' ABDUL SATTAR GORAYA, J.--- This appeal shall dispose of R.S.A. No,59 of 2005 and Cross-Objection 105 of 2005.
2. Through this second appeal, the judgment and decree dated 12-4-2005 of the learned District Judge, Narowal and that of the trial Judge dated 27-9-2001, have been called in question.
3. Facts in brief are that Qari Muhammad Hanif-defendant executed an agreement dated 10-2- 1993 in favour of the respondent-plaintiff for payment of Rs,4,04,000 as consideration of the land measuring 20 Marlas 61 sq.Ft. Bearing Khasra No,676 situated within the limits of Municipal Committee, Narowal. It was agreed that the amount shall be paid till 31-3-1993 by selling the plots and the same amount shall be deposited in Account No,2218/Muslim Commercial Bank Ltd., Narowal and will bound down the appellant-defendant to pay the double amount which in total comes to Rs,8,08,000. It is the case of the respondent disclosed in the plaint that the terms of the agreement (Exh.P.1) were not complied with for which an amount of Rs,8,08,000 became due towards him and he is bound to pay the same. Appellant took certain Preliminary Objections and emphatically denied the contents of the plaint. Appellant came out with the plea that he has been subjected to undue influence and the said instrument was signed under coercion. He was never acting as a free agent when he put thsignatures on the document Exh.P.I. Initially the suit for rendition of accounts was also filed but the same was withdrawn. Issues Nos.6, 7 and 8 were fundamentally framed to cover the pleadings of a suit for rendition of accounts but on account of withdrawal of the same, these issues became redundant. Divergent pleadings of the parties gave rise to the following issues:---
(1) Whether agreement dated 10-2-1993 was executed between Ihsan Ullah and Qari Muhammad Hanif, if so, with what terms and conditions? OPP Ihsan Ullah.
(2) Whether Muhammad Hanif defendant has violated the terms and conditions of agreement and is liable to pay an amount of Rs,8,08,000 to the plaintiff? OPP Ihsan Ullah.
(3) Whether plaintiff Ihsan Ullah has not come in the Court with clean hands? OPD
(4) Whether the plaintiff Ihsan Ullah has no cause of action? OPD.
(5) Whether Iqrar Nama dated 10-2-1993 is result of undue influence and is not enforceable at law?
OPD
(6) Whether Qari Muhammad Hanif Plaintiff in the other suit is entitled to decree for rendition of accounts against Ihsan Ullah? OPD
(7) Whether Qari Muhammad Hanif plaintiff in the other suit has no cause of action? OPD
(8) Whether the suit for rendition of accounts is insufficiently valued for the purpose of court-fee, if so what is correct valuation? OPD
(9) Relief."
' Issues Nos.1 and 2 were answered in favour of the plaintiff. Issues Nos.3, 4 and 5 were answered against the defendant.
4. Learned counsel for the appellant argued that Issues Nos.2 and 5 in fact, are the core issues in the whole case and both the Courts below erred in law in making proper dissection of the record and as a result of non-reading and misapplication of law, grave miscarriage of justice has taken place. Bitterly argued that the appellant while signing was not acting as a free agent and when he put his signatures upon Exh.P.1, he being a person working under the command of Ihsan Ullah plaintiff, it will never constitute a valid agreement. It is further argued that the instrument Exh.P.1 on its face value does not constitute an agreement because in the said instrument, there is no reciprocal liability of the suitor.
5. On the other hand, learned counsel for the respondent defended the judgment and decree passed by the learned trial Judge tooth and nail and came out with the plea that the findings recorded by the learned trial Judge are rich in detail. He further argued that the learned lower Appellate Court has fallen in error in making reduction of the amount because the case of the respondent-plaintiff falls within the provisions of section 74 of the Contract Act.
6. I have given conscious thought to the arguments addressed at the bar by the learned counsel for the parties and with their able assistance have gone through the record.
7. Exh.P.1 in the whole case is very important document. The said instrument in terms provides that an area measuring 20 Kanals 61 sq.Ft. Was given by Ihsan Ullah-respondent to the appellant. Out of the total business transaction, an amount of Rs,4,04,000 became due against Qari Muhammad Hanif appellant and by the said instrument, an undertaking was given that after selling the plot, the amount of Rs,4,04,000 shall be deposited in account No,2218/MCB, Narowal till 31-3-1993 failing which Qari Muhammad Hanif' was held entitled to pay the double amount. A separate special Power of Attorney (Exh.D.1) was also executed in favour of Qari Muhammad Hanif by Ihsan Ullah Khan-respondent on the basis of which he was empowered to sell 20 Marlas, 61 sq.Ft. Of land situated in the Municipal limits of Narowal. The position, therefore, which springs out from bare perusal of the stipulations mentioned in the two documents, one thing is manifest that the plot was owned by Ihsan Ullah and in the record, it was existing in his name.
8. This is a common ground between the two parties that Qari Muhammad Hanif was acting as an agent under the suitor and he was entering into the sale transaction with the various persons on behalf of the suitor to sell out his property and make payment to him. In the last transaction, the plot measuring 20 Marlas, 61 sq.Ft. Is shown to have been placed at the disposal of Qari Muhammad Hanif, who was asked to sell out the said property and make payment in the bank account held in the name of the respondent.
9. Section 74 of the Contract Act in terms 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 which breach, or 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. In the case in hand, in the first instance, there was not a contract in the nature by which the offer was made and acceptance was made by the appellant.
Perusal of the document Exh.P.2, the special Power of Attorney to accomplish the transaction of sale to someone else, gives a genuine impression to believe that it was merely an undertaking to pay the amount of Rs,4,04,000 which in fact, was outstanding against the appellant-defendant. At the end of close of the business transaction, the said arrangement appears to have been made.
Exh.P.1 is shown to have been signed by Qari Muhammad Hanif and attested by Muhammad Farooq and Munir Hussain P. Ws. There were no signatures appearing on the said instrument of Ihsan Ullah respondent-plaintiff to accept any reciprocal liability, if there was any.
10. Provision of section 74 of the Contract Act deals only with the rights to receive from the party who has broken a contract, a reasonable compensation and in absence of any contract, the mere fact that the appellant-defendant did not make payment of the amount within the time limit fixed by the suitor would not entitle him to attract the provisions of penal clause and claim the penalty. A penalty to claim double amount in fact, is not enforceable at law because the document Exh.P.1 and Exh.D.1 give a definite impression that these arrangements were made simply to recover the amount and nothing else, outstanding against the appellant-defendant. I am fortified in my view by Allah Ditta v. Abdul Khalique 2006 CLC 1152. The respondent in fact, is bound by his undertaking to make the payment within reasonable time. The stipulations in the said instrument are expressed only to the extent of target date but it was depending upon happening of certain events that Qari Muhammad Hanif shall make payment after selling the said plot. It is bounden duty of the Court, in such circumstances, to make proper assessment, as to what was the nature of the contract and contents of the deal arrived at between the two parties and what was the loss occasioned. Both the Courts below have not taken into consideration this aspect and recorded their findings contrary to material available on the record.
11. Much emphasis has been laid by learned counsel for the respondent that sections 73 and 74 of the Contract Act in terms provide compensation for breach of agreement to sell and non-payment of the amount within the time stipulated in the contract will result in infliction of penalty as provided in the contract. Reference has been made to Mst. Gul Shahnaz v. Abdul Qayyum Soomro and another PLD 2002 Kar. 333, Sir Chunilal v. Mehta and sons Ltd. AIR 19.62 SC 1314 and Messrs Ravians Paper and Board Industries Limited through Chief Executive 2004 CLD 984. The contention has no force. The words 'contract' and `compensation' used in section 74 ibid have significant meanings. This section boldly cuts the most troublesome knot in the Common Law doctrine of damages. It is easy to allege damages but difficult to prove. Evidence to prove the damages should have been brought on record that as to what loss the suitor suffered on the fact of this situation that subject-matter of Exh.P.1 was the landed property. In the case in hand, sufficient evidence is available on the record that the said instrument Exh.P.1 was only reduced into writing to ensure the payment of Rs,4,04,000 and nothing more than that. In absence of any valid contract, the penal clause cannot be attracted. Contract by fiction of law is a result of acceptance of a proposal as to an act or forbearance, by the parties. The contract has not been signed by the respondent and as such in absence of a reciprocal liability, the said contract does not come within the definition of a concluded contract as the vital ingredients embodied in section 2 of the Contract Act are missing. The judgments cited at the bar by the learned counsel for the respondent are entirely different on facts and circumstances and the same are not applicable in the case in hand. There remains a case of liability of payment to be discharged by the appellant outstanding against him. Reference may be made to Mst. Barkat Bibi v. Muhammad Rafique and others 1990 SCM R 28.
12. This is stark reality that the appellant has been working as an agent and that too under the command and dictative influence of the suitor-respondent. What is an agent, it is distinguished from an ordinary servant and the complete definition has been given in "The Law of Agency", a Book written by the foreign author namely Rai Sahib Om Prakash Aggarawala. It reads:- "An agent may have, and often has, in fact, a large discretion, but he is bound in law to follow the principal's instructions provided they do not involve anything unlawful. To this extent an agent may be considered as a superior kind of servant, and a servant who is entrusted with any dealing with third persons on his master's behalf is to that extent an agent. But a servant may be wholly without authority to do anything as an agent, and agency, in the case of partners, even an extensive agency, may exist without any contract of hiring and service."
' As regards undue influence, there are attending circumstances which go to root of the case that at the time of final rendition, arrangement of this nature was made that the appellant-defendant be bound down to make the payment.
13. Learned District Judge, Narowal in paragraph No,8 of the judgment himself realized that it was not that type of breach of contract which entitled the suitor to claim the penalty imposed in the agreement Exh.P.1 and the said penalty in assessment of the learned District Judge was bit harsh.
From the overall discussion made above, I have come to the inescapable conclusion that there was no contract existing between the parties in the nature the breach of which would empower the suitor to claim compensation in terms of section 74 of the Contract Act. The penal clause, kept in Exh.P.1 is not enforceable at law, however, there is no denial of the fact that amount of Rs,4,04,000 is outstanding against the appellant and he is legally bound to make payment of the said amount in a recovery suit.
14. In nutshell, the appeal is partly accepted and it is held that the condition imposed in the agreement Exh.P.1 is not enforceable and the respondent-suitor is entitled to receive amount of Rs,4,04,000 only from the appellant. Cross Objection having no force is also dismissed accordingly.
There shall, however, be no order as to costs.