Source: Supreme Court 

Why in News?

A bench of Justice R Mahadevan and Justice JB Pardiwala held that all trademark disputes are not outside the purview of arbitration. 

• The Supreme Court held this in the case of K Mangyarkarasi v. NJ Sunderesan (2025). 

What was the Background of K Mangyarkarasi v. NJ Sunderesan (2025) Case?   

• The petition arises from a judgment passed by the High Court of Judicature at Madras dated 9th January 2025, which rejected the Civil Revision Petition filed by the petitioners. 
• The petitioners had initially filed a suit in the Commercial Court seeking permanent injunction against the respondents regarding trademark usage of "Sri Angannan Biriyani Hotel" and damages of Rs. 20 lakhs. 
• The respondents filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (A & C Act), requesting that the parties be referred to arbitration based on arbitration clauses in two Deeds of Assignment of Trade Marks dated 20th September 2017, and 14th October 2019. 
• The Commercial Court allowed the Section 8 application on 6th February 2024, referring the parties to arbitration, finding that the dispute arose from contractual arrangements rather than trademark registration issues. 
• The first petitioner (Mrs. K. Mangayarkarasi) is the proprietrix of the trademark after her father Late Angannan, who died in 1986, and her husband Kathirvadivel took over the business until his death in 1990. 
• The respondent (N.J. Sundaresan) is the son of Jagadeeswaran (brother of Kathirvadivel), who had assisted in the business until his death in 2019. 
• The petitioners claimed that the first petitioner was misled into signing blank papers which were later fraudulently filled as Assignment Deeds by the respondent. 
• Both the Commercial Court and the High Court found that the dispute was arbitrable as it arose from contractual arrangements (Assignment Deeds) and not from trademark registration issues that would operate in rem. 
• The courts determined that the allegation of fraud was between the parties with no public domain implications, making it suitable for arbitration. 
• The High Court dismissed the Civil Revision Petition on these grounds, leading to the current petition before the Supreme Court.

What were the Court’s Observations?

• The Supreme Court dismissed the Special Leave Petition, affirming the High Court's decision to refer the parties to arbitration. 
• The Court reaffirmed that under Section 16 of the A & C Act, an Arbitral Tribunal has the power to rule on its own jurisdiction, even when objections about the existence or validity of the arbitration agreement are raised. 
• The Court clarified that while certain categories of disputes are generally treated as non-arbitrable (such as criminal matters and certain rights in rem), not all trademark disputes fall outside the scope of arbitration. 
• The Court held that disputes arising from subordinate rights related to trademarks, such as license agreements, are arbitrable as they relate to rights and obligations between parties. 
• The Court determined that allegations of fraud do not automatically make a dispute non-arbitrable, especially when the fraud is alleged between parties with no public domain implications. 
• The Court emphasized that where a valid arbitration agreement exists, a judicial authority is under a positive obligation to refer parties to arbitration with no discretion to override this legislative mandate. 
• The Court cited the principle of "generalia specialibus non derogant" (general law should yield to special law), stating that once jurisdiction is ousted by a special statute like the Arbitration Act, civil courts should respect this ouster. 
• The Court referenced its recent decision in SBI General Insurance Co. Ltd. v. Krish Spinning (2024) , noting that even when a party claims a discharge voucher was obtained by fraud or coercion, this itself gives rise to an arbitrable issue. 
• The Court emphasized the time-sensitive nature of arbitration proceedings and that courts should limit their examination under Section 11 to merely ascertaining the existence of an arbitration agreement. 
• The Court concluded that allegations of fraud, criminal wrongdoing, or statutory violation do not detract from the jurisdiction of an arbitral tribunal to resolve disputes arising from civil or contractual relationships. 

What Disputes are Non Arbitrable? 

• A. Ayyasamy v. A. Paramasivam & Ors. (2016): 
  • The courts have held that certain kinds of disputes may not be capable of adjudication through the means of arbitration. 
  • The Court held that the following categories of disputes are not arbitrable: 
    • patent, trade marks and copyright; 
    • anti-trust/competition laws;  
    • insolvency/winding up;  
    • bribery/corruption;  
    • fraud;  
    • criminal matters. 
• Booz Allen and Hamilton Inc. v. SBI Home Finance Limited & Ors., (2011): 
  • The well-recognised examples of non-arbitrable disputes are : 
    • disputes relating to rights and liabilities which give rise to or arise out of criminal offences; 
    • matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; 
    • guardianship matters;  
    • insolvency and winding up matters;  
    • testamentary matters (grant of probate, letters of administration and succession certificate); and 
    • 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. 
  • The Court further held that 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. 
• Vidya Drolia v. Durga Trading Corporation reported in (2021): 
  • The 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. 
  • 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 licenses 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 license agreement.