Supreme Court overturns High Court order in property theft case: Ruchir Rastogi vs. Pankaj Rastogi (2023)

Date of the Judgment: 19 October 2023
Citation: 2023 INSC 941
Judges: Vikram Nath, J. and Ahsanuddin Amanullah, J.
Can a High Court quash an FIR when the basic ingredients of the alleged offenses are present? The Supreme Court addressed this question in a recent case involving allegations of theft, house trespass, and criminal intimidation within a family business dispute. The Court overturned the High Court’s decision, emphasizing that the presence of basic ingredients of the alleged offenses warrants further investigation and trial. The judgment was authored by Justice Vikram Nath, with Justice Ahsanuddin Amanullah concurring.

Case Background

The case revolves around a family business dispute between Ruchir Rastogi (the appellant) and Pankaj Rastogi (respondent No. 1), who are cousins. They were partners in a business run under the name M/s Lala Jugal Kishore and Sons. The business was operated from a shop that was initially rented. The dispute began when Pankaj Rastogi sought to dissolve the partnership in 2013, leading to legal proceedings.

Ruchir Rastogi filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection of the business assets. The District Judge passed an order directing both parties to jointly operate the shop and preserve its assets. Later, an arbitral award was passed, granting exclusive possession of the shop to Ruchir Rastogi and his father. However, the shop was subsequently purchased by a company owned by other family members, M/s Sushma Constructions Pvt. Ltd., who then filed an eviction suit against Pankaj Rastogi. The High Court ordered Pankaj Rastogi to hand over the shop’s possession to M/s Sushma Constructions Pvt. Ltd., which he did. Following this, the appellant lodged an FIR alleging theft and other offenses when he found the shop’s locks changed and the business assets missing.

Timeline

Course of Proceedings

The appellant, Ruchir Rastogi, initially filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, which led to the District Judge’s order for joint operation of the shop and preservation of assets. After the arbitral award, M/s Sushma Constructions Pvt. Ltd. filed an eviction suit against Pankaj Rastogi, which was initially dismissed by the Trial Court. However, the High Court allowed the revision petition and ordered Pankaj Rastogi to hand over the shop’s possession. Subsequently, Ruchir Rastogi filed an FIR when he discovered the changed locks and missing assets. The High Court quashed this FIR, leading to the present appeals before the Supreme Court.

Legal Framework

The Supreme Court considered the following sections of the Indian Penal Code, 1860:

• Section 378, Indian Penal Code, 1860: Defines theft as “whoever, intending to take dishonestly any movable property out of the possession of any person without that person’s consent, moves that property in order to such taking, is said to commit theft.”
• Section 457, Indian Penal Code, 1860: Deals with “lurking house-trespass or house-breaking by night in order to commit an offence punishable with imprisonment.”
• Section 380, Indian Penal Code, 1860: Punishes theft in a dwelling house, etc., with imprisonment that may extend to seven years and a fine.
• Section 506, Indian Penal Code, 1860: Defines the offense of criminal intimidation.

The Court also considered the orders passed by the District Judge under Section 9 of the Arbitration and Conciliation Act, 1996, which aimed to preserve the assets of the firm during the arbitration process.

Arguments

Appellant’s Arguments:

• The appellant argued that the High Court erred in quashing the FIR as the FIR disclosed the basic ingredients of the offenses under Sections 457, 380, and 506 of the Indian Penal Code, 1860.
• The assets in the shop were in the joint possession of the appellant and respondent No. 1, and the removal of these assets without the appellant’s consent amounted to theft.
• The appellant contended that the breaking open of the locks of the shop constituted house-breaking, and the threat issued by respondent No. 1 amounted to criminal intimidation.
• The appellant highlighted the injunction order passed by the District Judge, which required the preservation of the assets.

Respondent’s Arguments:

• The respondents argued that the FIR did not disclose the necessary ingredients of the alleged offenses.
• They contended that the eviction was carried out based on a High Court order, and there was no intention to commit theft or any other offense.
• The respondents also raised issues regarding the arbitration award and its execution.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue:

1. Whether the High Court was right in quashing the FIR on the ground that the ingredients of the offenses under Sections 457, 380, and 506 of the Indian Penal Code, 1860 were not made out from the reading of the FIR.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Court considered the following legal provisions:

• Section 378, Indian Penal Code, 1860: Defines theft.
• Section 457, Indian Penal Code, 1860: Deals with lurking house-trespass or house-breaking by night.
• Section 380, Indian Penal Code, 1860: Punishes theft in a dwelling house.
• Section 506, Indian Penal Code, 1860: Defines criminal intimidation.
• Section 9, Arbitration and Conciliation Act, 1996: Pertaining to interim measures by court.

Judgment

The Supreme Court allowed the appeals and set aside the High Court’s judgment. The Court held that the FIR disclosed the basic ingredients of the offenses under Sections 457, 380, and 506 of the Indian Penal Code, 1860. The Court emphasized that the matter should be investigated and tried. The Court noted that the assets were in joint possession of the appellant and respondent No. 1, and there was an injunction order to preserve the assets. The Court observed that the removal of assets without the appellant’s consent and knowledge amounted to theft. The Court also noted that the breaking open of the locks and the threat issued by respondent No. 1 constituted offenses under Sections 457 and 506 of the Indian Penal Code, 1860, respectively.

How each authority was viewed by the Court:

• Section 378, Indian Penal Code, 1860*: The Court used this section to determine that the removal of assets without consent constituted theft.
• Section 457, Indian Penal Code, 1860*: The Court found that the breaking open of the locks of the premises for the purposes of theft was an offence under this section.
• Section 380, Indian Penal Code, 1860*: The Court used this section to highlight the punishment for theft committed in a building used for custody of property.
• Section 506, Indian Penal Code, 1860*: The Court noted that the threat issued by respondent No. 1 constituted criminal intimidation.
• Section 9, Arbitration and Conciliation Act, 1996*: The Court emphasized the importance of the interim orders passed under this section and the violation of the same by the respondents.

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that the FIR clearly disclosed the basic ingredients of the offenses alleged. The Court emphasized that the High Court should not have interfered at the stage of the FIR when there were allegations of theft, house-breaking, and criminal intimidation. The Court also took into consideration the fact that there was an injunction order in place to preserve the assets, which was violated by the respondents. The Court noted that the eviction suit was collusive and did not justify the removal of assets in violation of the injunction order. The Court was also swayed by the fact that the respondent was aware of the order of the District Judge and still did not inform the appellant about the eviction suit. The Court also noted that the respondent had threatened the appellant when questioned about the missing assets.

“The possession , would therefore , remain with the appellant and respondent No.1 so long as the injunction was operating on it.”

“The appellant , being a partner in the said firm, removal of the assets without his knowledge would amount to theft, be it by M/s Sushma Constructions Pvt. Ltd. or others.”

“All these offences are cognizable in nature and basic ingredients being there in the FIR, the High Court clearly erred in quashing the FIR.”

Key Takeaways

• An FIR should not be quashed if it discloses the basic ingredients of the alleged offenses.
• Interim orders passed by courts, such as injunctions, must be respected and followed.
• Removal of assets from a jointly owned property without the consent of all owners can amount to theft.
• Collusive suits do not justify the violation of court orders.
• Threats issued during a property dispute can lead to charges of criminal intimidation.

Directions

The Supreme Court directed that the matter should proceed with respect to the FIR in question in accordance with the law. The Court also clarified that any observations made in the order were only for the purposes of deciding the issue and should not influence the investigation or the trial.

Development of Law

The ratio decidendi of this case is that a High Court should not quash an FIR if it discloses the basic ingredients of the alleged offenses. The Supreme Court reiterated the importance of respecting court orders, particularly injunctions, and held that the removal of assets from a jointly owned property without consent can amount to theft. This judgment reinforces the principle that criminal proceedings should be allowed to take their course when there are allegations of cognizable offenses, and the High Court should not interfere at the stage of the FIR.

Conclusion

The Supreme Court’s decision in Ruchir Rastogi vs. Pankaj Rastogi and Others overturns the Allahabad High Court’s order, reinstating the FIR against the respondents. The Supreme Court emphasized that the FIR disclosed the basic ingredients of the offenses under Sections 457, 380, and 506 of the Indian Penal Code, 1860, and that the High Court should not have quashed it. This judgment highlights the importance of respecting court orders and the legal consequences of removing assets without consent, especially in cases involving joint ownership. The matter will now proceed for investigation and trial.