Division Bench directs immediate commencement of arbitration in M/s Jay Shree Ram Rice Mill dispute; Principal Secretary's refusal to comply amounts to wilful disobedience and contempt
In a significant judgment delivered on 16th September 2026, the Allahabad High Court's Division Bench comprising Justices J.J. Munir and Indrajeet Shukla reaffirmed the sanctity of arbitration clauses embedded within contractual agreements and censured the Uttar Pradesh State Government for deliberate non-compliance with a judicial order directing arbitration.
The case involved M/s Jay Shree Ram Rice Mill (Petitioner) against the State of Uttar Pradesh and others (Respondents). The dispute pertained to issues surrounding the quantity of paddy supplied and related statutory and contractual dues. Earlier, on 8th January 2026, the Court had ordered that all claims be adjudicated by an Arbitrator in accordance with Clause 12 of the agreement between the parties, directing that arbitration proceedings commence immediately and be completed within four months.
Contrary to this clear judicial directive, the Principal Secretary of the Food and Civil Supplies Department, Government of U.P., Ranvir Prasad, refused to initiate arbitration, citing non-compliance with certain Government Orders dated 9th October 2015 and 17th December 2015 regarding deposits. The Court observed this refusal as a prima facie act of wilful and deliberate disobedience of the Court's order and declared the Principal Secretary's action null and void in law.
The Bench highlighted the settled principle that any government order or action that contravenes a judicial order from a competent court is non est (void) and does not have legal effect. Further, the Court held that the Principal Secretary's stance not only violated the Court's order but also amounted to contempt of court. Consequently, the matter was directed to be placed before the Chief Justice of the Allahabad High Court for initiating appropriate proceedings for civil contempt against the Principal Secretary.
In the interim, the Court suspended the operation of the impugned order dated 4th June 2026 passed by the State Government and restrained any recovery action against the petitioner. The Court also mandated prompt communication of this order to the relevant government authorities and district magistrates to ensure compliance within 24 hours.
This judgment underscores the judiciary's firm stance on upholding the arbitration mechanism as a preferred mode of dispute resolution and sends a strong message that government authorities cannot circumvent judicial orders under administrative pretexts. It reinforces the principle that arbitration agreements, once incorporated and judicially upheld, must be respected and implemented without undue interference.
Bottom Line:
Arbitration clause in an agreement must be honored, and any government action or decision contravening a judicial order directing arbitration is non-est and constitutes contempt of court.
Statutory provision(s):
Arbitration and Conciliation Act, 1996
M/s Jay Shree Ram Rice Mill v. State of Uttar Pradesh, (All)(DB) : Law Finder Doc Id # 2981905
