Allegations of fraud regarding a trademark assignment do not preclude arbitration; disputes arising from such assignments are arbitrable under the Arbitration and Conciliation Act.

ORDER :

1. The Petitioners are plaintiffs and the Respondent herein is the 1^st Defendant in the Suit. The Suit in C.O.S.No.147/2023, is filed the Petitioners / Plaintiffs before the Commercial Court (District Judge Cadre), Coimbatore, seeking for a relief of permanent injunction, restraining the Respondent / 1^st Defendant, his men, agent, power agent, representative, etc., from interfering or using the Plaintiff's Trademark of “SRI ANGANNAN BIRIYANI HOTEL” or “ABH SRI ANGANNAN HOTEL” or any other name format signifying the term, “ANGANNAN.” and to pay damages of Rs.20,00,000/- for the loss that the plaintiffs incurred due to the use of the Trademark in Application No.6440505 of “SRI ANGANNAN BiRIYANI HOTEL.”

2. Pending Suit, the 1^st Respondent / 1^st Defendant filed an Application in I.A.No.9 of 2023, praying to refer the parties to Arbitration. The said Application was allowed by the Commercial Court, District Judge, Coimbatore. Aggrieved over the same, the Petitioners filed the present Civil Revision Petition along with Civil Miscellaneous Petitions.

3. Mr.Arun C Mohan, the learned counsel appearing for the Petitioners / Plaintiffs would submit that the Court below ought to have considered that the 1^st Respondent fraudulently fabricated the assignment of t he Petitioners' Trademark to the 1^st Respondent and that the 1^st Petitioner did not consent for the said assignment. The said assignment was in fact denied as being fraudulent and the aspect of serious fraud can only be considered by a civil Court, which has been wholly disregarded to the impugned order. Since the assignment deed itself is a fabricated document and when such serious allegations of fraud exist, the fraud renders the arbitration clause invalid. The Court below not considered the question and prayer of infringement of trademark is a question of “right in rem” which is inherently non-arbitrable. The prayer sought for in the plaint has been disregarded in the impugned order and the nature of the suit has not been duly considered therein. The 2^nd respondent is not a signatory to the alleged assignment agreement between the 1^st petitioner and the 1^st respondent. Further, the Petitioners have filed criminal complaint against the 1^st Respondent for cheating and fabrication of the Assignment deed and the same has not adjudicated.

4. The learned counsel for the petitioners further submitted that it was merely agreed between the 1^st petitioner and the respondent to lease the brand name of “SRI ANGANNAN BIRIYANI”during the year 2016, for which, the respondent pay royalty every month. The Respondent fraudulently created an assignment of transfer of alleged Trademark on 20.09.2017, which is fabricated one. At no point of time, the 1^st Petitioner consensually assigned the Trademark to the 1^st Respondent. Since the alleged Assignment Deed itself is challenged by the Petitioners due to its illegal nature, the Arbitration clause incorporated in this fabricated document is not enforceable. If the 1^st Respondent's intention is to resolve the dispute, then he should not have given an undertaking in mandatory mediation that there is no possibility of settlement. Even during pendency of the Suit, the Respondent, remained silent. Only after an order passed in I.A.No.3 of 2023, restraining the Respondents from using the Trademark and brand name, the Respondents filed the Petition in I.A.No.9/2024 invoking the Arbitration Clause. The Respondent is continued to use the Trademark and brand name in his bills and receipts. The dispute fall under the category of right in rem are non arbitrable. Initial assignment deed did not include an arbitration clause and later it was incorporated by the Respondent.

5. The learned counsel in support of his contentions, has relied on the Judgment of the Hon'ble Supreme Court in Avitel Post Studioz Limited and Ors. Vs. HSBC PI Holdings (Mauritius) Ltd. 2020 SCC Online SC 656, wherein it has been held that a dispute becomes non-arbitrable when the court comes