K. Mangayarkarasi & Anr. v. N.J. Sundaresan & Anr

"Arbitration is not defeated by allegations—it survives even the shadow of fraud when rooted in contract."

Summary :

A trademark infringement suit concerning “Sri Angannan Biriyani Hotel” was referred to arbitration under valid assignment deeds containing arbitration clauses. The Supreme Court dismissed the Special Leave Petition, holding that disputes arising from contract-based assignments are arbitrable, and mere allegations of fraud (not affecting public interest) do not defeat arbitration.

Facts :

⦁ Petitioners (K. Mangayarkarasi & another) sued the respondents in C.O.S. No. 147 of 2023 before the Commercial Court, seeking a permanent injunction to restrain use of the trademark and damages of ₹20 lakh.

⦁ Respondents invoked arbitration clause in two assignment deeds (20 Sept 2017 and 14 Oct 2019) by filing under Section 8 of the Arbitration Act.

⦁ Commercial Court allowed the referral on 6 February 2024; High Court affirmed on 9 January 2025; petitioners approached the Supreme Court.

Issues :

⦁ Is the dispute arbitrable, given it involves trademark rights?

⦁ Do allegations of fraud render the arbitration clause unenforceable?

Findings :

⦁ Trademark assignment disputes are rights in personam arising from contract, not non-arbitrable rights in rem, so they fall within arbitration scope.

⦁ Allegations of fraud limited to the parties without public impact do not automatically exclude arbitration. The arbitral tribunal should decide such issues under Section 16 of the Act.

⦁ Once a compliant Section 8 application is made, courts must enforce arbitration clauses and not test their own jurisdiction generally.

Suggestions (for practitioners) :

⦁ Always examine if assignment agreements contain arbitration clauses before instituting IP litigation.

⦁ Allegations of fraud in contract disputes should still be raised before the arbitral tribunal unless they affect public interest.

⦁ Courts should prioritize early reference to arbitration to reduce pendency.

Judgment (9 May 2025) :

The Supreme Court dismissed the Special Leave Petition (SLP (C) No. 13012 of 2025), upholding the High Court’s decision to refer the parties to arbitration. The judgment emphasised enforcement of arbitration agreements under Section 8 and the tribunal’s power under Section 16.