Arbitration Clause Survives Contract Termination and Corporate Name Change Despite Allegations of Trademark Infringement

The Appellant (formerly VCare Infotech) and Respondent entered into a "Partner Agreement" in July 2023.

This agreement authorized the Appellant to use the Respondent's "NEWGEN" marks for specific business purposes while acknowledging the Respondent's exclusive ownership.

In July 2024, the Appellant changed its corporate name to "Newgen IT Technologies Limited".

The Respondent subsequently terminated the agreement, alleging trademark misappropriation, and filed a suit for permanent injunction and passing off.

The Appellant moved an application under Section 8 of the Arbitration and Conciliation Act, 1996, seeking a referral to arbitration based on Article 18 of the Partner Agreement.

The Commercial Court dismissed the application, reasoning that the change of name and the termination of the main contract rendered the arbitration clause invalid.

Section 8 and Section 16 of the Arbitration and Conciliation Act, 1996.

The "separability presumption," which dictates that an arbitration clause is a distinct agreement that survives the termination of the parent contract.

Doctrine of Competence-Competence (both positive and negative aspects) as elucidated in the Constitution Bench judgment in In re, Interplay Between Arbitration Agreements.

Disputes involving subordinate rights in personam arising from rights in rem (such as trademark licenses) are arbitrable, following K. Mangayarkarasi v. N.J. Sundaresan.

The High Court found the lower court’s reasoning fundamentally flawed, noting that a mere change of corporate name does not extinguish contractual obligations or the arbitration clause.

Citing the Interplay judgment, the court emphasized that Section 16 mandates the Arbitral Tribunal to rule on its own jurisdiction, and the "negative aspect" of this doctrine requires civil courts to refrain from deciding jurisdictional issues if a prima facie arbitration agreement exists.

The court analyzed the Respondent's suit and found the allegations of trademark infringement were directly linked to a breach of "Article 14" of the Partner Agreement.

Therefore, the dispute was not an abstract claim in rem but a contractual dispute regarding the "right to use" a mark.

Given that the dispute was relatable to the subject matter of the agreement, the court held that the legislative mandate of Section 8 left no discretion to the judicial authority but to refer the matter.

The Court allowed the appeal, set aside the Commercial Court’s order dated 23 April 2025, and referred the disputes to arbitration, directing the parties to invoke the arbitral process in accordance with Article 18 of the Agreement.

The specific question of whether the dispute is ultimately arbitrable remains open for the Arbitral Tribunal to decide as a jurisdictional issue under Section 16.