Contract - Compensation for breach of contract where penalty stipulated for - "the contract contains any other stipulation by way of penalty", if applicable to all stipulation by way of penalty - Indian Contract Act, 1872 (Act IX of 1872), s.74 - Code of Civil Procedure, 1908 (Act 5 of 1908), s.2 (12) and O. 20 r. 12 (1) (c)

By agreement dated March 21, 1949, the plaintiff contracted to sell leasehold rights in a piece of land and in the building constructed thereon to the defendant. The plaintiff received Rs. 25,000/- under the agreement and delivered possession of the building and the land in his occupation to the defendant, but the sale was not completed before the expiry of the period stipulated in the agreement, and for this default each party blamed the other. The plaintiff instituted a suit in the court of the Subordinate Judge claiming to forfeit the amount of Rs. 25,000/· received by him, and praying for decree for possession of the land and building and for compensation for use and occupation of the building from the date of delivery of possession to the defendant of the property. The defendant contended that the plaintiff having broken the con· tract could not forfeit the amount of Rs. 25,000/· received by him nor claim any compensation. The trial Judge held that the plaintiff had failed to put the defendant in possession and could not therefore retain Rs. 25,000/· and accordingly directed that on the plaintiff depositing Rs. 25,000/- less Rs. 1,400/- the defendant do put the plaintiff in possession and awarded to the plaintiff future mesne profits at the rate of Rs. 140/· per mensem from the date of the suit until delivery of possession. On appeal the High Court modified the decree of the trial court and declared "that the plaintiff was entitled to retain out of Rs. 25,000/- paid by the defendant under the sale agreement, a sum of Rs. 11,250/·" and directed that the plain· tiff do get from the defendant compensation for use at the rate of Rs. 265/· per mensem.