Supreme Court Half Yearly Digest 2025: Arbitration & Conciliation Act

Arbitration and Conciliation Act, 1996Sections 8 and 11(6A) – Arbitrability of Trademark Disputes – Dispute between two factions of a Coimbatore-based family over the "Sri Angannan Biriyani Hotel" trademark. The petitioner filed a civil suit seeking a permanent injunction and ₹20 lakhs in damages for alleged trademark infringement. The respondent invoked an arbitration clause in the Trademark Assignment Deed, leading to referral to arbitration by the Commercial Court and High Court. Held: Not all trademark disputes are non-arbitrable; disputes in personam arising from contractual obligations, such as those under a trademark license or assignment deed, are arbitrable. Allegations of fraud, misconduct, or statutory violations do not preclude arbitration when the dispute stems from an arbitration agreement. Under Section 8, the referral court's role is limited to confirming the existence of a valid arbitration agreement, leaving substantive issues like claim validity or fraud to the arbitral tribunal. Under Section 11(6A), the court's role is confined to verifying the arbitration agreement's existence, not adjudicating the dispute's merits. Disputes arising from trademark licenses or assignments, being in personam, are arbitrable unless they involve in rem rights affecting the public. Judicial authorities must enforce arbitration agreements under Section 8 without discretion to bypass this mandate. The principle that subordinate in personam rights arising from in rem rights are arbitrable, as established in Booz Allen and Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532 and Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1, was reaffirmed. The Supreme Court dismissed the petitioner's challenge, upholding the referral to arbitration. Petition dismissed; trademark dispute held arbitrable as it arose from an assignment deed. K. Mangayarkarasi v. N.J. Sundaresan, 2025 LiveLaw (SC) 597 : 2025 INSC 687Section 31(7) - Arbitral Tribunal's Discretion to Award Differential Interest Rates - Held, under Section 31(7), the arbitral tribunal has the authority to award varying interest rates for pre-reference, pendente lite, and post-award periods. The Supreme Court set aside the High Court's decision, which had overturned the tribunal's award of compound interest, affirming that the "sum" under Section 31(7)(b) includes the principal and accrued interest, permitting compound interest. The tribunal may exclude specific periods or subdivide the period between the cause of action and the award date, applying reasonable interest rates as deemed fit. The appeal was allowed, restoring the arbitral award with compound interest as granted. Interstate Construction v. National Projects Construction Corporation Ltd., 2025 LiveLaw (SC) 585 : 2025 INSC 699Section 16 - An arbitral award cannot be set aside solely on jurisdictional grounds, such as the applicability of the Madhya Pradesh Madhyastham Adhikaran Adhiniyam, 1983 (MP Act), if no objection to the arbitral tribunal's jurisdiction was raised under Section 16 of the 1996 Act. Where a party, such as the respondent-MPRDC, participates in arbitration proceedings without challenging jurisdiction and raises the issue only post-award under Section 34, the award cannot be annulled on jurisdictional grounds alone. Jurisdictional challenges in ongoing arbitration proceedings are permissible before filing a statement of defence, but not after substantial progress. Awards under the 1996 Act, where the MP Act applies, may be challenged under Sections 34 and 37 of the 1996 Act but must be executed as per the MP Act. The appeal was allowed, overturning the High Court's decision to set aside the award solely on jurisdictional grounds. Gayatri Project v. Madhya Pradesh Road Development Corporation, 2025 LiveLaw (SC) 578 : 2025 INSC 698Section 7 - Ambiguous Arbitration Clauses - Suo Motu Powers - Judicial Time Wastage - Malafide Drafting - The Supreme Court deprecated the practice of deliberately ambiguous drafting of arbitration clauses by the legal fraternity, terming it a "criminal waste of judicial time." The Court directed judicial forums to reject such poorly drafted clauses at the outset by exercising suo motu powers in cases of malafide drafting. It emphasized the need for clear and precise arbitration clauses to prevent litigation and ensure expeditious dispute resolution. Article 20 in the Concession Agreements between South Delhi Municipal Corporation and private contractors was held not to constitute a valid arbitration agreement under Section 7 due to its ambiguity and lack of procedural clarity. Consequently, the Supreme Court set aside the High Court's judgments interpreting Article 20 as a valid arbitration clause in two cases, while affirming the rejection of arbitration in a third case. (Para 49 - 60) South Delhi Municipal Corporation v. SMS Limited, 2025 LiveLaw (SC) 568 : 2025 INSC 693The MSMED Act, as a special statute, prevails over the Arbitration and...

Supreme Court Half Yearly Digest 2025: Arbitration & Conciliation Act

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