Pithu Manji and another vs Jhuksar Singh and others

Dawson Miller, C.J.—This is an appeal by the defendants under the Letters Patent from a decision of Mr. Justice Ross setting aside the decree of the District Judge and restoring that of the Munsif. The defendants entered into a kabuliat with the patnidars of Mauza Birari Bhikham by which they took settlement of 80 bighas of land for a period of 4 years, that is from 1320 to 1324 F. inclusive at a rent of Rs. 2 per bigha. The kabuliats provided that the tenants should give up possession at the end of the term, but if on the expiry of the lease they continued in occupation and possession without taking a fresh settlement and executing kabuliats the landlords should have a right to half the produce and to have it apportioned. There then follows a stipulation in the kabuliats that if the defendants prevented the landlords from getting the produce apportioned the latter should be entitled to realise the value of their share in the produce at Rs. 10 per bigha. On the expiry of the lease the defendants remained in occupation and it is alleged in the plaint and not contradicted that the defendants refused to give up possession or to allow the landlords to have the produce apportioned or to pay rent at the rate of Rs. 10 per bigha. Thereupon the plaintiffs who are the 8 annas landlords brought the present suit claiming their half share of the produce which they fix under the terms of the kabuliat at Rs. 10 per bigha of Rs. 400 in all for the year 1324 F. The defendants raised two defences, first, that they took kaimi settlement at Rs. 2 and that they were not aware of the terms of the kabuliat which were fraudulently inserted without their knowledge and secondly that the stipulation as to Rs. 10 per bigha was a penalty and not binding upon them as an agreement to pay rent at that rate.

The learned Munsif before whom the case came did not in fact go into the question of what was the actual rate in rupees of the produce of the land but thought that under the contract the plaintiffs were entitled in the event of the defendants refusing to have the produce apportioned to recover rent at the rate of Rs. 10 per bigha for the year 1324 F. and accordingly he passed judgment for the sum claimed with costs against the defendants.

On appeal the learned Officiating District Judge considered the terms of the kabuliat and came to the conclusion that the stipulation to pay rent at the rate of Rs. 10 per bigha in the event of the defendants refusing to allow the produce to be apportioned was merely a stipulation by way of penalty and not a substantive part of the agreement binding the defendants to pay rent at that rate. What he said was that "the payment and price of the produce at this rate does not seem to me the proper consideration for the plaintiffs'' share in the produce. There is nothing on the record to show on what basis or date this rate of the price was fixed at the time of the kabuliat. This rate prima facie seems to me altogether unreasonable. In this view of the matter I am prepared to hold that the agreement relating to the payment of the price at Rs. 10 per bigha is in the nature of a penalty to be impressed upon the defendants if they failed to divide the produce as agreed upon, and as such it is not enforceable. It was simply a sort of threat to compel the defendants to divide the produce should they hold over without executing a fresh kabuliat". In that view of the law it seems to me that the learned District Judge was quite right and on referring to S. 74 of the Indian Contract Act it seems clear that the stipulation contained tin the kabuliat was one which came within the direct terms of that section. It was a sum named in the contract as the amount to be paid in case of a breach of the contract and in such cases where that occurs the stipulation f or payment of such an amount is treated and properly treated as a penalty. It is a stipulation entered in the agreement merely with the object of forcing the defendants to fulfil their terms of the contract. In the present case the contract was that at the end of 4 years when the lease terminated the defendants should pay to their landlord half the amount of the produce of the land. That was the agreement, and in the event of their objecting to do so or preventing the landlords from having the produce assessed, then follows the stipulation that they should pay at Rs. 10 per bigha. It is clear to my mind that that stipulation was purely a penalty as understood in law and it was as one knows from one''s knowledge of the usual rate of rent of lands of this description a much higher rate of rent than is usual in such cases and I have no hesitation in coming to the conclusion that that stipulation was purely a penalty and not meant to be a substantive part of the contract binding in any way on the defendants. In these circumstances the question is whether the learned District Judge was right in dismissing the suit on the ground that the rent claimed was a penalty or whether he ought to have considered what was the actual value of the produce in the particular case and awarded the plaintiffs a rent based upon the value of the produce.

When the matter came before the learned Judge of this Court he took a different view from that taken by the Officiating District Judge. His view was that prima facie the agreement was reasonable and that if the defendants contended that it was not reasonable then it was for them to prove it and in the absence of any finding based on evidence the learned Judge thought it must be held that the agreement was reasonable and that the plaintiff entitled to recover rent at the rate of Rs. 10 a bigha. I have already stated that in my opinion the stipulation was purely and simply entered in the kabuliat as a penalty. Then the only question which we have to consider is what ought to be the result The learned District Judge dismissed the suit and stated that the plaintiffs might in some other proceedings if they chose apply for the ascertainment of a fair rent based upon the actual produce. I do not think however in this case where evidence has been given by both parties as to the actual produce that we should be serving any good purpose by dismissing the suit and allowing the plaintiffs if they should be so advised to bring a fresh suit asking for rent based upon the produce. The question as to what the produce was or the value of the produce was or was not determined by the Courts below that is to say by the Lower Appellate Court and the Munsif. It was left undetermined but there is evidence on the record to which we have been referred and in my opinion in order to dispose of this suit we are entitled u/s 103 of the CPC if the evidence on the record is sufficient to determine issue of fact necessary to the disposal of the appeal provided that that issue has not been determined by the Lower Appellate Court. The issue was not determined by the Lower Appellate Court and although the evidence is somewhat meagre and one can only arrive at a rough and ready conclusion still the evidence is there and we have been referred to it and have read it and that is sufficient to enable the Court to come to a conclusion in the case as to what the proper rate of rent should be based upon the produce. The plaintiffs very naturally put it considerably higher than the defendants.

The evidence on behalf of the defendants is roughly that the yield of maki and kurthi was from 2 1\\2 to 3 maunds per bigha and that tori is sold from Rs. 2 to Rs. 3 per maund. If you take the higher figures given by the defendant the result would be that the total produce would be about Rs. 9 per bigha. The plaintiffs, on the other hand, put the produce much higher. They state that the land yields from 10 to 12 maunds per bigha of maki and tori in the year 1324 F. If you take the lower rate, viz, 10 maunds per bigha and treat the value as Rs. 3, then you get Rs. 30 per bigha. That estimate is in my opinion clearly excessive, but considering the evidence as a whole the result which I have arrived at is that a fair rent for the whole produce of the land would be Rs. 10 per bigha so that the plaintiffs are entitled to rent at a rate of Rs. 5 per bigha. The result is that the judgment and decree of the learned Judge of this Court are set aside and a decree will be entered for the plaintiffs for rent at the rate of Rs. 5 per bigha in respect of 40 bighas, that is to say, Rs. 200 in all for the year 1324 F. With regard to costs the plaintiffs have succeeded to the extent of half their claim and we think that they are entitled to proportionate costs throughout.

Adami, J.

I agree.