This article argues that personal adoption of Hanfi Madhhab by kings and royal patronage and prevalence of a Madhhab among the masses do not signify official recognition of that Madhhab by the state. The official recognition is obtained when a Madhhab is the exclusive source of state legislation and the judges are required to apply the law of a particular Madhhab exclusively. I have found no evidence to support this position. The phenomenon of the official recognition of Madhhab is essentially territorial, and Fiqh doctrines, are essentially personal. I have shown that the Hanfi Madhhab, especially as expounded in the "Fatwa Alamgiri", recognizes the fact that administration of justice operates on a different level as far as state is concerned. An analysis of "Alamgiri Farman'' shows that state refers to the principal of Siyasa more than to Madhhab doctrines in its legislation. I have also shown that the principal of Siyasa, though recognized by the Madhhab doctrine, could not be integrated into the Madhhab theory. It remained juxtaposed with other principles. The state seems to have developed a parallel source of its legislation.