Full Judgment Text
2025 INSC 687
REPORTABLE
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
O R D E R
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
Signature Not Verified
Digitally signed by
POOJA SHARMA Judge Cadre), Coimbatore allowing application filed by the
Date: 2025.05.14
18:45:01 IST
Reason:
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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
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“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:-
“APPLICATION FILED UNDER SECTION 8 OF THE
ARBITRATION AND CONCILIATION AMENDMENT
ACT, 2019
st
I. Petitioner/1 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
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1. Mrs. K. Mangayarkarasi, W/o. Late Mr. N.
Kadiravadivei, Hindu, aged about 77 years, residing at
st
A2/1, Sree Annapporna Apartments, Bharathi Park, 1
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.
nd
III. Respondent/2 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.
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)”
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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
st
and obtained signature of the 1 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.
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16. The counsel for respondents contended that the
dispute pertained to the scope of trade mark registration
and thus, 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
rd
parties to the said documents, but the 3 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
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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
st
interest of the 1 interest has been transferred in favour
of the respondents 2 and 3 and they are successors or
st
legal representatives of the said 1 respondent through
Gift deeds. When the 1st and 2nd respondents are parties
rd
to the disputed Assignment deeds, the 3 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
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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:-
st
“18. It is not in dispute that the 1 Petitioner/Plaintiff is
the Proprietrix of the Trademark, after her father Late
st
Angannan, who died in 1986. The 1 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
st
business till he died in 2019. The 1 Respondent,
Sundaresan, is the son of Jagadeeswaran.
Mangayarkarasi had a son, 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
nd
Mangayarkarasi are Manonmani, who is the 2
nd
Respondent and Sreedevi, who is the 2 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
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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,
st st
the 1 Respondent / 1 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.”
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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.
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(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
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
st
contention of the petitioners that the 1 Petitioner was
st
misled to signing blank papers and the 1 Respondent
st
filled up the same by including his name and the 1
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Respondent has forged a fabricated deed as an
irrevocable deed, cannot be countenanced for the simple
st
reason that the 1 Petitioner wanted to assign the
fabricated deed as an irrevocable deed, cannot be
st
countenanced for the simple reason that the 1 Petitioner
wanted to assign the Trademark is not in dispute and the
st
signatures not disputed. Once 1 Petitioner admitted her
signatures and the document ex facie shows that it has
st
been properly executed and the 1 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,
st nd
the 1 Petitioner/K. Mangayarkarasi and the 2
Petitioner Sreedevi and her Husband Ajith received
st
several payments from, the 1 Respondent periodically,
which is evident from the statement of extract of the
st
payments made by the 1 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
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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
st
of several payment received by the assignor from the 1
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
st
right claimed by the 1 Respondent is contractual as
assignee of a Trademark. Disputes raised by the
Petitioners is that there was no intention to assign the
st
trademark and that too irrevocably to the 1 Respondent,
nd
but at the same time, the assignment in favour of the 2
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
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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
st
right that is asserted by the 1 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
st
Tribunal. This judgment supports the plea of the 1
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. 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
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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
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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.
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
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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
of Arbitration and Conciliation’, 3rd Edn., authored by
Indu Malhotra. See also note 10 ibid.]:
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(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
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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:-
(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
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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.
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
SLP(C) No. 13012/2025
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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
SLP(C) No. 13012/2025
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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.
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
SLP(C) No. 13012/2025
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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 of the
no-claim certificate or the discharge voucher, such
disputed discharge voucher may itself give rise to an
arbitrable dispute.” (Emphasis supplied)
SLP(C) No. 13012/2025
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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:-
SLP(C) No. 13012/2025
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“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. 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
SLP(C) No. 13012/2025
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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
SLP(C) No. 13012/2025
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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 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
SLP(C) No. 13012/2025
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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.
…...............................J.
(J.B. PARDIWALA)
…................................J.
(R. MAHADEVAN)
NEW DELHI;
MAY 9, 2025
SLP(C) No. 13012/2025
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REPORTABLE
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
O R D E R
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
Signature Not Verified
Digitally signed by
POOJA SHARMA Judge Cadre), Coimbatore allowing application filed by the
Date: 2025.05.14
18:45:01 IST
Reason:
SLP(C) No. 13012/2025
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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
SLP(C) No. 13012/2025
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“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:-
“APPLICATION FILED UNDER SECTION 8 OF THE
ARBITRATION AND CONCILIATION AMENDMENT
ACT, 2019
st
I. Petitioner/1 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
SLP(C) No. 13012/2025
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1. Mrs. K. Mangayarkarasi, W/o. Late Mr. N.
Kadiravadivei, Hindu, aged about 77 years, residing at
st
A2/1, Sree Annapporna Apartments, Bharathi Park, 1
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.
nd
III. Respondent/2 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.
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)”
SLP(C) No. 13012/2025
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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
st
and obtained signature of the 1 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.
SLP(C) No. 13012/2025
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16. The counsel for respondents contended that the
dispute pertained to the scope of trade mark registration
and thus, 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
rd
parties to the said documents, but the 3 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
SLP(C) No. 13012/2025
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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
st
interest of the 1 interest has been transferred in favour
of the respondents 2 and 3 and they are successors or
st
legal representatives of the said 1 respondent through
Gift deeds. When the 1st and 2nd respondents are parties
rd
to the disputed Assignment deeds, the 3 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
SLP(C) No. 13012/2025
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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:-
st
“18. It is not in dispute that the 1 Petitioner/Plaintiff is
the Proprietrix of the Trademark, after her father Late
st
Angannan, who died in 1986. The 1 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
st
business till he died in 2019. The 1 Respondent,
Sundaresan, is the son of Jagadeeswaran.
Mangayarkarasi had a son, 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
nd
Mangayarkarasi are Manonmani, who is the 2
nd
Respondent and Sreedevi, who is the 2 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
SLP(C) No. 13012/2025
Page 8 of 28
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,
st st
the 1 Respondent / 1 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.”
SLP(C) No. 13012/2025
Page 9 of 28
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.
SLP(C) No. 13012/2025
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(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
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
st
contention of the petitioners that the 1 Petitioner was
st
misled to signing blank papers and the 1 Respondent
st
filled up the same by including his name and the 1
SLP(C) No. 13012/2025
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Respondent has forged a fabricated deed as an
irrevocable deed, cannot be countenanced for the simple
st
reason that the 1 Petitioner wanted to assign the
fabricated deed as an irrevocable deed, cannot be
st
countenanced for the simple reason that the 1 Petitioner
wanted to assign the Trademark is not in dispute and the
st
signatures not disputed. Once 1 Petitioner admitted her
signatures and the document ex facie shows that it has
st
been properly executed and the 1 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,
st nd
the 1 Petitioner/K. Mangayarkarasi and the 2
Petitioner Sreedevi and her Husband Ajith received
st
several payments from, the 1 Respondent periodically,
which is evident from the statement of extract of the
st
payments made by the 1 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
SLP(C) No. 13012/2025
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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
st
of several payment received by the assignor from the 1
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
st
right claimed by the 1 Respondent is contractual as
assignee of a Trademark. Disputes raised by the
Petitioners is that there was no intention to assign the
st
trademark and that too irrevocably to the 1 Respondent,
nd
but at the same time, the assignment in favour of the 2
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
SLP(C) No. 13012/2025
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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
st
right that is asserted by the 1 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
st
Tribunal. This judgment supports the plea of the 1
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. 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
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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
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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.
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
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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
of Arbitration and Conciliation’, 3rd Edn., authored by
Indu Malhotra. See also note 10 ibid.]:
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(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
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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:-
(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
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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.
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
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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
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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.
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
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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 of the
no-claim certificate or the discharge voucher, such
disputed discharge voucher may itself give rise to an
arbitrable dispute.” (Emphasis supplied)
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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:-
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“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. 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
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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
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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 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
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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.
…...............................J.
(J.B. PARDIWALA)
…................................J.
(R. MAHADEVAN)
NEW DELHI;
MAY 9, 2025
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