MODI, J. - (1.) THIS is a first appeal by the plaintiff Milkiyat Singh in a suit for specific performance of the contract for sale of agricultural land or, in the alternative, for damages for breach of contract. On 9-3-67 the defendant-respondent No. 1 Kaka Singh son of Narain Singh entered into an agreement with plaintiff appellant Milkiyat Singh and the plaintiff respondent Jagroop Singh by which the former agreed to sell to the latter 12-1/2 bighas of land in Ghuk No. 37 GG, Tehsil Padampur for a sum of Rs. 13000/- and the vendees paid a sum of Rs. 4000/- by way of earnest money on the same date. The sale was to be completed on Lohri Smt. 2024 when the balance of purchase price was to be paid by the vendees. It was stipulated between the parries that if the defendant vendor failed to complete the sale, he would be liable to refund the earnest money and in addition to it, pay a sum of Rs. 4000/- as damages for breach of contract, and it was further provided that if the vendees failed to complete the sale, they would be liable to forfeiture of their earnest money On 12-1-68 the time for completion of the sale was extended upto 15-2-68 by mutual consent of the parties. The plaintiff-vendees' case is that on the appointed date (15 2-68) they went to the Sub-Registrar's Office with the balance of sale-price but the defendant-vendor did not turn up to get the sale-deed registered. The plaintiff-vendees therefore instituted the suit out of which this appeal has arisen an 20-2-68 against the vendor for specific performance of the contract for sale. They also claimed, in the alternative, Rs 4000/-as damages and the return of Rs. 4000/- paid to the vendor by way of earnest money. Subsequently, the plaintiff-vendees amended the plaint and impleaded defendants Nos. 2 to 4 on the ground that after the institution of the suit the defendant-vendor sold 6-1/2 bighas of land to defendant No. 4 Mst. Ranjeet Kaur arid the remaining 3-1/2 bighas of land to defendants Nos. 2 and 3 and got the sale-deeds registered in their favour on 30-4-68. The defendant-vendor Kakasingh son of Narainsingh in his written statement admitted the execution of the agreement to sell, dated 9-3-67 but denied to have received Rs. 4000/- by way of earnest money from the plaintiff-vendees. He further alleged that the plaintiffs refused to get the sale-deed registered in their favour because they possessed in Chak No 1 HH and Ghat No. 3 GG in excess of ceiling limit applicable to them. The defendant-vendor further admitted having extended time for completing the sale but pleaded that the time was extended under pressure to refund the amount of earnest money. He further admitted having executed the sale-deeds in respect of the disputed land in favour of defendants Nos. 2 to 4 on 30- 1-63 but alleged that the said sale deeds were executed in pursuance of an earlier agreement to sell, executed by him in Lohri Smt. 2023. He further pleaded that in view of the provisions contained in secs. 30-E and 42 of the Rajasthan Tenancy Act, 1955, the suit-agreement dated 9-3-67 was void and unenforceable in as much as the plaintiffs held land in excess of the ceiling limit on the date of the agreement. On the pleadings of the parties, the lower court framed the following issues: "(2) Whether the agreement date 9-3 67 was null and void and not binding as the plaintiffs had land in excess of the ceiling limit on the date of the agreement?" The learned Additional District Judge, Ganganagar, who tried the suit decided all the issues except issue No. 2 against the defendants. While dealing with issue Mo. 2, the learned Judge held that the plaintiffs were holding land in excess of ceiling limit at the time of the agreement dated 9-3-67. He further held that sec. 30E(1) of the Rajasthan Tenancy Act prohibited acquisition of land over and above the ceiling limit by purchase and in face of such a prohibitory provision no court of law could enforce an agreement which was forbidden by law. The learned Judge accordingly dismissed the suit for specific performance as also for the recovery of damages for Rs. 4000/-. He, however, decreed the suit for return of earnest money of Rs, 4000/- against vendor Kakasingh I/O Narainsingh with interest at the rate of six percent per annum from the date of the suit till realisation. Dissatisfied with the said judgment and decree, the plaintiff Milkiyatsingh has preferred this appeal and impleaded vendor Kakasingh I/O Narain Singh, subsequent transferes defendants Nos. 2 to 4 and plaintiff Jagroop Singh as respondents.
(2.) ARGUING the appeal, Mr. L. R. Mehta, the learned advocate for the appellant has frankly conceded that the plaintiffs were holding agricultural land in excess of the ceiling limit at the time of the agreement dated 9-3-67. His main argument in this appeal is that the trial court committed gross error in holding that according to sec. 30E of the Rajasthan Tenancy Act, an agreement to transfer agricultural land to a person holding land in excess of the ceiling limit is void and unenforceable. The question therefore arises whether sec. 30E of the Rajasthan Tenancy Act prohibits transfer of agricultural land to person holding land in excess of the ceiling limit. Sec. 30E appears in chapter III B of the Rajasthan Tenancy Act. This Chapter deals with restrictions on holding land in excess of ceiling area. Sec. 30E runs as under: "Sec. 30-E Maximum land that can be held and restriction on future acquisition: (1) Notwithstanding anything contained in this Act or in any other law for the time being in force, no person shall, from a date notified by the State Govt. in this behalf - (a) continue to hold or retain in his possession in any capacity and under any tenure whatsoever land in excess of the ceiling area applicable to him; or (b) acquire, by purchase, gift, mortgage, assignment, lease, surrender or otherwise by devolution or bequest, any land so as to effect an incrtase in the extent of his holding over the ceiling area applicable to him, (2) livery person, who, on such date, is in possession of land in excess of the ceiling area applicable to him or who thereafter comes into possession of any land by acquisition under clause (b) of sub-sec. (1), shall, within six months of such date or within three months of such acquisition, as the case may be, make a report of such possession or acquisition to, and shall surrender such excess land to the State Government and place it at the disposal of the Tehsildar within the local limits of whose jurisdiction such land is situate: (3) Any person failing intentionally to make a report or to surrender land as required by sub-sec. (2) shall on, conviction, be punishable with fine which may extend to one thousand rupees. (4) Without prejudice and in addition to such conviction and fine the person retaining possession of any land in excess of the ceiling area applicable to him shall be deemed to be a trespasser liable to ejectment from such excess land and to pay penalty in accordance with clause (a) of sub-sec. (1) of sec.183: Provided that the lands from which a person shall be so ejected shall, as far as may be, be unencumbered lands. (5) All lands coming to the State Government by surrender under sub sec. (2) or by ejectment under sub-sec. (4) shall vest in it free from all encumbrances." Sec. 30F provides for allotment of land surrendered under sec. 30E. It lays down that all lands vesting in the State Government under sec. 30E shall be held by the Tehsildar and shall thereafter be let out to landless and other persons subject to the provisions of sec. 30G. Sec. 30G provides for payment of compensation for land surrendered under sec. 30F. It provides: "Sec. 30. Compensation for land surrendered under sec.30 E and for rights in improvements therein - (1) The Statement Government shall be liable to pay compensation for all lands vesting in it under sec. 30E to the persons so surrendering the same. (2) Every such person shall, at the time of such vesting or at any time thereafter, submit to the sub divisional officer a detailed statement of his claim for compensation in the prescribed form and in the prescribed manner." By sec. 23 of the Contract Act, consideration for object of an agreement is unlawful if it is forbidden by law or it is of such a nature that if it is permitted it would defeat the provisions of any law or is fraudulent. A bare reading of secs.30E, 30F and 30G would go to show that the Legislature has not declared the transfer to a person holding land in excess of ceiling area to be invalid, Sec. 30 E (2) provides that the person acquiring land by transfer in excess of the ceiling area applicable to him shall make a report of such acquisition to, and shall surrender such excess land to the State Government. Sec. 30-G further provides that the State Government shall be liable to pay compensation to the person so surrendering the excess land u/s. 30E. Again, sec. 30E does not lay down that the land acquired by a person by transfer or otherwise in excess of ceiling area shall revert to the transferor. On the other hand, it is clear from sec. 30G that the land acquired by a person in excess of the ceiling area shall be deemed to be of the ownership of the transferee who would be entitled to get compensation from the State Government. It is also pertinent to note that under sec. 30E a person acquiring land by transfer in excess of ceiling area is not required to surrender the very land which he has acquired, to the State Government. He is at liberty to retain the land acquired by him and surrender any other land held by him so as to leave with him the land upto the ceiling area. It is therefore difficult to hold on the basis of sec. 30E of the Rajasthan Tenancy Act that the Legislature has prohibited transfer to a person holding land in excess of ceiling area applicable to him. What is prohibited u/s 30E is that a person cannot effect an increase in the extent of his holding over the ceiling area by means of purchase, gift, mortgage, assignment, lease; surrender, devolution or bequest The inability of the transferee to hold land in excess of ceiling area has, in my opinion, no effect upon the operation of the transfer. Again, the requirement of the law to surrender in the event of the transferee acquiring land in excess of the ceiling area in no way invalidates the transfer between the parties. I am, therefore clear in my mind, that a contract for purchase of land by a person holding land in excess of: ceiling area is not void and the vendor cannot resist enforcement of such a contract on the ground that it is forbidden by sec. 30-E of the Rajasthan Tenancy Act. Mr. S.R. Bajwa, the learned advocate for the defendant-respondents, drew my attention to the provisions of the Rajasthan Imposition of Ceiling on Agricultural Holdings Act, 1973 (No 11 of 1973), hereinafter called the Act. The contention of Mr. Bajwa is that the agreement to sell if enforced would result in transgression of the provisions of sec. 17 of the Act. It will be desirable to quote in extenso sec. 17 of the Act. It runs as follows: "Sec.17. Restriction on future acquisitions: (1) On and from the commencement of this Act, it shall not be lawful for any person to acquire by purchase, gift, mortgage, assignment, lease, surrender, devolution, bequest or otherwise any land so as to effect an increase in the extent of his holding over the ceiling area applicable to him. (2) Notwithstanding anything contained in any law for the time being in force, no document relating to any transfer of land either by way of sale, gift, mortgage, exchange, surrender or otherwise shall be registered by any Registering Officer appointed under the Indian Registration Act, 903 (Central Act, 16 of 1908), unless . . . (a) . . . . (b) . . . (3) If on or after the commencement of this Act, any person acquires land by any of themethods mentioned in sub-see. (1) which effect an increase in the extent of his holding over the ceiling area applicable to him, he shall within 60 days of such acquisition furnish a return to the Authorised Officer in accordance with sec. 10. (4) The provisions contained in sec. 4 to 16 shall, as far as may be, apply in relation to the land referred in sub-sec. (3)." A perusal of sec. 1 of the Act would reveal that it extends to the whole of the State of Rajasthan and it shall be deemed to have come into force in the whole of the State of Rajasthan excepting the Rajasthan Canal Project area with effect from the 1st day of January, 1973 and it shall come into force in the Rajasthan Canal Project area on such date as the State Government may, by notification in the Official Gazette, appoint. It is not the case of the parties that the land in dispute exists in the Rajasthan Canal Project Area. For the purpose of the land in dispute, it is admitted that the Act came into force on 1-1-73 although it was published in the Rajasthan Official Gazette on 29-3-73. A bare reading of sec. 17(1) of the Act would reveal that it hits only those persons who acquire land in excess of ceiling area by purchase, gift, mortgage, assignment, lease, surrender, devolution, bequest or otherwise on or after 1st January, 1973. In the present case, the agreement to sell was entered into between the parties as far back as 9-3-67 and the suit for specific performance of the contract was instituted on 20-2-68. There is nothing to indicate that sec. 17(1) of the Act makes unlawful even those transactions which were entered into prior to 1st January 1973 Sec. 17(1) of the Act has thus no applicability to the facts of the present case. That apart, the expression "It shall not be lawful for any person to acquire ' by purchase" used in sec. 17(1) of the Act appears some-what vague and in no case this expression is better than the expression "no person shall, as from a date notified by the State Government in this behalf acquire by purchase" used in sec. 30E of the Rajasthan Tenancy Act An examination of the scheme of the Act would lead to the conclusion that the Legislature in this Act also has not declared the transfer to a person holding land in excess of ceiling area to be invalid, for sec. 16 of the Act provides that the land in excess of ceiling area on being declared to be surplus under sec. 13 of, the Act by the Authorised Officer shall vest in the State Government. That being the case, the only consequence of the invalidity of the acquisition of the land in excess is that it shall vest in the State Government. The provisions of the Act are thus more or less similar to the provisions contained in Chapter III-B of the Rajasthan Tenancy Act. It therefore cannot be said that the agreement to purchase land by the plaintiffs in excess of the ceiling area is void under sec. 17 of the Act. Mr. Bajwa next contended that in any case no decree for specific performance of the contract can be passed in the present case in view of the prohibition contained in sub-sec. (2) of sec. 17 of the Act. The contention is not without substance. Clause (b) of sub sec. (2) of sec. 17 of the Act lays down that no document relating to any transfer of land either by way of sale, gift, mortgage, exchange; surrender or otherwise shall be registered by any Registering Officer appointed under the Indian Registration Act, 1908, unless, the transferee makes a declaration in writing disclosing the area of the land already held by him and that the land already held by him together with the land to be transferred to him will not exceed the ceiling area applicable to him. Admittedly, the plaintiffs were holding land in excess of the ceiling area applicable to them, on the date of the agreement to sell. It is further admitted by the, learned counsel for the appellant that even now the plaintiffs are holding land in excess of the ceiling area applicable to them. That being the admitted position, it is clear that it will not be possible for the plaintiffs to submit the declaration as required by clause(b) of sub-sec. (2) of sec. 17 of the Act to the Registering Authority. In the absence of such declaration the Registering Officer would be debarred from registering the document of transfer. In the circumstances, the, decree for specific performance even if passed by this Court will be of no avail or utility to the plaintiffs. I therefore see no point in passing a decree which cannot be executed effectively. Realising the difficulty, the learned counsel for the plaintiff appellant submitted that the plaintiffs be granted alternative relief for damages to the extent of Rs. 4000/- claimed by them in the plaint. The trial court has found that the plaintiffs were ready and willing to perform their part of the contract and they never refused to get the sale-deed executed and registered. This finding has not been challenged before me by the learned counsel for the defendants. There is thus no doubt that the defendant-vendor was guilty of the breach of contract and the plaintiffs are entitled to claim damages for the breach of contract. It is further clear that the contract for sale has become incapable of specific performance on account of the provisions of the Act which came into force subsequent to the institution of the suit. Explanation to sec. 21 of the Specific Relief Act, 1963, provides that in such a case the court is not precluded from awarding damages for breach of contract. The question that now arises is whether the plaintiffs are entitled to a sum of Rs. 4000/- by way of damages. It is strenuously contended before me that although it was stipulated in the agreement that either party in the event of the breach of contract would be liable to pay a sum of Rs. 4000/- to the other by way of damages, the stipulation is in the nature of penalty and cannot be enforced.
(3.) I have considered the question of awarding damages and I find that it is well settled that where a sum is named in the agreement as payable on breach thereof, the plaintiff cannot be held entitled to the entire sum so named merely because such a sum is mentioned in the agreement to be so payable. All that the plaintiff would be entitled to is a reasonable compensation subject to the amount named therein being the maximum (See sec. 74 of the contract Act) The question, therefore, arises whether a sum of Rs. 4000/- in the present case is a reasonable compensation The answer is not far to seek. Admittedly, the vendor Kaka Singh S/o Narain Singh re-sold the land to defendants Nos. 2 to 4 for Rs. 25000/-. That being the case, I have no hesitation in coming to the conclusion that the amount of Rs. 4000/- named in the agreement as damages for breach of contract, apart, from the return of the earnest money of Rs. 4000/- is reasonable compensation, as it is well covered by the excess price to the tune of Rs. 12000/- recovered by the vendor at the re-sale. The plaintiffs are therefore entitled to a decree for Rs. 4000/- by way of damages. For the reasons stated above, the appeal is allowed, the decree passed by the lower court is modified and the decretal amount is enhanced from Rs. 4000/- to Rs. 8000/-. The plaintiffs shall be entitled to interest on the decretal amount at the rate of six percent per annum from the date of the suit till realisation. The costs of this appeal shall be borne by defendant Kaka Singh son of Narain Singh.;