S.N. Modi, J.
1. This is a first appeal by the plaintiff Milkiyatsingh 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 Kakasingh son of Narainsingh entered into an agreement with plaintiff-appellant Mililkiyat Singh and the plaintiff-respondent Jag Roop Singh by which the former agreed to sell to the latter 12 bighas of land in Chak 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 the purchase money was to be paid by the vendees. It was stipulated between the parties 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 bale 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 regitered. The plaintiff-vendees therefore instituted the suit cut of which this appeal has arisen on 20-2-68 against the vendor for specific performance of the contract for sale. They also claimed, in the alternative, Rs. 400/- 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 1/4 bighas of land to defendant No. 4 Mst. Ranjeet Kaur and the remaining 6 1/4 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 pale 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 land in Chak No. 1 NN & Chak No. 37 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 30-4-68 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 Sections 30-E and 42 of the Rajasthan Tenancy Act, 1965, 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. The defendants Nos. 2 to 4, filed a separate written statement denying the allegations made in the plaint. They pleaded that the suit agreement being of a later date the plaintiffs were not entitled to a decree for specific performance of the contract. On the pleadings of the parties, the lower court framed the following issues:
1. Whether a sum of Rs. 4000/-mentioned in the agreement was not paid to defendant No. 1?
2. Whether the agreement dated 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?
3. Whether the plaintiffs refused to get the sale-deed executed and as such they are riot entitled to a decree for specific performance of the contract?
4. Whether the extention of the date in the agreement was made under this pressure that a sum of Rs. 4000/- will be recovered from the defendant?
5. Whether the defendant No. 1 entered into an agreement to sell the land in dispute with defendant No. 2 in Lohri Smt. 2023 and in compliance of the same, sale-deed was executed in favour of defendants Nos. 3 and 4. If so, what is its effect on the suit?
6. What is the effect on the suit of the sale in favour of defendants Nos. 3 and 4 by defendant No. 1 during the pendency of the suit?
7. Whether the plaintiffs are not entitled to a decree for specific performance in view of the provisions of Section 42 of the Rajasthan Tenancy Act?
8. Relief?
The learned Addl. Distt, Judge, Ganganagar, who tried the suit decided all the issues except issue No.2, against the defendants. While dealing with issue No.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 Section 30-E(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 son of Narain Singh 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 son of Narainsingh, subsequent transferees defendants No. 2 to 4 and plaintiff Jagroopsingh 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 9-3-07. His main argument in this appeal is that the trial court committed gross error in holding that according to Section 30-E of the Rajasthan Tenancy Act, an agreement to transfer agricultural land to a person holding a land in excess of the ceiling limit is void and unenforceable. The question therefore arises whether Section 30E of the Rajasthan Tenancy Act prohibits transfer of agricultural land to a person holding land in excess of the ceiling limit. Section 30E appears in Chapter III-3 of the Rajasthan Tenancy Act. This Chapter deals with restrictions on holding land in excess of ceiling area. Section 30E runs as under:
Section 30-E. Maximum land that can be held and restrictions on future acquisitions-
(1) Notwithstanding anything contained in this Act or in any other law for the time being in force, no person shall, as 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 or by devolution or bequest, any land so as to effect an increase in the extent of his holding over the ceiling area applicable to him,
Provided that different dates may be so notified for different areas of the State.
(2) Every 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 acquistion under Clause (b) of Sub-section (1), shall, within six months of 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 Tehsilder within the local limits of whose jurisdiction such land is situate:
Provided that if any person holding or acquiring land in excess of the ceiling area applicable to him holds land in more than one Tehsil he shall have the option to choose which of the lands held by him in different Tehsil should be surrendered so as to leave with him the land upto the celling area applicable to him:
Provided further that the option afforded by the foregoing provisos shall be subject to the limitation that, where the person surrendering excess land under the sub-section holds lands, of which some are encumbered and some are not encumbered, the unencumbered lands, shall so far as may be, be surrendered in preference to encumbered lands.
(3) Any person failing intentionally to make a report or to surrender land as required by Sub-section (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-section (1) of Section 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-section (2) or by ejectment under Sub-section (4) shall vest in it free from all encumbrances.
Section 30-F provides for allotment of land surrendered under Section 30-E. It lays down that all lands vesting in the State Government under Section 30-E shall be held by the Tehsildar and shall thereafter be let out to landless and other persons subject to the provisions of Section 30-C. Section 30-G provides for payment of compensation for land surrendered under Section 30-E. It provides:
Section 30-G. Compensation for land surrendered under Section 30-E, and for rights in improvements therein--
(1) The State Government shall be liable to pay compensation for all lands vesting in it under Section 30-E 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.
(3) The amount of compensation shall be determined by the Sub-Divisional officer in the manner and in accordance with the principles laid do on in Sections 23, 24, 25 and 26;
Provided that, notwithstanding anything contained in Sub-section (1) of Section 25 the scale of such compensation shall be:
(a) thirty times the sanctioned rent-rate in respect of the first twenty-five acres of land vesting in the state Government under Section 30-E,
(b) twenty-five times the sanctioned rent-rate in respect of the next twenty-five acres of such land, and
(c) twenty times the sanctioned rent-rate in respect of the remaining part of such land:
Provided further that, where rent in respect of any such land has not been settled, the sanctioned rent-rate there shall be taken to be the rent rate sanctioned during the last settlement for similar land in the neighborhood.(4) The amount of compensation so determined shall be apportioned among, the person surrendering his land under Sub section (2) of Section 30-E or ejccted there from under Sub-section (4) of that Section, and his tenants, if any, in the manner laid down in rules made by the State Government in this behalf
(5) Notwithstanding anything contained in Chapter III A, the amount of compensation determined under this section shall be payable in cash or in bonds or partly in cash and partly in bonds as the State Government may determine by rules made in this behalf and provisions of Sub-sections (1), (2) an (4) of Section 27 and of Section 30 shall apply to the payment thereof
By Section 23 of the Contract Act, consideration or 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 Sections 30E, 30F and 30G would go to show that the Legislature has no declared the transfer to a person holding land in excess of ceiling area to be invalid. Section 30G(2) provides that the person acquiring land by transfer in excess of the ceiling and a applicable to him shall make a report of such acquisition to, and shall surrender such excess land to the State Government. Section 30G further provided that the State Government shall be liable to pay compansation to the person so surrendering the excess land Under Section 30E Again, Section 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 Section 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 a so pertinent to note that under Section 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 Section 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 Under Section 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 transfer 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 Section 30-G 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 trangression of the provisions of Section 17 of the Act. It will be desirable to quote in extenso Section 17 of the Act. It runs as follows.
Section 17. Restrictions 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, 1908 (Central Act 16 of 1908), unless
(a) the transferor makes a declaration in writing in such form as may be prescribed and files it before such officer that the land intended to be transferred has not been declared surplus land and may not be declared to be in excess of the ceiling area applicable to him; and
(b) the transferee makes a declaration in writing in such form as may be prescribed and files it before such officer 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.
(3) If on or after the commencement of this Act, any person acquires land by any of the methods mentioned in Sub-section (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 Section 10.
(4) The provisions contained in Section 4 to 16 shall, as far as may be apply in relation to the land referred to in Sub-section (3).
A perusal of Section 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 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 disoute it is admitted that the Act came into force on 11-73 although it was published in the Rajasthan Official Gazette on 29-3-73. A bare reading of Section 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 Section 17(1) of the Act makes unlawful even those transactions which were entered into prior to 1st January 1973. Section 17(1) of the Act has thus no applicability to the tacts of the present case. That apart, the expression 'it shall not be lawful for any person to acquire by purchase' used in Section 17(1) of the Art appears somewhat 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 Section 30-E 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 Section 16 of the Act provides that the land in excess of ceiling area on being declared to be surplus under Section 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 Section 17 of the Act.
3. 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-section (2) of Section 17 of the Act. The contention is not without substance. Clause (b) of Sub-section (2) of Section 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-section (2) of Section 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 thy 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 remedy 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 Section 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.
4. The question that now arises is whether the plaintiffs are entitled to a sum of Rs 4000/- by way of damages. It is strenuouly 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.
5. 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 th?reof, the plaintiff cannot be held entitled to the entire sum so named merely became 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 Section 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 Kakasingh son of Narainsingh resold the land to defendants No. 2 to 4 for Rs. 25000/-. That being a 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.
6. 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 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 Kakasingh son of Narainsingh.