Supreme Court: The assumption that all matters relating to trademarks are outside the scope of arbitration, is plainly erroneous.

The Petitioners instituted a commercial suit, inter alia for permanent injunction against the Defendants for use of the Petitioners trademark and consequential damages. 

The Defendants preferred application under Section 8 of the Arbitration and Conciliation (Amendment) Act, 2019.  The petitioners alleged that that they had signed in a blank stamp paper, which was fabricated as Assignment deeds. 

The court observed that the Defendants claimed right through two contractual arrangements, namely, Assignment deeds and 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. As the suit was filed based on the said assignment deeds and subsequent events between the parties, the court held the disputed assignment deeds will have to be analysed. In view of the Arbitration Clause, the parties were directed to resolve their dispute before the Arbitral Tribunal.  

The petitioners challenged the said order by way of a civil revision application, which also came to be rejected vide the impugned judgment.  

In the impugned order, the court held that though the execution of the agreement is disputed, the existence of the agreement is not. The parties have signed the ‘Assignment Deed of Trademark’, which contains the Clause regarding settlement of dispute through arbitration, and therefore the Court was right in referring the matter to the Arbitral Tribunal.   The court dismissed the contention that disputes involved in use of trademark are not arbitrable and reiterated that mere allegations will not nullify the effect of arbitration agreement between the parties and such issues can be determined by the Arbitral Tribunal. 

The impugned order was challenged in the Supreme Court, who upheld the order.  

 The court relied upon the findings inter alia reported in  In Re : Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1966 and the Indian Stamp Act, 1899 [ 2023 INSC 1066],  which held that  

“ 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) “ 

The court reiterated 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. 

In The Supreme Court of India 

Extraordinary Appellate Jurisdiction 

Special Leave Petition (Civil) No. 13012 Of 2025 

K. Mangayarkarasi & Anr. Petitioners 

Versus 

N.J. Sundaresan & Anr. Respondents 

Dated 9th May 2025