1. The plaintiff has filed this appeal against the dismissal of his claim by the trial Court for damages on account of breach of agreement by the defendants.
2. The facts not in dispute are that the defendants along with 3 others are the joint owners of agricultural lands measuring 587.01 acres situated in village Khandabarh Tahsil, Budni, District Sehore. They had inherited these lands from their predecessor-ill-interest Khur-sheed Ahmad. After his death, the Government of Madhya Pradesh disputed their title resulting in litigation which ultimately ended in their favour. During pendency of the dispute, the defendants executed an agreement Ex. P. 1 on 5-8-1964. It was agreed that the defendants would sell all the standing jungle including all the timber and firewood etc. to the plaintiff for a sum of Rs. 60,000/- and the defendants would deliver possession of the aforesaid lands for the purpose of clearing and removing all timber, firewood and other pro-duce after the dispute with the Government of M.P. was settled and the defendants obtained possession. The plaintiff was entitled under the agreement to cut, clear and remove all the timer, fire-wood etc. and prepare charcoal from the jungle within 2 years from the date of delivery of possession by the defendants. It was also stipulated in the agreement that if any party failed to perform his part of the agreement, the other party would be entitled to claim Rs. 50,000/- from the defaulter. On the same day, the plaintiff paid Rs. 3500/-to the defendants as advance payment. It was further stipulated that if the dispute of the defendants with the Government was not settled by the end of Jan. 1965 the advance amount of Rs. 3500/- would be refunded to the plaintiff. As the defendants did not deliver possession of the lands by 31-1-1965 the amount of Rs. 3500/- was returned to the plaintiff on 29-10-1966. Subsequently, the defendants received possession of the lands on 20-12-1969 from the State of M.P. but did not deliver possession to the plaintiff. Therefore, the present suit was filed by the plaintiff claiming damage of Rs. 50,000/-as stipulated in the agreement. During pendency of the suit, the defendants entered into similar agreement with one Jagdish Chandra on 31-7-1970 for the sale of standing jungle, timber and firewood in consideration of a sum of Rs. 1,51,000/- and the said Jagdish Chandra in pursuance of that agreement had cut and removed the entire timber, fire-wood and jungle produce from the jungle.
3. The plaintiff's case is that on settlement of dispute and getting delivery of possession of their lands, the defendants were bound to put the plaintiff in possession of all jungles including all timber, fire-wood etc. after 20-12-1969 Though the plaintiff took back advance payment of Rs. 3500/- on 29-10-1966 as per the terms of the agreement, the agreement stipulated that in spite of the refund, the agreement would subsist and the refund would be without prejudice to the plaintiff's right under the agreement. This was also the endorsement made by the defendant Salim Ahmad Khan on the receipt passed by him. In spite of this subsisting agreement, the defendants entered into another agreement on 31-7-1970 with one Jagdish Chandra for Rs. 1,51,000/- and thereby they committed breach of the agreement. Though the defendants are profited by asum of Rs. 91,000/- the plaintiff claims only Rs. 50,000/- as damages which have been stipulated in the agreement.
4. The defendants resisted the suit and denied all the allegations. According to them the suit agreement was in contravention of Section 180 of the M. P. Land Revenue Code, 1959, and. therefore, illegal and void. The defendant Firoz Ahmad Khan was a minor at the time of the agreement and his mother defendant Begum Rafiya Khursheed could not act as the guardian of the minor's property and, therefore, so far as Firoz Ahmad Khan was concerned the agreement was inoperative. As the plaintiff had taken back the advance payment of Rs. 3500/-, the suit agreement came to an end and even if there was a stipulation to the contrary in the agreement, the same is bad in law. Besides the defendants, the 3 daughters of Khursheed Ahmed Khan are also owners of the suit lands and no such agreement could have been entered into without their consent.
5. The learned trial Judge found that the suit agreement between the parties was hit by Section 180 of the M. P. Land Revenue Code, 1959, and could not be enforced. He further held that the suit agreement was not binding on the defendant Firoz Ahmed Khan, who was a minor, and his mother defendant Begum Rafiya Khursheed could not have acted as guardian of the minor's property. However, he found that the agreement was not bad for uncertainty of performance nor the 3 daughters of Khursheed Ahmed Khan were necessary parties to the suit. Although the plaintiff took back advance payment of Rs. 3500/-, still as per terms the agreement subsisted. It has also been found that the defendants subsequently by another agreement dated 31-7-70 sold all jungle, timber and fire-wood etc. to one Jagdish Chandra for Rs. 1,51,000/- who had cut and removed them. But it has been held that if the agreement was valid then the plaintiff would have been entitled to Rs. 50,000/- as damages as stipulated in the agreement. He, therefore, dismissed the suit.
6. The only questions for consideration are (i) whether the agreement in question is void ab initio being in contravention of Section 180 and other provisions of the M. P. Land Revenue Code, 1959, (ii) whether the plaintiff is entitled to Rs. 50,000/- as damages as stipulated in the agreement The finding of the trial Court that the agreement against Firoz Ahmed Khan is unenforceable because he was a minor and his mother was not authorised to enter into transactions on his behalf as his guardian is unassailable. Under the Mahomedan Law, mother cannot be legal guardian of minor's property.
7. The defendants in their written statement submitted that the suit agreement is in contravention of Section 180 of the M.P.L.R. Code and is forbidden by law. If the agreement is allowed to stand, it would defeat the provisions of the Code. The plaintiff by amendment in the plaint contended that the land in question was completely a jungle and the defendants desired to clear it off for purpose of cultivation. Since they had no source to do so, they entered into suit agreement with the plaintiff for that purpose. Therefore, the agreement is not hit by Section 180 of the Code. Under Section 179 all trees standing in a holding belong to Bhumiswami. Section 180 (1) of the Code is as under :-
'The transfer by a Bhumiswami of any trees standing in any land comprised in his holding except the produce of such trees shall be void unless the land itself is transferred'.
It is evident from these provisions that Bhumiswami is the owner of all trees standing in his holding but he is forbidden from transferring any trees standing thereon except the produce of such trees. Such a transfer shall be void unless the land itself is transferred. Now we have to see whether the interest of the Bhumiswami in the standing trees has been transferred or only the produce of such trees has been transferred. The suit agreement Ex. P. 1 recites that the defendants agreed to sell all the standing jungle including all the timber, firewood etc. to the plaintiff for a sum of Rs. 60,000/- for the purpose of clear felling and removing all the timber, firewood and other products. The defendants would deliver possession of the lands to the plaintiff for that purpose and within 2 years thereof the plaintiff was to remove all the trees. In the plaint also it is pleaded that the defendant agreed to sell all the standing jungle including all the timber and firewood etc. and that the possession of the Jungle would be delivered by the defendant to the plaintiff. In his evidence also plaintiff Gurubux Singh(P. W. 1) has deposed that the entire jungle was sold. Therefore, there cannot be any manner of doubt that all the interest of the defendants in all the standing trees on the suit lands was agreed to be sold abolutely to the plaintiff and all their rights in the trees ceased.
It is true that all the standing trees were to be cut and removed within 2 years of delivery of possession but there was no stipulation that after 2 years the rights of the defendants in the trees would be revived. At the most the plaintiff could not have cut and removed the trees after 2 years but his right to enjoy the products of the trees would have continued thereafter also. It follows that all the trees standing in the jungle were sold by absolute sale but the land on which trees were standing was not sold. As such, the agreement was in violation of Section 180 (1) of the Code, This being the position, the suit agreement cannot be enforced and is void. This apart, under Section 240 of the Code there is prohibition against cutting of certain trees. As per the rules framed under this section, certain species of trees have been mentioned which shall not be cut without the permission in writing of the Collector. It can be assumed that there were also trees in the jungle of the species mentioned in the rules which could not be cut without prior permission of the Collector. Such trees are found in jungles. In the plaint also it is mentioned that the defendants had agreed that they would obtain necessary permission for cutting the trees from the competent authority. Unless and until such permission was obtained, all the trees could not be cut and removed. It is not known as to what was the extent of such trees in the Jungle. Therefore, under these rules the agreement would also be hit so far they stipulate cutting of the trees which is prohibited under the rules without the prior permission of the Collector. The finding of the trial Judge is accordingly affirmed on this point.
7A. Now the question remains whether the plaintiff is entitled to damages of Rs. 50,000/- as stipulated in the agreement and as has been held by the learned trial Judge. We are unable to agree with the finding of the trial Judge. Section 74 of the Contract Act provides that 'when a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach,or if the contract contains, any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for'. The Supreme Court in Fateh Chand v. Balkishan Dass, AIR 1963 SC 1405 has held as under (at p. 1406) ;-
'The measure of damages in the case of breach of a stipulation by way of penalty is by Section 74 reasonable compensation not exceeding the penalty stipulated for. In assessing damages the Court has subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. Jurisdiction of the Court to award compensation in case of breach of contract is unqualified except as to the maximum stipulated; but compensation has to be reasonable, and that imposes upon the Court duty to award compensation according to settled principles. The section undoubtedly says that the aggrieved party is entitled to receive compensation from the party who has broken the contract, whether or not actual damage or loss is proved to have been caused by the breach. Thereby it merely dispenses with proof of 'actual loss or damage', it does not justify the award of compensation when in consequence of the breach no legal injury at all has resulted, because compensation for breach of contract can be awarded to make good loss or damage which naturally arose in the usual course of things or which the parties knew when they made the contract, to be likely to result from the breach'.
8. Now it remains to be seen whether the sum of Rs. 50,000/- as stipulated in the agreement is by way of penalty or liquidated damages. If it is penalty then the plaintiff will have to prove actual damages suffered by him and in case it is liquidated damages then the plaintiff may get the sum named in the agreement, if legal injury is caused. Thesuit agreement is only for the consideration of Rs. 60,000/- and it is not possible to accept that for breach of such agreement, damages of Rs. 50,000/-would be suffered, therefore the stipulation was by way of penalty. Defendant Saleem Ahmad Khan (DW. 1) has stated that this sum of Rs. 50,000/- was mentioned as damages for breach of agreement at the instance of the plaintiff. As against this, plaintiff Gurubux Singh (P. W. 1) has stated that because he would have earned profit of Rs. 40,000/-to Rs. 50,000/- out of the suit agreement and therefore Rs. 50,000/- was stipulated as damages but he admitted that in forest contracts at times losses are incurred but he was definite that he would have earned profit of Rs. 50,000/-. This he could have earned after investing a sum of Rupees 1,50,000/-. The amount would have been required for preparing coal, cutting timber and for transport charges. Obviously he has not taken into consideration the value of the species of the trees which could not be cut if the permission was refused by the Collector. He further admitted that in 1964 when the suit agreement was entered into the price of timber was quite low and that is why he agreed to purchase the jungle for Rs. 60,000/- only. He asserted that the consideration was the proper price of the jungle sold, which means that he would not have earned any substantial profit even in that year. He states that in 1970 the prices have gone fourfold. The plaintiff has not invested a single pai in pursuance to the agreement and on the other hand he has taken refund of advance payment. So without incurring any loss the plaintiff wants damages of Rupees 50,000/-, which he cannot get as liquidated damages also as no injury has been caused to him. Therefore, we hold that the plaintiff is not entitled to any damages for breach of agreement even if it is assumed that the agreement is enforceable.
9. For the reasons stated above, the appeal fails and it is dismissed with costs. Counsel's fee as per schedule, if certified.