Most people instinctively associate trademark disputes with courtroom litigation. After all, trademarks are statutory rights created under the Trade Marks Act, 1999, and questions relating to their registration, validity, or rectification have traditionally fallen within the exclusive domain of courts and statutory authorities. This has led to a common misconception that every dispute involving a trademark must necessarily be decided by a court and is incapable of being resolved through arbitration.
The Supreme Court has now reaffirmed that this assumption is legally incorrect. In K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr., the Court clarified that the mere involvement of a trademark does not automatically render a dispute non-arbitrable. Where the dispute arises from contractual arrangements such as a trademark assignment or licence agreement, and concerns the respective rights and obligations of the contracting parties rather than the validity of the trademark itself, the matter is essentially one of private rights and may be referred to arbitration.
The judgment is significant because it reinforces a principle that has gradually evolved through earlier decisions of the Supreme Court. The focus is not on whether the dispute concerns intellectual property, but on the nature of the right that is sought to be enforced. While disputes involving public rights affecting the world at large continue to remain within the jurisdiction of courts and statutory authorities, disputes arising from contractual relationships between specific parties may well belong before an arbitral tribunal.
This article examines the Supreme Court’s decision, the principles laid down in the earlier precedents on which it relies, and explains why this ruling marks another important step in India’s evolving pro-arbitration jurisprudence, particularly in the context of commercial disputes involving intellectual property.
The Dispute Before the Supreme Court
The dispute arose out of a long-standing family business in Coimbatore operating under the well-known name “Sri Angannan Biriyani Hotel.” Members of the same family became embroiled in a disagreement over the ownership and use of the trademark, eventually leading to litigation before the Commercial Court.
The plaintiffs instituted a commercial suit seeking a permanent injunction to restrain the defendants from using the trademark and claimed damages of ₹20 lakhs for the alleged infringement. Their case was essentially that the defendants had no lawful right to use the mark and should be prevented from doing so.
The defendants, however, took a fundamentally different position. They relied upon two Trademark Assignment Deeds executed between the parties, both of which contained an arbitration clause. According to them, the dispute was not merely about trademark infringement; it arose directly from contractual arrangements governing the assignment of trademark rights. Since the parties had expressly agreed to resolve disputes through arbitration, they invoked Section 8 of the Arbitration and Conciliation Act, 1996, requesting the Commercial Court to refer the matter to arbitration instead of proceeding with the civil suit.
The Commercial Court accepted this contention and referred the parties to arbitration. The Madras High Court affirmed that decision, holding that the controversy primarily stemmed from the contractual rights created by the assignment deeds rather than any challenge to the statutory validity of the trademark itself. Dissatisfied with these concurrent findings, the plaintiffs approached the Supreme Court, contending that disputes relating to trademarks are inherently non-arbitrable and therefore incapable of being decided by an arbitral tribunal.
The case, therefore, presented an important legal question that extends far beyond the facts of this family dispute:-
Does the mere involvement of a trademark make a dispute non-arbitrable, or can certain trademark disputes, particularly those arising from contractual arrangements such as assignment or licence agreements, be resolved through arbitration?
The Supreme Court’s answer to this question has significant implications for businesses, brand owners, and commercial contracting parties alike.
The Real Question: Does Every Trademark Dispute Belong Before a Court?
The Supreme Court answered this question with a clear no.
The Court observed that merely because a dispute involves a trademark does not mean it is automatically excluded from arbitration. The decisive factor is not the subject matter alone, but the nature of the rights that are in dispute.
To understand this distinction, it is important to appreciate the difference between rights in rem and rights in personam, concepts that have long guided Indian arbitration law.
A right in rem is a right enforceable against the world at large. For instance, the registration of a trademark grants its proprietor an exclusive statutory right that binds everyone. Questions concerning the grant, validity, rectification, or cancellation of a registered trademark affect not merely the parties before the court but all persons who may deal with or claim an interest in that trademark. Such disputes involve the exercise of statutory and sovereign functions and are therefore reserved for courts and the authorities designated under the Trade Marks Act.
A right in personam, on the other hand, operates only between identified parties. Consider a situation where the proprietor of a registered trademark licenses another business to use the mark or assigns certain rights under a contractual arrangement. If a dispute subsequently arises regarding the interpretation of the agreement, the extent of the rights transferred, payment of royalties, territorial restrictions, or breach of contractual obligations, the controversy concerns the rights and obligations of the contracting parties alone. It does not determine the validity of the trademark itself or affect the rights of the public at large.
It was precisely this distinction that shaped the Supreme Court’s reasoning in the present case. The Court noted that the dispute before it did not concern the grant or validity of the “Sri Angannan Biriyani Hotel” trademark. Instead, the competing claims arose from Trademark Assignment Deeds executed between the parties. The controversy was therefore rooted in contractual obligations rather than the statutory existence of the trademark. Consequently, the dispute was one concerning private rights between the parties and was capable of being resolved through arbitration.
The judgment thus dispels the misconception that all trademark disputes are inherently non-arbitrable. While matters involving the creation, registration, validity, or rectification of trademark rights continue to remain within the exclusive jurisdiction of courts and statutory authorities, disputes arising from contractual arrangements such as licence agreements, assignment deeds, franchise arrangements, coexistence agreements, or other commercial understandings may validly be referred to arbitration, provided they concern rights enforceable only between the parties to the agreement.
This distinction is not a new one. Rather, it is the culmination of principles that have gradually evolved through a series of landmark decisions of the Supreme Court. The present judgment draws heavily upon those precedents and applies them in the specific context of trademark disputes, thereby bringing greater clarity to the law governing the arbitrability of intellectual property disputes.
The Evolution of the Law: How the Supreme Court Reached This Position
The Supreme Court’s conclusion in K. Mangayarkarasi did not emerge in isolation. It is the result of a gradual evolution of arbitration jurisprudence over the last decade, with each landmark decision refining the principles governing arbitrability. Together, these decisions explain why contractual disputes involving trademarks may be referred to arbitration, even though certain aspects of trademark law remain exclusively within the jurisdiction of courts and statutory authorities.
Booz Allen: Drawing the Line Between Public Rights and Private Rights
The foundation was laid in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., where the Supreme Court explained that every dispute involving civil or commercial rights is not automatically excluded from arbitration. The Court introduced the distinction between rights in rem and rights in personam, observing that disputes concerning private rights between identified parties are generally capable of being resolved through arbitration, whereas disputes determining rights against the world at large ordinarily require adjudication by courts or public authorities.
Importantly, the Court also clarified that this distinction is not absolute. Even where a dispute originates from a right in rem, disputes concerning subordinate contractual rights arising out of that right may still be arbitrable. This principle would later become the cornerstone for resolving commercial intellectual property disputes.
A. Ayyasamy: Fraud Is Not an Automatic Bar to Arbitration
The next important development came in A. Ayyasamy v. A. Paramasivam, where the Supreme Court reconsidered the long-held belief that every allegation of fraud must necessarily be decided by a civil court.
The Court clarified that mere allegations of fraud are insufficient to exclude arbitration. Only cases involving serious allegations affecting the public domain or rendering the arbitration agreement itself invalid may fall outside the arbitral process. Ordinary disputes alleging fraud between contracting parties continue to remain arbitrable.
This principle assumes particular significance in contractual trademark disputes. It is not uncommon for parties challenging assignment deeds or licence agreements to allege forgery, misrepresentation, coercion, or fraudulent execution. A. Ayyasamy makes it clear that such allegations do not automatically deprive the arbitral tribunal of its jurisdiction.
Vidya Drolia: Clarifying the Position on Intellectual Property Disputes
The law was further refined by the Constitution Bench in Vidya Drolia v. Durga Trading Corporation, which became the principal authority on arbitrability.
The Court recognised that certain matters involving intellectual property are inherently linked to sovereign functions. For example, the grant or registration of a trademark creates statutory rights enforceable against the public at large. Questions concerning the validity, registration, or rectification of such rights therefore remain matters for courts or the authorities constituted under the Trade Marks Act.
At the same time, the Court cautioned against treating every dispute involving intellectual property as non-arbitrable. It acknowledged that disputes arising from licence agreements, assignments, or other contractual arrangements merely regulate the rights and obligations of the contracting parties. Since such disputes operate only between those parties, they are disputes in personam and may legitimately be resolved through arbitration.
Krish Spinning: A Referral Court Should Not Conduct a Mini Trial
The final building block came in SBI General Insurance Co. Ltd. v. Krish Spinning, where the Supreme Court reiterated that courts exercising jurisdiction under the Arbitration and Conciliation Act perform only a limited referral function.
The Court observed that issues such as whether an agreement was obtained through fraud or coercion, whether claims are genuine, or whether a party has acted dishonestly are matters that ordinarily fall within the jurisdiction of the arbitral tribunal. Referral courts are not expected to undertake a detailed examination of disputed facts or conduct a preliminary trial before referring parties to arbitration.
This approach reinforces the legislative objective of ensuring that arbitration remains an efficient and expeditious dispute resolution mechanism. Courts are required to confine themselves to determining whether a valid arbitration agreement exists and whether the dispute falls within its scope, leaving questions on the merits to the arbitral tribunal.
Viewed together, these decisions form a coherent jurisprudential framework. Booz Allen distinguished between public and private rights, A. Ayyasamy clarified that allegations of fraud do not automatically exclude arbitration, Vidya Drolia explained how those principles apply to intellectual property disputes, and Krish Spinning reinforced the limited role of referral courts. Drawing upon each of these decisions, the Supreme Court in K. Mangayarkarasi concluded that a contractual dispute arising from trademark assignment deeds was rightly referred to arbitration.
The Supreme Court’s Reasoning: Applying Established Principles to Trademark Disputes
Applying these well-settled principles, the Supreme Court found no reason to interfere with the decisions of the Commercial Court and the Madras High Court, both of which had referred the parties to arbitration.
The Court noted that the petitioners had attempted to characterise the dispute as one involving trademark infringement in order to contend that it was inherently non-arbitrable. However, a closer examination of the pleadings and the reliefs sought revealed that the controversy could not be decided without first examining the Trademark Assignment Deeds executed between the parties. The defendants’ claim to use the trademark did not arise independently under the Trade Marks Act, 1999; rather, it was founded upon the contractual rights allegedly created by those assignment deeds. Consequently, the dispute was essentially contractual in nature.
The Court was equally unpersuaded by the argument that allegations of fraud or fabrication automatically excluded arbitration. The petitioners had alleged that the assignment deeds were fraudulently prepared and that signatures had been obtained on blank papers. While these allegations undoubtedly raised disputed questions of fact, the Court reiterated that such disputes do not, by themselves, divest an arbitral tribunal of its jurisdiction.
In a significant observation, the Court reaffirmed that allegations of fraud, criminal wrongdoing, or even statutory violations do not oust the jurisdiction of an arbitral tribunal where the dispute essentially arises out of a civil or contractual relationship governed by an arbitration agreement. Questions relating to the validity of the claims, allegations of fraud, or the genuineness of the parties’ assertions are matters that the arbitral tribunal is fully competent to examine during the arbitral proceedings.
The Court also emphasised the limited role of a judicial authority when faced with an application under Section 8 of the Arbitration and Conciliation Act, 1996. Once the court is satisfied that a valid arbitration agreement exists and the dispute falls within its scope, the legislative mandate is clear—the parties must be referred to arbitration. The referral court is not expected to undertake a detailed examination of the merits, evaluate the strength of rival claims, or decide whether the allegations ultimately succeed. Those issues fall squarely within the jurisdiction of the arbitral tribunal.
Another important aspect highlighted by the Court was the distinction between disputes concerning the existence of trademark rights and disputes concerning the exercise of contractual rights relating to a trademark. While the grant, registration, rectification, or cancellation of a trademark undoubtedly involves public rights and remains outside the scope of arbitration, contractual arrangements governing the use, assignment, or licensing of an existing trademark stand on a different footing. Such disputes regulate the legal relationship between specific parties and therefore concern rights in personam, making them suitable for resolution through arbitration.
The Court summed up the legal position by observing that the assumption that all trademark disputes are outside the scope of arbitration is plainly erroneous. Disputes arising from subordinate contractual rights—such as those created by licence or assignment agreements—are capable of being resolved by an arbitral tribunal because they determine only the inter se rights and obligations of the contracting parties and do not affect the rights of the public at large.
Accordingly, finding no legal infirmity in the concurrent decisions of the courts below, the Supreme Court dismissed the Special Leave Petition and upheld the reference of the dispute to arbitration.
Why This Judgment Matters
The significance of this judgment extends well beyond a family dispute over a trademark. It provides much-needed clarity on the intersection of trademark law and arbitration, an area that has often been clouded by the assumption that intellectual property disputes are, by their very nature, unsuitable for private adjudication.
For businesses, the ruling reinforces the importance of carefully drafted arbitration clauses in trademark assignment, licence, franchise, brand collaboration, and coexistence agreements. Parties frequently spend considerable time negotiating the commercial terms of such agreements but pay little attention to the dispute resolution clause. This judgment underscores that where parties have consciously chosen arbitration as their preferred mechanism for resolving contractual disputes, courts will ordinarily respect that choice.
The decision also strengthens India’s pro-arbitration jurisprudence by reaffirming the principle of party autonomy, which lies at the heart of the Arbitration and Conciliation Act, 1996. Arbitration is fundamentally a consensual process. When parties voluntarily agree to submit disputes arising from their contractual relationship to arbitration, courts are expected to give effect to that agreement unless the dispute falls within a recognised category of non-arbitrable matters. This judgment faithfully reinforces that legislative policy.
Equally important is the Court’s clarification that allegations of fraud or statutory violations cannot be used as a convenient device to avoid arbitration. Commercial disputes often involve allegations of forged documents, misrepresentation, coercion, or breach of statutory obligations. If every such allegation were sufficient to bypass an arbitration agreement, the very objective of arbitration as an efficient dispute resolution mechanism would be defeated. By reiterating that such issues can ordinarily be examined by an arbitral tribunal, the Supreme Court has discouraged attempts to circumvent valid arbitration agreements through strategic pleadings.
From the perspective of trademark law, the judgment also brings conceptual clarity by distinguishing the trademark itself from the contractual rights relating to its use. The statutory rights flowing from registration remain matters of public law and continue to be governed by the Trade Marks Act, 1999. However, once parties enter into private commercial arrangements concerning the use, assignment, or licensing of those rights, disputes arising from those agreements assume a different legal character. They are no longer concerned with determining the validity of the trademark against the world at large but with enforcing contractual obligations between specific parties. Recognising this distinction is essential for preserving both the integrity of the statutory trademark regime and the efficacy of arbitration as a commercial dispute resolution mechanism.
Ultimately, the Supreme Court’s decision is not a departure from existing law but a logical application of well-established principles to trademark disputes. It dispels the misconception that every dispute involving intellectual property must necessarily be resolved through courtroom litigation and instead reiterates a simpler principle: the arbitrability of a dispute depends not on the subject matter alone, but on the nature of the rights being asserted. Where the dispute concerns private contractual rights between identified parties, arbitration is not merely permissible—it is the forum that courts are expected to uphold when the parties have agreed to it.
Conclusion
The decision in K. Mangayarkarasi v. N.J. Sundaresan is a timely reaffirmation that arbitration and intellectual property rights are not mutually exclusive. While disputes concerning the grant, validity, rectification, or cancellation of trademarks continue to remain within the exclusive domain of courts and statutory authorities, contractual disputes arising from trademark assignments, licences, franchises, and similar commercial arrangements stand on a different footing.
By reaffirming the distinction between rights in rem and rights in personam, clarifying the limited role of referral courts under Section 8 of the Arbitration and Conciliation Act, 1996, and reiterating that allegations of fraud do not, by themselves, defeat a valid arbitration agreement, the Supreme Court has further strengthened India’s arbitration-friendly legal framework.
The message emerging from the judgment is both clear and practical. The mere involvement of a trademark does not determine the forum for resolving a dispute. What matters is the nature of the right sought to be enforced. If the controversy concerns the statutory existence or validity of a trademark, the matter belongs before the appropriate court or statutory authority. But where the dispute is rooted in a contractual relationship governing the use or assignment of trademark rights, the parties will ordinarily be held to their bargain and required to resolve their differences through arbitration.
Judgment Explained and Relied upon Citations:-
- K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr., (2025) 8 SCC 299.
- Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd. & Ors., (2011) 5 SCC 532.
- A. Ayyasamy v. A. Paramasivam & Ors., (2016) 10 SCC 386.
- Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1.
- Kvaerner Cementation India Ltd. v. Bajranglal Agarwal & Anr., (2012) 5 SCC 214.
- SBI General Insurance Co. Ltd. v. Krish Spinning, 2024 SCC OnLine SC 1754.
By Mamta Sharma, Advocate