a trademark is by a contract and not by
a statutory act. It does not involve any exercise of sovereign
functions of the State. It cannot be said that the disputes
are not arbitrable. Further, no relief has been prayed for
declaration to set aside the said Assignment deeds.
16. The counsel for respondents contended that the dispute
pertained to the scope of trade mark registration and thus,
[2025] 5 S.C.R. 1205
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
any decision on the same would operate in rem as it would
confer an absolute right on the winning party. However, this
court feels that that firstly, the dispute was addressed, more
or less exclusively, around two contractual arrangements,
namely. Assignment deeds. Secondly, the remedy is sought
not on the ground that the petitioner is using deceptively
similar trade marks, but rather that the right to use the trade
mark was deliberated on a different family group. Thirdly,
even if there was any reliance on provisions of the Trade
Marks Act, 1999, the “essential infraction” as alleged was
not of provisions of the Trade Marks Act, 1999, but of the
provisions of the agreements. Thus, this court is of the
view that any effective adjudication of the disputes would
be dreadful without reference to the two assignment deeds.
On the question of arbitrability of IPR disputes, the court
finds that the dispute in the present case does not be in
connection with the grant or registration of trade marks,
and was therefore not affected by the concern identified
in Vidya Drolia or Ayyasamy cases. Further, there was no
connection of sovereign functions, and as it did not fall
under any of the categories of disputes excepted by the
Hon’ble Supreme Court of India in Vidya Drolia.
17. Non Signatory can be party to Arbitration:- Admittedly,
the petitioner and respondents 1 and 2 are parties to
the said documents, but the 3rd respondent is not party
to the said documents. The respondents also produced
the copies of the same documents as Ex.R2 and Ex.R3.
Further, the 1st respondent also executed Ex.R4 Copy
Gift Deed dated 13.10.2020 and Ex.R5 Copy of Gift Deed
dated 31.01.2023 in favour of the respondents 2 and 3.
Ex.R6 Letter of Registrar. Ex.R5 and Ex.R5 reveal that the
applications were filed on 02.03.2023 and 15.05.2023 for
transfer of changes in the Trade mark. Ex.R8 to Ex.R15
are documents to show the legal action taken against the
petitioner. Ex.R16 is the Power of Attorney deed. Ex.A17
State of Account. Thus, the right, title and interest of the 1st
interest has been transferred in favour of the respondents
2 and 3 and they are successors or legal representatives
of the said 1st respondent through Gift deeds. When the
1206 [2025] 5 S.C.R.
Supreme Court Reports
1st and 2nd respondents are parties to the disputed
Assignment deeds, the 3rd respondent also become party to
the said Assignment deeds, who derived 50% right of the
1st respondent. She cannot claim that she is non signatory
of Ex.P1 and Ex.P2 = Ex.R2 and Ex.R3. Admittedly, no
pleading in the counter of the respondents in respect of
non signatory of the 3rd respondent. Further, Sec.8 of
Arbitration and Conciliation Act says that “…if a party to
the arbitration agreement or any person claiming through
or under him....” Thus, this court feels that even though,
the 3rd respondent is not a party to the Assignment deeds,
in the absence of any pleadings, in view of the Gift deed
and sailing with the other respondents and successor/
legal representative of the 1st respondent, she can also
be subjected to arbitration proceedings.
18. Thus, it is clear that the disputed assignment deeds
have to be analyzed in the present suit and the present
suit is filed based on the said assignment deeds and
subsequent events between the parties. Considering all
aspects this Court is of the view that when the disputed
assignment deeds have to be analyzed in view of the
clause No. 15 regarding Arbitration Clause, this Court has
no jurisdiction and such, the parties have to be directed to
resolve their dispute before the Arbitral Tribunal.
19. In the result, this application is allowed. No costs.”
5. The petitioners being dissatisfied with the order passed by the
Commercial Court referred to above challenged the same before
the High Court by way of a civil revision application. The High Court
rejected the revision application vide the impugned judgment holding
as under:-
“18. It is not in dispute that the 1st Petitioner/Plaintiff is
the Proprietrix of the Trademark, after her father Late
Angannan, who died in 1986. The 1st Petitioner’s husband,
Kathirvadivel took over the business in 1984, after the
death of Angannanm and till he died in 1990, he was
assisted by his brother, Jagadeeswaran in the business
till he died in 2019. The 1st Respondent, Sundaresan, is
the son of Jagadeeswaran. Mangayarkarasi had a son,
[2025] 5 S.C.R. 1207
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
Muralidharan. He died leaving behind two daughters
namely, Jaishree and Sreemathi. Jaishree represents the
Petitioners, as power agent in this proceeding. The two
daughters of Mangayarkarasi are Manonmani, who is the
2nd Respondent and Sreedevi, who is the 2nd Petitioner.
19. On perusal of the records it is seen that the Petitioners /
Plaintiffs filed a Suit in C.O.S. No. l47 of 2023 before the
Commercial Court (District Judge Cadre), Coimbatore,
for permanent injunction, restraining the defendants
from interfering or using the Plaintiff’s Trademark of
“Sri Angannan Briyani Hotel” and to pay damages of
Rs.20,00,000/- for the loss that the plaintiffs incurred
due to the use of the Trademark. Pending Suit, the 1st
Respondent / 1st Defendant filed an Application in I.A.No.9
of 2023, praying to refer the parties to Arbitration, which
was allowed by the Commercial Court, District Judge,
Coimbatore. Aggrieved over the same, the Petitioners are
before this Court with the present Civil Revision Petition.
20. On perusal of Clause 15 of “Deed of Assignment of
Trade Marks”, dated 20.09.2017 and 14.10.2019, it is seen
that in the event of any dispute between the parties, parties
agreed to get such issues resolved. through Arbitration and
in the event of not finding a resolution through Arbitration,
the Court having jurisdiction in Coimbatore to the exclusion
of all other Courts. The Clause 15 of “Deed of Assignment
of Trade Marks”, dated 14.10.2019, contains Arbitration
Clause, which reads as follows:-
Arbitration Clause, which reads as follows:-
15. “Dispute Resolution”
“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 and in the event of not finding a
resolution through arbitration, the Court having
jurisdiction in Coimbatore to the exclusion of
all other Courts.”
1208 [2025] 5 S.C.R.
Supreme Court Reports
21. Section 8 of the Arbitration and Conciliation Act, 1996
reads as under:-
“8. Power to refer parties to arbitration where
there is an arbitration agreement.-
(1) A judicial authority, before which an action
is brought in a matter which is the subject of
an arbitration agreement shall, if a party to the
arbitration agreement or any person claiming
through or under him, so applies not later than
the date of submitting his first statement on the
substance of the dispute, then, notwithstanding
any judgment, decree or order of the Supreme
Court or any Court, refer the parties to arbitration
unless it finds that prima facie no valid arbitration
agreement exists.
(2) The application referred to in sub-section (1)
shall not be entertained unless it is accompanied
by the original arbitration agreement or a duly
certified copy thereof;
Provided that where the original arbitration
agreement or a certified copy thereof is not
available with the party applying for reference
to arbitration under sub-section (1), and the said
agreement or certified copy is retained by the
other party to that agreement, then, the party so
applying shall file such application along with a
copy of the arbitration agreement and a petition
praying the Court to call upon the other party to
produce the original arbitration agreement or its
duly certified copy before that Court.
(3) Notwithstanding that an application has
been made under sub-section (1) and that the
issue is pending before the judicial authority,
an arbitration may be commenced or continued
and an arbitral award made.”
22. The suit has been filed by the Petitioners / Plaintiffs
by suppressing the Arbitration Clause. The right of the
[2025] 5 S.C.R. 1209
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
Respondents emanates out of the agreement between the
parties. When there is a valid contract between the parties
providing for Arbitration, all claims including enforceability
can only be adjudicated before an Arbitrator. Though the
Petitioners disputed the execution of the agreement, the
existence of the agreement is not disputed. An Arbitration
Clause which forms a part of the Agreement shall be
treated as an agreement independent of the other terms
of the Contract. Further, the Arbitral Tribunal has power
to decide on any objections with respect to the existence
of validity of the agreement when there is an Arbitration
Clause. The petitioners and Respondents having signed
in the ‘Assignment Deed of Trademark’, which contains
the Clause regarding settlement of dispute through
arbitration, the Court below is right in referring the matter
to the Arbitral Tribunal.
23. As regards the contention of the petitioners that the
Assignment Deed is brought fraudulently and therefore,
when fraud is pleaded, the matter cannot be referred to
Arbitration is concerned, no doubt, mere plea of fraud
is insufficient to avoid an arbitration proceedings. The
contention of the petitioners that the 1st Petitioner was
misled to signing blank papers and the 1st Respondent filled
up the same by including his name and the 1st Respondent
has forged a fabricated deed as an irrevocable deed, cannot
be countenanced for the simple reason that the 1st Petitioner
wanted to assign the fabricated deed as an irrevocable
deed, cannot be countenanced for the simple reason that
the 1st Petitioner wanted to assign the Trademark is not in
dispute and the signatures not disputed. Once 1st Petitioner
admitted her signatures and the document ex facie shows
that it has been properly executed and the 1st Petitioner
is also a party to the document and the Assignment Deed
is duly executed and attested by a Notary Public, prima
facie the contention of the Petitioners cannot be accepted.
Further, the 1st Petitioner/K. Mangayarkarasi and the 2nd
Petitioner Sreedevi and her Husband Ajith received several
payments from, the 1st Respondent periodically, which is
evident from the statement of extract of the payments made
1210 [2025] 5 S.C.R.
Supreme Court Reports
by the 1st Respondent from 19.03.2021 to 23.02.2023.
24. The allegation of fraud must have some implication
in public domain to oust jurisdiction of arbitration. If an
allegation of fraud exists directly between the parties
concerned, the same will not be termed to be of serious
nature of fraud and hence would not be barred for
arbitration. At this juncture, it is worthwhile to refer the
decision of the Hon’ble Apex Court in Sushma Shivkumar
Daga case (cited supra). Further, relying on a earlier
Judgment of the Apex Court in Rashid Raza’s case (cited
supra) the Supreme Court holds that two parties in an
Agreement. The first is that the plea perneats the entire
contract option of the arbitration agreement rendering it
void or secondly whether the allegation of fraud touches
upon the internal affairs of the parties inter se having no
implication in the public domain. The allegation must have
some implication in public domain to oust jurisdiction of
arbitration. If an allegation of fraud exists directly between
the parties concerned, the same will not be termed to be
of serious nature of fraud and hence would not be barred
for arbitration. Further, the Apex Court in the Judgment in
Deccan Paper Mills’s case (cited supra) held that where
the suit is inter parties with no public domain, fraud as
laid down in the case of Avitech Past Studioz Ltd (cited
supra)) is not applicable. Where rectification of instrument
under Section 31 of the Specific Relief Act is strictly action
inter parties or by person who obtained derivative title
from parties, such action is in personam and the dispute
is arbitrable.
25. The Law laid down by the Apex Court in the aforesaid
Judgments squarely apply to the case on hand. Admittedly,
the dispute between the parties arise out of a contract
of assignment. There is no public cause involved in
this dispute. The question involved is one between the
parties arise out of a contract of assignment. There is
no public cause involved in this dispute. The question
involved is one arising under the contract of assignment
and its validity and binding nature and what is the effect
of several payment received by the assignor from the 1st
[2025] 5 S.C.R. 1211
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
Respondent, as assignee/on various dates, which are
matters to be considered by the Arbitral Tribunal and this
is undoubtedly covered by the arbitration clause. The right
claimed by the 1st Respondent is contractual as assignee
of a Trademark. Disputes raised by the Petitioners is that
there was no intention to assign the trademark and that too
irrevocably to the 1st Respondent, but at the same time,
the assignment in favour of the 2nd Petitioner is accepted.
This renders the position of the Petitioners very week
insofar as the merits of the claim are concerned. This
despite is arbitrable and factual issues as also validity of
the assignment and rights flowing from it can be decided
by the Arbitral Tribunal. Further, the Suit is filed for the
reliefs against the infringement and passing off, which by
their very nature would fall within the jurisdiction of the
Arbitrator. 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.
26. As regards the contention of the Petitioners that
disputes involved in use of trademark is not arbitrable is
concerned, the Petitioners rely on a passing reference
in Ayyasamy’s case (cited supra), where the Apex Court
held that where there are allegations of fraud and such
allegations are merely alleged, it may not be necessary
to nullify the effect of arbitration agreement between
the parties and such issues can be determined by the
Arbitral Tribunal. This judgment supports the plea of the
1st Respondent, who wants the dispute to be referred to
Arbitration. Though fraud was pleaded in that proceeding,
the Supreme Court concluded that mere allegation of fraud
was not sufficient to detract from the obligations of the
parties to submit their disputes to arbitration. Moreover,
non-arbitrable disputes dealt with in Booz Allen’s case
and Vidya Doha’s case. In Booz Allen’s case, the Apex
Court dealt with the disputes, which are arbitrable and
which non-arbitrable. This is clarified by a Three Judge
Bench Decision of the Apex Court in Vidya Doha’s case.
1212 [2025] 5 S.C.R.
Supreme Court Reports
In view of the foregoing reasons, this Court is not inclined
to interfere with the findings of the Court below.
27. In the result, the Civil Revision Petition stands
dismissed. Consequently, the connected miscellaneous
petitions are also dismissed. However, there shall he no
order as to costs.”
6. In such circumstances referred to above, the petitioners are before
this Court with the present petition.
7. Heard Mr. V. Prakash, the learned senior counsel appearing for the
petitioners.
8. The law on the subject is no longer res integra. When 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 then what is the court expected to do in law has been explained
very succinctly by this Court in Kvaerner Cementation India Ltd. v.
Bajranglal Agarwal and Anr. reported in (2012) 5 SCC 214, as
under:-
“3. There cannot be any dispute that in the absence of
any arbitration clause in the agreement, no dispute could
be referred for arbitration to an Arbitral Tribunal. But,
bearing in mind the very object with which the Arbitration
and Conciliation Act, 1996 has been enacted and the
provisions thereof contained in Section 16 conferring the
power on the Arbitral Tribunal to rule on its own jurisdiction,
including ruling on any objection with respect to existence
or validity of the arbitration agreement, we have no doubt
in our mind that the civil court cannot have jurisdiction to
go into that question.
4. A bare reading of Section 16 makes it explicitly clear
that the Arbitral Tribunal has the power to rule on its
own jurisdiction even when any objection with respect to
existence or validity of the arbitration agreement is raised,
and a conjoint reading of sub-sections (2), (4) and (6) of
Section 16 would make it clear that such a decision would
be amenable to be assailed within the ambit of Section
34 of the Act.
[2025] 5 S.C.R. 1213
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
5. In this view of the matter, we see no infirmity in the
impugned order so as to be interfered with by this Court.
The petitioner, who is a party to the arbitral proceedings
may raise the question of jurisdiction of the arbitrator as
well as the objection on the ground of non-existence of any
arbitration agreement in the so-called dispute in question,
and on such an objection being raised, the arbitrator would
do well in disposing of the same as a preliminary issue so
that it may not be necessary to go into the entire gamut
of arbitration proceedings.”
(Emphasis supplied)
9. What would be the position in case a suit is filed by the plaintiff and
in the said suit, the defendant files an application under Section
8 of the Act of 1996 questioning the maintainability of the suit on
the ground that party had agreed to settle the disputes through the
means of arbitration having regarding to the existence of an arbitration
agreement between them? This has been very elaborately explained
by this Court in A. Ayyasamy v. A. Paramasivam & Ors. reported
in (2016) 10 SCC 386. The Court held as under:-
“13. …Obviously, in such a case, the court is to pronounce
upon arbitrability or non-arbitrability of the disputes.
14. In the instant case, there is no dispute about the
arbitration agreement inasmuch as there is a specific
arbitration clause in the partnership deed. However,
the question is as to whether the dispute raised by the
respondent in the suit is incapable of settlement through
arbitration. As pointed out above, the Act does not make
any provision excluding any category of disputes treating
them as non-arbitrable. Notwithstanding the above, the
courts have held that certain kinds of disputes may not be
capable of adjudication through the means of arbitration.
The courts have held that certain disputes like criminal
offences of a public nature, disputes arising out of illegal
agreements and disputes relating to status, such as
divorce, cannot be referred to arbitration. The following
categories of disputes are generally treated as non-
arbitrable [See O.P. Malhotra on ‘The Law and Practice
1214 [2025] 5 S.C.R.
Supreme Court Reports
of Arbitration and Conciliation’, 3rd Edn., authored by Indu
Malhotra. See also note 10 ibid.]:
(i) patent, trade marks and copyright;
(ii) anti-trust/competition laws;
(iii) insolvency/winding up;
(iv) bribery/corruption;
(v) fraud;
(vi) criminal matters.
Fraud is one such category spelled out by the decisions
of this Court where disputes would be considered as
non-arbitrable.
15. “Fraud” is a knowing misrepresentation of the truth or
concealment of a material fact to induce another to act to
his detriment. Fraud can be of different forms and hues.
Its ingredients are an intention to deceive, use of unfair
means, deliberate concealment of material facts, or abuse
of position of confidence. The Black’s Law Dictionary
defines “fraud” as a concealment or false representation
through a statement or conduct that injures another who
relies on it [See Ramesh Kumar v. Furu Ram, (2011) 8
SCC 613 : (2011) 4 SCC (Civ) 303 (a decision rendered
under the Arbitration Act, 1940).] However, the moot
question here which has to be addressed would be as to
whether mere allegation of fraud by one party against the
other would be sufficient to exclude the subject-matter of
dispute from arbitration and decision thereof necessary
by the civil court.”
(Emphasis supplied)
10. In Booz Allen and Hamilton Inc. v. SBI Home Finance Limited &
Ors., (2011) 5 SCC 532, this Court in the context of Section 8 of the
Act of 1996 considered the question as to whether the subject matter
was ‘arbitrable’ i.e. arbitrable by private forum (arbitral tribunal). In
this context, the Court discussed the term ‘arbitrability’ by pointing
out three facets thereof namely:-
[2025] 5 S.C.R. 1215
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
(1) whether the disputes are capable of adjudication and settlement
by arbitration?
(2) whether the disputes are covered by the arbitration agreement?
(3) whether the parties have referred the disputes to arbitration?
11. The Court held as under:-
“35. The Arbitral Tribunals are private fora chosen
voluntarily by the parties to the dispute, to adjudicate
their disputes in place of courts and tribunals which are
public fora constituted under the laws of the country.
Every civil or commercial dispute, either contractual or
non-contractual, which can be decided by a court, is in
principle capable of being adjudicated and resolved by
arbitration unless the jurisdiction of the Arbitral Tribunals
is excluded either expressly or by necessary implication.
Adjudication of certain categories of proceedings are
reserved by the legislature exclusively for public fora
as a matter of public policy. Certain other categories of
cases, though not expressly reserved for adjudication
by public fora (courts and tribunals), may by necessary
implication stand excluded from the purview of private fora.
Consequently, where the cause/dispute is in arbitrable,
the court where a suit is pending, will refuse to refer the
parties to arbitration, under Section 8 of the Act, even
if the parties might have agreed upon arbitration as the
forum for settlement of such disputes.
36. The well-recognised examples of non-arbitrable disputes
are : (i) disputes relating to rights and liabilities which give
rise to or arise out of criminal offences; (ii) matrimonial
disputes relating to divorce, judicial separation, restitution
of conjugal rights, child custody; (iii) guardianship matters;
(iv) insolvency and winding-up matters; (v) testamentary
matters (grant of probate, letters of administration and
succession certificate); and (vi) eviction or tenancy matters
governed by special statutes where the tenant enjoys
statutory protection against eviction and only the specified
courts are conferred jurisdiction to grant eviction or decide
the disputes.
1216 [2025] 5 S.C.R.
Supreme Court Reports
37. It may be noticed that the cases referred to above
relate to actions in rem. A right in rem is a right exercisable
against the world at large, as contrasted from a right in
personam which is an interest protected solely against
specific individuals. Actions in personam refer to actions
determining the rights and interests of the parties
themselves in the subject-matter of the case, whereas
actions in rem refer to actions determining the title to
property and the rights of the parties, not merely among
themselves but also against all persons at any time
claiming an interest in that property. Correspondingly,
a judgment in personam refers to a judgment against a
person as distinguished from a judgment against a thing,
right or status and a judgment in rem refers to a judgment
that determines the status or condition of property which
operates directly on the property itself. (Vide Black’s Law
Dictionary.)
38. Generally and traditionally all disputes relating to
rights in personam are considered to be amenable to
arbitration; and all disputes relating to rights in rem are
required to be adjudicated by courts and public tribunals,
being unsuited for private arbitration. This is not however
a rigid or inflexible rule. Disputes relating to subordinate
rights in personam arising from rights in rem have always
been considered to be arbitrable.”
(Emphasis supplied)
12. In Vidya Drolia v. Durga Trading Corporation reported in (2021)
2 SCC 1, this Court held that the grant and issue of patents and
registration of trademarks are matters that fall within the sovereign
or government functions and have erga omnes effect. Prima facie,
the nature of disputes sought to be raised by the petitioners cannot
be considered as actions in rem. The assumption that all matters
relating to trademarks are outside the scope of arbitration is plainly
erroneous. There may be disputes that may arise from subordinate
rights such as licences granted by the proprietor of a registered
trademark. Undisputedly, these disputes, although, involving the
right to use trademarks, are arbitrable as they relate to rights and
obligations inter se the parties to a licence agreement.
[2025] 5 S.C.R. 1217
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
13. At this juncture, we would like to refer to the recent decision of this
Court in SBI General Insurance Co. Ltd. v. Krish Spinning reported
in 2024 SCC OnLine SC 1754, wherein one of us, J.B. Pardiwala, J.,
was a part of the Bench, which considered, inter alia, the issue as
to whether a party could seek referral of a matter to arbitration,
having previously executed a discharge voucher as the full and
final settlement of all pending dues. Referring to the position of law
elucidated in the case of National Insurance Company Limited v.
Boghara Polyfab Private Limited reported in (2009) 1 SCC 267,
the Court observed that the aspect of full and final settlement having
been obtained by fraud or coercion itself gives rise to an arbitrable
issue and thus does not act as a bar to arbitration. The relevant
paragraphs are reproduced hereinbelow:-
“57. The position that emerges from the aforesaid
discussion is that there is no rule of an absolute kind
which precludes arbitration in cases where a full and final
settlement has been arrived at. In Boghara Polyfab (supra),
discussing in the context of a case similar to the one at
hand, wherein the discharge voucher was alleged to have
been obtained on ground of coercion, it was observed that
the discharge of a contract by full and final settlement by
issuance of a discharge voucher or a no-dues certificate
extends only to those vouchers or certificates which are
validly and voluntarily executed. Thus, if the party said
to have executed the discharge voucher or the no dues
certificate alleges that the execution was on account of
fraud, coercion or undue influence exercised by the other
party and is able to establish such an allegation, then the
discharge of the contract by virtue of issuance of such a
discharge voucher or no dues certificate is rendered void
and cannot be acted upon.
58. It was further held in Boghara Polyfab (supra) that
the mere execution of a full and final settlement receipt
or a discharge voucher would not by itself operate as a
bar to arbitration when the validity of such a receipt or
voucher is challenged by the claimant on the ground of
fraud, coercion or undue influence. In other words, where
the parties are not ad idem over accepting the execution
1218 [2025] 5 S.C.R.
Supreme Court Reports
of the no-claim certificate or the discharge voucher, such
disputed discharge voucher may itself give rise to an
arbitrable dispute.”
(Emphasis supplied)
14. Further, referring to the time-sensitive nature of arbitration proceedings
and the broad jurisdiction of arbitral tribunals under Section 16 of
the Act of 1996, the Court observed that the aspects like full and
final settlement, frivolity or dishonesty in litigation, etc. were well
within the domain of the arbitral tribunal to consider and the courts,
acting under Section 11 of the Act of 1996 must limit their scope of
examination merely to ascertaining the existence of the arbitration
agreement. The approach taken by this Court in Krish Spinning
(supra) not only furthers the interpretation adopted by this Court
in its previous decisions in Mayavati Trading Private Limited v.
Pradyut Deb Burman reported in (2019) 8 SCC 714 and In Re :
Interplay Between Arbitration Agreements under the Arbitration
and Conciliation Act, 1966 and the Indian Stamp Act, 1899
reported in 2023 INSC 1066, but also gives meaningful effect to the
change brought about by the 2015 amendment to the Act of 1996.
The relevant paragraphs are reproduced hereinbelow:-
“123. The power available to the referral courts has to be
construed in the light of the fact that no right to appeal is
available against any order passed by the referral court
under Section 11 for either appointing or refusing to
appoint an arbitrator. Thus, by delving into the domain of
the arbitral tribunal at the nascent stage of Section 11, the
referral courts also run the risk of leaving the claimant in a
situation wherein it does not have any forum to approach
for the adjudication of its claims, if it Section 11 application
is rejected.
124. Section 11 also envisages a time-bound and
expeditious disposal of the application for appointment
of arbitrator. One of the reasons for this is also the fact
that unlike Section 8, once an application under Section
11 is filed, arbitration cannot commence until the arbitral
tribunal is constituted by the referral court. This Court, on
various occasions, has given directions to the High Courts
for expeditious disposal of pending Section 11 applications.
[2025] 5 S.C.R. 1219
K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr.
It has also directed the litigating parties to refrain from
filing bulky pleadings in matters pertaining to Section 11.
Seen thus, if the referral courts go into the details of issues
pertaining to “accord and satisfaction” and the like, then it
would become rather difficult to achieve the objective of
expediency and simplification of pleadings.
125. We are also of the view that ex-facie frivolity and
dishonesty in litigation is an aspect which the arbitral
tribunal is equally, if not more, capable to decide upon
the appreciation of the evidence adduced by the parties.
We say so because the arbitral tribunal has the benefit
of going through all the relevant evidence and pleadings
in much more detail than the referral court. If the referral
court is able to see the frivolity in the litigation on the basis
of bare minimum pleadings, then it would be incorrect
to doubt that the arbitral tribunal would not be able to
arrive at the same inference, most likely in the first few
hearings itself, with the benefit of extensive pleadings and
evidentiary material.”
(Emphasis supplied)
15. The law is well settled that allegations of fraud or criminal wrongdoing
or of statutory violation would not detract from the jurisdiction of
the arbitral tribunal to resolve a dispute arising out of a civil or
contractual relationship on the basis of the jurisdiction conferred by
the arbitration agreement.
16. Once an application in due compliance with Section 8 of the Act of
1996 is filed, the approach of the civil court should be not to see
whether the court has jurisdiction. It should be to see whether its
jurisdiction has been ousted. There is a lot of difference between the
two approaches. Once it is brought to the notice of the court that its
jurisdiction has been taken away in terms of the procedure prescribed
under a special statute, the civil court should first see whether there
is ouster of jurisdiction in terms or compliance with the procedure
under the special statute. The general law should yield to the special
law — generalia specialibus non derogant. In such a situation, the
approach shall not be to see whether there is still jurisdiction in the
civil court under the general law. Such approaches would only delay
1220 [2025] 5 S.C.R.
Supreme Court Reports
the resolution of disputes and complicate the redressal of grievance
and of course unnecessarily increase the pendency in the court.
[See:- A. Ayyasamy (supra)]
17. 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 by enforcing the terms of the contract.
There is no element of discretion left in the court or judicial authority
to obviate the legislative mandate of compelling parties to seek
recourse to arbitration.
18. 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.
19. The Special Leave Petition stands, accordingly, dismissed.
20. Pending application(s), if any, stands disposed of.
Result of the case: Special leave petition dismissed.
†
Headnotes prepared by: Niti Richhariya, Hony. Associate Editor
(Verified by: Kanu Agrawal, Adv.)
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "Arbitration"Sign in to search