“Arbitrability of Trademark-Assignment Disputes – Even Where Fraud Is Alleged”
Commentary on K. Mangayarkarasi v. N.J. Sundaresan (2025 INSC 687)

1. Introduction

The Supreme Court’s order in K. Mangayarkarasi v. N.J. Sundaresan settles a recurring controversy: whether civil courts can entertain suits concerning trademark-assignment disputes, particularly where allegations of fraud and forgery are raised, or whether parties must be referred to arbitration in view of an arbitration clause embedded in the assignment deed.

The litigants comprise members of the extended “Angannan” family, proprietors of the reputed “Sri Angannan Biriyani Hotel” mark:

• Petitioners (plaintiffs below): K. Mangayarkarasi (mother) and her daughter K. M. Sreedevi.
• Respondents (defendants below): N. J. Sundaresan (nephew) and Manonmani (another daughter).

The petitioners sued in the Commercial Court (Coimbatore) for permanent injunction and damages alleging trademark infringement and passing-off. The defendants invoked an arbitration clause contained in two registered Deeds of Assignment (2017 & 2019) and succeeded in:

1. Getting the Commercial Court to allow a Section 8 application under the Arbitration and Conciliation Act, 1996 (“1996 Act”).
2. Having the Madras High Court affirm that referral.

The petitioners approached the Supreme Court in Special Leave Petition (Civil) No. 13012/2025. The Court dismissed the SLP, thereby endorsing the High Court’s view that the dispute is arbitrable despite allegations of fraud and despite the fact that trademarks are statutory rights.

2. Summary of the Judgment

Delivering a brief but precedent-laden order, Pardiwala J. held:

• Section 8 mandates referral to arbitration once an arbitration agreement exists and is prima facie valid; courts must resist entertaining the suit.
• Allegations of fraud or forgery inter se the parties do not render the dispute non-arbitrable (relying on A. Ayyasamy, Rashid Raza, Deccan Paper Mills).
• Trademark disputes are not per se non-arbitrable; only actions in rem (grant/registration) are reserved for statutory fora. Assignment disputes concern contractual rights in personam.
• The existence, validity or fraudulent procurement of the assignment deed can be decided by the arbitral tribunal under Section 16 (“kompetenz-kompetenz”).
• The High Court’s refusal to interfere was correct; SLP dismissed with costs.

3. Detailed Analysis

3.1 Precedents Cited & Their Influence

1. Kvaerner Cementation India Ltd. v. Bajranglal Agarwal, (2012) 5 SCC 214 – Affirmed the exclusive jurisdiction of the arbitral tribunal to rule on its own jurisdiction under Section 16.
2. A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386 – Drew a distinction between mere allegations of fraud (arbitrable) and serious, public-domain fraud (possibly non-arbitrable). The Supreme Court relies on this to reject the petitioners’ “fraud exception”.
3. Booz Allen & Hamilton Inc. v. SBI Home Finance, (2011) 5 SCC 532 – Laid down the “six non-arbitrable categories” and the in rem / in personam test. The Court borrows this taxonomy to classify trademark-assignment disputes as in personam.
4. Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1 – Reiterated arbitrability tests and clarified that not all intellectual-property matters are barred; only those impacting sovereign grant/registration are.
5. SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754 – Modern reading of post-2015 Section 11/Section 8 jurisdiction; courts should confine themselves to verifying the existence of an arbitration agreement.

3.2 Court’s Legal Reasoning

a) Section 8 is mandatory. Once a party “applies not later than filing the first statement on the substance of the dispute” and produces the arbitration agreement, the judicial authority shall refer parties to arbitration unless “prima facie no valid agreement exists”. The Commercial Court and High Court correctly found an operative clause in Clause 15 of both deeds.

b) “Competence-Competence”. Section 16 empowers the arbitral tribunal to rule on its own jurisdiction, including challenges to the validity of the arbitration agreement. Thus any argument that the deeds were forged is for the arbitrator, not the civil court.

c) Fraud Exception Narrowed. Fraud that is:

• Pervasive and vitiates the entire contract or
• Has public-domain ramifications,

may take the dispute outside arbitration. Here, allegations centered on intra-family deception, not on public rights or state functions; hence arbitrable.

d) Trademark rights do not convert the dispute into an action in rem. Assignment of a registered mark is voluntary and contractual. The plaintiffs sought injunction/damages (private relief), not rectification of the register. Therefore, no statutory bar to arbitration.

e) Non-signatory Issue. Section 8 covers “any person claiming through or under” a party. Respondent 3 derived title under a gift deed and can be compelled to arbitrate notwithstanding the absence of her signature.

3.3 Likely Impact of the Decision

• IP-Arbitration Friendly. Confirms that disputes about assignment, licensing, or infringement between contracting parties fall within arbitration, provided registration integrity is not questioned.
• Narrowed ‘Fraud’ Shield. Litigants can no longer stall arbitration merely by alleging forgery/fraud unless they demonstrate public implications.
• Commercial Court Docket Lightened. Commercial Courts, especially in major IP hubs (Delhi, Mumbai, Chennai, Bengaluru), will refer more IP-linked suits to arbitration where contracts so stipulate.
• Due Diligence Imperative. Parties assigning IP must recognize that arbitration clauses survive and will bind not only signatories but successors and transferees.
• Consistency with Global Trends. Aligns Indian jurisprudence with jurisdictions like Singapore & UK that regard most IP-licence disputes as arbitrable.

4. Complex Concepts Simplified

• Arbitrability. Whether a dispute can be decided by a private arbitrator instead of a public court. Determined by (i) nature of dispute (public vs private rights), (ii) existence of arbitration agreement, (iii) legislative intent.
• Action in rem vs in personam. • In rem: determines rights against the world (e.g., grant of patent, cancellation of trademark registration). • In personam: determines rights between specific parties (e.g., breach of licence). Courts reserve in rem matters; arbitrators can handle in personam.
• Section 8 (1996 Act). Obliges a court to send parties to arbitration when sued despite an arbitration agreement, provided the application is timely and the agreement is prima facie valid.
• Kompetenz-Kompetenz (Section 16). The arbitrator’s power to decide its own jurisdiction, including validity of the arbitration clause.
• Fraud Exception. Historically a bar to arbitration; modern cases limit it only to serious, public-dimension fraud.

5. Conclusion

The Supreme Court’s dismissal of the SLP in K. Mangayarkarasi crystallises two key propositions:

1. Contractual disputes over the assignment (or licensing) of trademarks, even when peppered with allegations of forgery or fraud, remain arbitrable.
2. Civil courts must confine themselves to a threshold review of the arbitration agreement; deeper merits—fraud, coercion, entitlement—are within the arbitral tribunal’s territory.

By reinforcing the mandatory language of Sections 8 and 16, and by adopting a pragmatic in personam test for IP matters, the decision advances India’s pro-arbitration stance and provides clarity to businesses relying on private dispute-resolution mechanisms in intellectual-property transactions.