Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(All) 3589

IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Arun Bhansali, C.J., Kshitij Shailendra, J.
The Government of U.P. - Appellant
Versus
M/s Krishna Mohan Goel, Contractor – Respondent
Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 255 of 2025, Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 253 of 2025, Appeal Under Section 37 of Arbitration And Conciliation Act 1996 No. - 252 of 2025
Decided On : 24-11-2025

Advocates Appeared:
For the Appellant : Rajiv Singh
For the Respondent: Dilip Kumar, Sanjai Kumar Singh, Ashish Jaiswal

Procedural defects that do not go to the root of the matter should not lead to dismissal; objections under Section 34 of the Arbitration Act are maintainable without prior sanction from the Legal Remembrancer.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Appeals against dismissal of objections for lack of prior permission from Legal Remembrancer - Commercial Court dismissed objections without examining merits, ruling them not maintainable due to absence of sanction as required under L.R. Manual 15.05 - Court held such executive instructions do not equate to law and objections are maintainable despite procedural irregularity. (Paras 1-24)

(B) Legal principles - Procedural defects that do not go to the root of the matter should not result in the dismissal of genuine claims - The necessity of prior sanction does not bar filing of objections under Section 34, and the merits of the case must also be considered. (Paras 12, 19)

Facts of the case:
Three appeals challenged the Commercial Court's dismissal of objections under Section 34 of the Act, based solely on the lack of prior permission from the Legal Remembrancer. The appellants argued that the L.R. Manual is directory and not mandatory.

Findings of Court:
The rejection of the objections solely on procedural grounds was unjustified; hence, the matter was remitted back for merits determination.

Issues: Whether objections under Section 34 require prior permission from the Legal Remembrancer to be maintainable, and the applicability of procedural manual instructions.

Ratio Decidendi: The Court found that the L.R. Manual's guidelines do not constitute 'law' as required under constitutional provisions, thus not precluding the maintainability of objections filed without prior sanction.

Result: Appeals allowed and cases remitted back to Commercial Court for merit examination.

Table of Content
1. initial basis of appeals (Para 1)
2. court's focus on maintainability (Para 2 , 3 , 4)
3. arguments presented by parties (Para 5 , 6 , 7 , 8)
4. analysis of l.r. manual provisions (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16)
5. final judgment and order (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25)

JUDGMENT :

1. These three appeals have been filed challenging identical orders dated 04.07.2025, 10.06.2025 and 10.06.2025, whereby the Commercial Court, Prayagraj has dismissed the objections under Section 34 of Arbitration and Conciliation Act, 1996 (in short ‘Act, 1996') filed by the appellants, respectively in Arbitration Case No. 20 of 2023, 14 of 2023 and 15 of 2023. Dismissal of the objections is only on the ground that before filing of the same, the appellants had not obtained prior permission from the Legal Remembrancer (in short 'L.R.') and, therefore, the objections were not maintainable.

2. Since the orders passed by the Commercial Court are not on merits of the arbitration case, that is to say that the awards passed by the Arbitrator have not been examined on merits, we are not entering into the factual controversy involved in the matter and are deciding these appeals only on the limited aspect as to whether, in absence of prior permission obtained from L.R., objections under Section 34 of the Act, 1996 were maintainable.

3. First of all, we may refer to the finding recorded by the Commercial Court in all three orders impugned in these appeals. The finding recorded in the order dated 04.07.2025 passed in Arbitration Case No. 20 of 2023 (impugned in Arbitration Appeal No. 255 of 2025) reads as under:-

"12. The record shows that the application was filed without there being any sanction from the State as admitted in para no.7 of the affidavit filed in support of the aforesaid case filed under Section 34 of the Act of 1996, a copy of which has been annexed as Annexure No.3 at page no.33 onwards. The para no. 15.05 of the L.R. Manual reads as under:-

"15.05. Authority for institution of suits by the Government- No suit with a valuation exceeding Rs. 2,500 on behalf of the State shall be instituted in any court without the prior sanction of of the Legal Remembrancer.”

“13. On perusal of the afore-quote para, it prohibits for filing any suit prior to sanction of the State Government. Once there is a prohibition, the application has been filed without any authority. Once the authority has not granted approval for filing the same, it cannot be treated to be the proper filing."

4. The finding recorded in the order dated 10.06.2025 passed in Arbitration Case No. 14 of 2023 (impugned in Arbitration Appeal No. 253 of 2025) and identical finding recorded in order dated 10.06.2025 passed in Arbitration Case No. 15 of 2023 (impugned in Arbitration Appeal No. 252 of 2025) read under:-

"15.05. Authority for institution of suits by the Government-No suit with a valuation exceeding Rs. 2,500 on behalf of the State shall be instituted in any court without the prior sanction of the Legal Remembrancer."

17.07. Appeal to District Judge-

(1) The Legal Remembrancer shall, on receipt of papers and as soon as may be, give instructions for an appeal being/or not being filed, as the case may be.

(2) Instructions may, in this behalf, be given by the Legal Remembrancer sue moto and in the absence of a proposal from the head of Department/District office.

Note- In cases the District Government Counsel has advised appeal before the District Judge and no instructions are received by him from the Legal Remembrancer even in the last day of expiry of limitation then he may file an appeal on that day if there is strong probability of success and only the interest of the State is involved. He shall communicate immediately the reasons therefor to the Legal Remembrancer for issuing ex-post- facto sanction for filing appeal.