MAULVI ANWARUL HAQ, J.---On 2-2-1988 the respondent filed a suit against the petitioner. In the plaint, it was stated that the petitioner entered into a registered agreement on 23-1-1983 for the sale of the suit-land for a consideration of Rs.1,73,750. He paid earnest of Rs.35,000 while the agreement was to be performed on 31-12-1983. However, on 8-6-1983 the petitioner also agreed to sell a residential property, mentioned in para.3 of the plaint, for . a consideration of Rs.36,000 and received advance Rs.30,000 while balance was to be paid to him up to 31-12-1983. Another sum of Rs.14,000 was also received by the petitioner. He went to the office of the Sub-Registrar with a balance amount of consideration but the petitioner did not turn up. He protested. Ultimately, an agreement was also entered into on 13-4-1985 whereby it was agreed that the respondent had foregone the performance of the agreement dated 31-12-1983 on terms that the petitioner would repay a sum of Rs.66,400 in instalments and in case he failed to pay the instalments, he will be liable to transfer the land to him at the rate of Rs.40,000 per Acre. It was complained that the petitioner did not comply with the said terms and had not paid him any money. With these averments, he sought a decree for specific performance of the said agreement or in the alternative for recovery of Rs.66,400. On 25-4-1988 the petitioner also filed a suit for declaration. He also stated the said facts but then proceeded to state that out of Rs.66,400, he paid a sum of Rs.16,400 as the first instalment on 13-4-1985 which was mentioned in the agreement: On 29-1-1986 he paid Rs.14,000 against receipt. It was then mentioned that the respondent had executed a pro note of Rs.36,000 in favour of the petitioner and the said amount was also adjusted and in this way he had paid the entire amount. The declaration sought was that the respondent be restrained from claiming the said amount from him. Both the suits were contested with the said pleas. The suits were consolidated. Issues were framed. Evidence of the parties was recorded.
The learned trial Court decreed the suit on 22-6-2003 directing the petitioner to transfer the land as promised. A first appeal filed by the petitioner has been dismissed by a learned Additional District Judge, Multan, on 15-9-2003.
2. Learned counsel for the petitioner in the very outset concedes the findings of fact recorded by the learned Courts below that the amount has not been paid by the petitioner to the respondent as agreed in the agreement dated 13-4-1985 i.e. Exh.P.4. He however, urges that the penal clause whereby the petitioner was to transfer his land in case of non-payment cannot be enforced. He relies on the cases of Province of West Pakistan v. Messrs Mistri Patel & Co. Another PLD 1969 SC 80 and Messrs Nigah-e-Karimee Enterprises through Proprietor and another v. Trust Investment Bank Limited 2005 CLC 912 and Abdullah v. Karim Haider PLD 1975 Kar. 385. Learned counsel for the respondent, on the other hand, contends that the breach having been established, his client is entitled to the transfer of the land by the petitioner in his favour in the manner agreed.
3. I have gone through the copies of the records. The factual position stated with reference to the pleadings of the parties particularly the plaint of the respondent is not disputed. Now the said agreement dated 13-4-1985 is on record as Exh.P.4. It refers to the registered agreement dated 23- 1-1983 (Exh.P.1 for the transfer of the suit-land only).
4. With reference to the agreement for the sale of residential property (Exh.P.2), it was stated that the petitioner has received a total amount of Rs.66,400 from the respondent. It then narrates that the parties have mutually agreed that the petitioner will not take the residential property and the respondent will pay Rs.66,400. The first instalment will be payable on the 15th of Har, 1985 and this will be Rs.16,400. The remaining Rs.50,000 shall be paid in five equal instalments every year on the first day of Poh against receipt. In case the petitioner fails to pay the instalments then the respondent shall be entitled to get the suit-land transferred in his favour by means of a registered document at the rate of Rs.40,000 per Acre.
5. Now I have also examined the evidence and I do find that the said payment had not been made.
Now according to the terms of the said agreement the entire amount was to be paid in instalments up to the year, 1990. The suit was instituted in February, 1988.
6. Now in the said case of Province of West Pakistan v. Messrs Mistri Patel & Co. And another it was held by the Honourable Supreme Court of Pakistan that a stipulation in a contract in terrorem is a penalty, whereas in the case of liquidated damages the contract is binding upon the parties. In the case of penalty, however, the Court refuses to enforce it and award aggrieved party reasonable compensation. I deem it appropriate to reproduce here the following except from the said judgment at page 88 thereof: "The argument that section 74 of the Contract Act deals only with the right to receive from the party who has broken a contract reasonable compensation and not the right to forfeit what has already been received by the aggrieved party cannot be accepted in view of the terms of the section. The cases in which such a view has been taken appear to have ignored the expression "the contract contains any other stipulation by way of penalty" in the section. This expression is comprehensive enough to include cases of forfeiture of money or any property already delivered as well as cases of recovery of money or any property on the basis of a promise to pay."
7. To my mind the said penal clause is not enforceable. However, the respondent certainly is entitled to reasonable compensation. Admittedly, the sum of Rs.66,400 is lying with the petitioner, at least, since 13-4-1985. The possession is also with him.
8. Since the learned Courts below have acted without jurisdiction while enforcing the said penal clause, I allow this civil revision inasmuch as while maintaining the dismissal of the suit filed by the petitioner for said declaration, I modify the decree passed in the suit filed by the respondent and instead I pass a decree for recovery of Rs.66,400 with profits to be paid at the rate of 12% per annum with effect from 13-4-1985 in favour of the plaintiff-respondents and against the defendant-petitioner. The costs to be borne by the petitioner throughout. In this Court, the counsel fee is fixed at Rs.10,000.