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Tejendro Narain Singh v. Bakai Singh And Ors.
Factual and Procedural Background
The suit concerns recovery of rent by the plaintiff as a part proprietor of an estate from the defendant, Bakai Singh. The defendant had held 42 bighas 15 cottas of land under a registered kabuliat (lease/agreement) for seven years at varying rates (2 annas, 4 annas and 8 annas) totaling a former summed rent of Rs. 10 for the term. The kabuliat, executed on 27th September 1881, contained a clause that on expiry of the fixed term the tenant would execute a fresh kabuliat and continue cultivation; and that if he cultivated without executing the fresh kabuliat he would pay rent at a uniform rate of Rs. 4 per bigha.
The seven-year term expired in Asin 1296 (F.). The defendant did not execute a fresh kabuliat and continued to hold the land. The plaintiff sued for arrears of rent for the years 1296 to 1299 on the basis of the Rs. 4 per bigha rate, claiming an enhanced rent (stated as Rs. 171 instead of the former Rs. 10).
At trial the Munsif treated the Rs. 4 provision as penal in nature but awarded an increased rent only to the extent of 2 annas per rupee on the former rent as "compensation" (applying Section 29 of the Bengal Tenancy Act and principles of Section 74 of the Contract Act). On appeal the Subordinate Judge dismissed the suit holding that the plaintiff, being only a part proprietor, could not sue for enhancement of rent (arguing such enhancement could only be effected under the Bengal Tenancy Act and by all proprietors jointly). The matter proceeded further on appeal to the higher court whose opinions follow in the text.
Legal Issues Presented
- Whether the plaintiff, as a part proprietor, can maintain a suit to recover enhanced rent claimed under the terms of a kabuliat executed prior to the Bengal Tenancy Act.
- Whether the clause in the kabuliat providing for a uniform rent of Rs. 4 per bigha (if the tenant failed to execute a fresh kabuliat) is an enforceable agreed rent or is in the nature of a penalty and therefore not enforceable as such.
- Whether Section 74 of the Contract Act (relating to liquidated damages/compensation) applies so as to permit an award of reasonable compensation in lieu of a penal stipulation, and if so, whether the plaintiff should be remanded to determine a reasonable compensation.
- Whether the Bengal Tenancy Act (and specifically Section 29) applies retrospectively to render the kabuliat or its stipulation unenforceable.
Arguments of the Parties
Plaintiff / Appellant's Arguments
- The enhanced rate of Rs. 4 per bigha, to be paid on default of executing a fresh kabuliat, was what the parties contemplated as the new rent; the fresh kabuliat the defendant undertook to execute would have been on those terms (paragraph 8).
- The plaintiff is not seeking judicial enhancement of rent under the Bengal Tenancy Act but is suing to recover arrears at a rate agreed by the defendant in 1881 (paragraph 21).
- Although the plaintiff is a part proprietor, rents have been collected separately since 1296, and the defendant has admitted paying co-sharers their separate shares; thus the plaintiff can sue for his share (paragraph 21).
Defendant / Respondent's Arguments
- The Rs. 4 per bigha stipulation was not a genuine agreement for future rent but was in the nature of a penalty or a mere threat intended not to be enforced (defendant's written statement and deposition as described in paragraph 14).
- Implicit in the Subordinate Judge's view: the plaintiff, as one of two joint landlords, could not seek enhanced rent individually and such enhancement could only be made under the Bengal Tenancy Act by all proprietors jointly (paragraph 5 and 6).
- Reference was made to Section 45 of the Contract Act (devolution of joint rights) to argue the defendant is not bound to fulfil a promise to a single joint co-proprietor (paragraph 25), although the higher court considered this met by a fresh contract made in 1296 (paragraph 25).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ram Chunder Chackrabatty v. Giridhur Dutt, I.L.R. 19 Cal. 755 | Authority for the proposition that a ryot who had agreed to pay a certain rate from the expiry of a prior lease could be held liable for rent at that agreed rate (a case considered similar to the present facts). | Justice Rampini relied on this case as similar to support the plaintiff's contention that the arrears at the agreed rate could be recoverable (paragraph 23). |
| Kalachand Kyal v. Shib Chnnder Roy, I.L.R. 19 Cal. 392 | Full Bench authority referenced concerning the rule on penalties — cited in support of the view that the stipulated rate in the kabuliat is not necessarily a penalty under applicable rules. | Referenced by Justice Rampini to show that the rate stipulated did not fall within the penalty rule as laid down in the cited Full Bench decisions (paragraph 24). |
| Umarkhan Maharnadkhan v. Salekhan, I.L.R. 17 Bom. 106 | Another Full Bench case addressing the penalty rule, grouped with Kalachand as establishing principles on what constitutes a penalty. | Referenced by Justice Rampini to support the conclusion that the Rs. 4 per bigha stipulation was not a penalty under the Full Bench authority (paragraph 24). |
| Banke Behan v. Sundar Lal, I.L.R. 15 All. 232, 253 | Full Bench observation criticizing the doctrine (as incorporated in Section 74 discussion) that English judges imposed agreements not made by parties — used to comment on the approach to penalties and Section 74 of the Contract Act. | Quoted by Justice Rampini to criticize the doctrine behind Section 74 as described in an Allahabad Full Bench judgment and to support the view that the penalty doctrine should not be over-applied (paragraph 24). |
Court's Reasoning and Analysis
The court's analysis proceeds through multiple stages, reflecting differing views by members of the bench. The core analytical steps explicitly stated in the opinion are:
- Preliminary factual finding: it was found that the defendant had acquired rights of occupancy under the Rent Act in force before the kabuliat was executed (paragraph 4). The kabuliat was executed before the Bengal Tenancy Act was passed (paragraph 6; paragraph 23).
- On the pleadings and evidence the court observed that the plaint did not state any explicit antecedent agreement that the fresh kabuliat would contain rent at Rs. 4 per bigha; the claim for Rs. 4 is asserted only on the default of executing a fresh kabuliat (paragraphs 10–13). There was no evidence showing how Rs. 4 was fixed or what terms the fresh kabuliat would contain (paragraphs 12, 14).
- Characterisation of the Rs. 4 stipulation: one view (as adopted by the Munsif and endorsed by part of the higher court) is that the clause providing Rs. 4 on default was "in the nature of a penalty" (paragraph 5; paragraph 15). The defendant himself described the clause as "a mere threat" or a clause "not intended to be enforced" (paragraph 14).
- Application of statutory provisions: the Munsif had applied Section 29 of the Bengal Tenancy Act and principles of Section 74 of the Contract Act to limit the recoverable enhancement. The higher court noted that the kabuliat was executed before the Bengal Tenancy Act and therefore that Act did not apply retrospectively to invalidate the contract (paragraphs 6, 23). The opinion expressly says Section 29 has no retrospective effect (paragraph 23).
- Consideration of Section 74 of the Contract Act: the court considered whether, if the clause is a penalty, any compensation under Section 74 could be awarded instead. It noted that any compensation must be reasonable and not necessarily the contractual stipulation; the contractual amount should be regarded as the ceiling of what can be claimed (paragraph 16). The court observed that raising rent from prior differentiated rates (8, 4, 2 annas) to a uniform Rs. 4 would be prima facie unreasonable and there was no evidence to show how that rate was fixed or what reasonable compensation would be (paragraph 16).
- Conclusion by the majority view: the plaintiff failed to prove entitlement to the enhanced rate; accordingly the plaintiff was entitled only to arrears at the former rates with interest. The decree of the Lower Appellate Court was modified to this extent, and each party was to bear their own costs (paragraph 17).
- Alternate (separate) reasoning by Justice Rampini: he took a different view. He held that the plaintiff was suing for arrears at a rate agreed upon in 1881 (not for a judicial enhancement) and that the kabuliat did state that the defendant would pay Rs. 4 per bigha on failure to execute a fresh kabuliat; he found that the stipulation was not within the purview of Section 74 and was not a penalty under the Full Bench authorities cited (paragraphs 21–24). He further found the kabuliat did not contravene any law at the time it was made (paragraph 23), that Section 29 is not retrospective (paragraph 23), that Section 5 of Bengal Act VIII of 1869 had not been interpreted to prevent a ryot with right of occupancy from agreeing any rate (paragraph 23), and that the plea under Section 45 (devolution of joint rights) was met by a fresh contract in 1296 (paragraph 25). On this basis Justice Rampini concluded the second appeal should be decreed with costs (paragraph 28).
Holding and Implications
Holding:
The plaintiff is entitled only to a decree for the arrears admittedly due at the former rates with interest; the plaintiff is not entitled to recover the enhanced rent at Rs. 4 per bigha claimed in the plaint. (Paragraph 17.)
Implications and consequences:
- The decree of the Lower Appellate Court is modified to the extent of awarding the plaintiff arrears at the former rates with interest (paragraph 17).
- Each party will bear their own costs throughout in the view adopted by the majority (paragraph 17).
- There is a contrary separate opinion by Justice Rampini who would have decreed the second appeal with costs in favour of the plaintiff on the basis that the Rs. 4 rate was an agreed rent and not a penalty and that the kabuliat was made before the Bengal Tenancy Act so that that Act did not invalidate the stipulation (paragraphs 21–28). The judgment therefore contains both the majority disposition (as first stated and concurred in by Ghose, J.) and the dissenting reasoning (Rampini, J.).
- No broader novel precedent is claimed to be established by the majority opinion; the court limited recovery to what was proved (former rates) and left unresolved any assessment of reasonable compensation under Section 74 because of lack of evidence (paragraph 16).
Note: All statements in this summary are strictly based on the text of the provided opinion and do not add material not present in that opinion.
1. This is a suit for rent due to the plaintiff as part proprietor of an estate.
2. The defendant Bakai Singh held 42 bighas 15 cottas of land at a rent of Rs. 10 for seven years, which expired in Asin 1296 (F.), and in a kabuliat executed by him, he agreed that, "on expiration of the term fixed, I shall execute a fresh kabuliat in favour of the proprietors, and then cultivate the said lands," and further that, should I cultivate the lands without executing a fresh kabuliat, I shall, without any objection, pay rent to them at one and the same rate of Rs. 4 per bigha."
3. The defendant did not execute a fresh kabuliat, and accordingly the plaintiff has brought this suit, claiming rent at Rs. 171 instead of at Rs. 10 as formerly.
4. It has been found that the tenant defendant had acquired rights of occupancy under the Rent Act then in force before the execution of that kabuliat,
5. The Munsif was evidently of opinion that the agreement to pay at the rate of Rs. 4 per bigha in the event of a breach of the condition as to the execution of a fresh kabuliat, at the end of seven years, was in the nature of a penalty, and he held that the plaintiff was entitled to enhanced rent, only at an increase of 2 annas per rupee on the former rent as a "compensation," and he gave plaintiff a decree for the amount so due. As we understand him, in coming to this conclusion, be applied Section 29 of the Bengal Tenancy Act, and the principles of Section 74 of the Contract Act. In appeal the Subordinate Judge dismissed the suit, holding that, as the plaintiff is only a part proprietor of the estate, he cannot sue for an enhancement of rent, such enhancement can be made only under the bengal tenancy act, and cannot be made, except by all the proprietors conjointly-
6. The kabuliat was executed before the bengal tenancy act was passed, and, therefore, any contract then made would not come within the operation of that Act. For a similar reason, the Subordinate Judge has misapplied that Act, so as to bar this suit brought by the plaintiff, a part proprietor of the estate The suit is not under the bengal tenancy act, and the defendant has admitted in his evidence that he has been paying the co-sharers of the estate the rents due to them separately, and, therefore, as already held by this Court the suit-is permissible."
7. The question then arises whether the plaintiff is entitled to rent at the rate claimed by reason of the terms of the kabuliat,
8. It has been contended before us for the plaintiff appellant that the enhanced rate of rent which was to be paid on default of executing a fresh kabuliat was what was in the contemplation of the parties should be the new rent, and that the fresh kabuliat, which the defendant undertook to execute was to be in those terms. '
9. On the other hand, it is contended that no such agreement was made and that this was in the nature of a penalty for not executing a fresh kabuliat.
10. The plaint certainly does not state any such agreement.
11. It is in the following terms:
"It was stipulated in the said kabuliat that upon expiration of the terms thereof, he would execute a fresh kabuliat and then cultivate the land, and that, should he cultivate the land without executing a fresh kabuliat, he would pay for all the lands at one and the same rate, that is, Rs. 4 a bigha, The defendants, however, notwithstanding that this term of the kabuliats has expired, has neither executed a fresh kabuliat nor given up the lands. The plaintiff is, therefore, entitled, under the terms of the kabuliat, to recover the rent for the said lands at one and the same rate of Rs. 4 a bigha from the year 1296 Fusli."
12. There is no evidence to support the case now set up that any such agreement was made, nor is there anything to show on what ground this rate of Rs. 4 a bigha is claimed, except on default of the defendant in executing a fresh kabuliat.
13. The plaintiff's case, as brought, was that he was entitled to this increase of rent, because the defendant did not execute a fresh kabuliat. Moreover it has not been stated, except in the course of argument before us, what the terms of the fresh kabuliat in respect of the rent to be payable were to be and it has been now stated that the rent was to be at Rs. 4 a bigha. By this we are asked to understand that whether the defendant did or did not execute a fresh kabuliat was of no consequence, for if he retained the lands, he was to pay enhanced rent, raising his rent from Rs. 10 to Rs. 171, and this, although, before he executed that kabuliat, he had a right of occupancy entitling him to hold the lands at rates which, under the law, could be raised only on the existence of certain specified circumstances. It seems unnecessary to remark that it is hardly possible that any one having a right of occupancy, like the defendant, would willingly so surrender his rights under the law.
14. The agreement was to execute a fresh kabuliat on expiry of the existing lease, but there is nothing to show either the amount of rent to be payable under such kabuliat, or the term of the new lease. And the defendant has stated in his written statement that he believed that the condition as to the payment of Rs. 4 a bigha on default of executing a kabuliat "was laid down as a mere threat to the tenants," and that, it was "put down in the kabuliats simply as a matter of form, etc. The said condition was not intended to be enforced."
15. We ate unable to hold that the defendant agreed to pay rent at Rs. 4 a bigha at the expiry of his lease, or that he agreed to execute a fresh kabuliat on these terms. The additional rent was intended to be enforceable only on default to execute a fresh kabuliat, and this was the plaintiff's case as brought and tried. We rather hold, as the Munsif seems to have held, that the so-called agreement to pay at the enhanced rate of Rs. 4 a bigha, was in the nature of a penalty.
16. It must next be considered whether, if this be regarded as a penalty, plaintiff is entitled to a remand in order that it may be determined whether, having regard to Section 74 of the Contract Act, he is entitled to any, and, if so, to what compensation for the breach of the contract in not executing a fresh kabuliat. Any compensation so awardable must be reasonable under the law, and is not necessarily what may be stated in the contract. The amount so stated should be regarded only as the full amount which can be claimed. In this case the compensation is an enhancement of rent on a tenant with rights of occupancy and holding at rates of 8 annas, 4 annas and 2 annas per bigha to an uniform rate of Rs. 4. That is prima facie altogether unreasonable, but that is what the plaintiff claims, and there is no evidence to show how that rate was fixed, or, indeed, what would be a reasonable compensation by way of an enhancement of rent.
17. The only conclusion at which I can arrive is, therefore, that the plaintiff has failed to show that he is entitled to anything more than the former rate of rent. The plaintiff is entitled to a decree for the arrears admittedly due at the former rates with interest, and to nothing further. To that extent the decree of the Lower Appellate Court is modified. Bach party will bear his own costs throughout.
18. I would add, in conclusion, that a case heard by my learned colleagues has been referred to by RAMPINI, J., in which judgment has not yet been delivered. I am not aware of the facts of that case, so that I am unable to consider it in connection with this case.
Ghose, J.
19. I agree. I desire to add, with reference to the case referred to by Mr. Justice Rampini in his judgment, that the. facts of that case and the terms of the agreement are very different from the facts and conditions of the kabuliat in this case.
Rampini, J.
20. The plaintiff in this suit sues for arrears of rent of the years 1296 to 1299, on the basis of a registered kabuliat executed by the defendant on the 27th September 1881. The terms of the kabuliat, with regard to the execution of which no question has been raised before us, are that the defendant shall pay rent at various rates, 2 annas, 4 annas, and 8 annas, for the land held by him for a term of seven years; that if, on the expiry of that term, he shall continue to cultivate the land, he shall execute a fresh kabuliat and that if he fails to do so, he shall pay rent for land held by him at the rate of Rs. 4 per bigha. Now, the plaintiff alleges, and it is not denied, that the defendant continues to hold the land and has executed no fresh kabuliat. He accordingly sues for arrears of rent at the rate of Rs. 4 per bigha. The Munsif held that the rate of the defendant's rent could not be increased by more than 2 annas in the rupee. He accordingly gave the plaintiff a decree at that rate. The Subordinate Judge, however, held that as the plaintiff was but one of the two joint landlords, he could not get any enhanced rent at all.
21. The plaintiff now urges (1) that the lower Courts are mistaken in supposing that he is suing for the enhancement of the defendant's rent. He does not seek in the suit to enhance the defendant's rent, but merely for arrears of rent at a rate agreed upon by the defendant in 1881, long before the Tenancy Act came into operation, and which arrears there is nothing in the Tenancy Act to prevent his recovering; (2) that, although he and his -co-sharers formerly collected their rents jointly, they have collected them separately from 1296; that the defendant has, in his written statement, raised no objection to this, and has not resisted his claim on this ground. On the contrary, in para. 7 of his written statement, he pleads payment to him of his share of the rent and in his deposition he has deposed to having paid his co-sharer's share of the rent to him separately. In my opinion both these contentions are sound and should prevail. I think the reason the Lower Appellate Court has given for dismissing the suit is manifestly wrong. The present case is, I consider, similar to the case of Ram Chunder Chackrabatty v. Giridhur Dutt I.L.R. 19 Cal. 755, in which the ryot had been previously holding 11 1/2 bighas of land, rent free, and was held liable for rent for this land at the rate of Rs. 1-8 per bigha, which, in circumstances similar to those of the present case, he had agreed to pay from the date of the expiry of his previous lease.
22. But it has been said that, even if this be so, the rate of Rs. 4 per bigha, which the defendant in his kabuliat agreed to pay if he did not execute a fresh kabuliat after the expiry of the seven years mentioned in the kabuliat, is a penalty, and, therefore, cannot be enforced against him. But he took no such plea in his written statement, and in any case, I am of opinion that the stipulation to pay Rs. 4 per bigha is not one coming within the purview of Section 74 of the Contract Act, which is the only section, as far as I am aware of, that incorporates in the Statute law of this country the rule of English law against penalties, which, I may observe, has been described in a recent Full Bench judgment of the Allahabad High Court as an "irrational doctrine bequeathed to people in England by a school of English judges, eminent,nodoubt, in the law, but overprone to making agreements for parties which the parties had not made and did not intend to make for themselves." Banke Behan v. Sundar Lal I.L.R. 15 All. 232, 253. This suit is not brought on the allegation that a contract has been broken. The suit is for arrears of rent at a rate at which the defendant agreed to pay on his failure to execute a fresh kabuliat, which he has failed to execute. The rate of rent mentioned in the kabuliat is not named as 'the amount to be paid in case of a breach of the contract, and the amount which the plaintiff seeks to recover in this suit is not compensation for a breach of any contract," but rent for land held by the defendant at a rate which the defendant has agreed to pay from a certain time. For these reasons the provisions of Section 74 of the Contract Act, in my opinion, do not apply, nor is this rate a penalty according to the rule laid down in the Full Bench cases of Kalachand Kyal v. Shib Chnnder Roy I.L.R. 19 Cal. 392 and Umarkhan Maharnadkhan v. Salekhan I.L.R. 17 Bom. 106. The rate runs from the expiry of the seven years term for which the kabuliat was executed, and not from the date of the execution of the kabuliat.
23. I am further unable to see that the kabuliat, at the time it was executed, contravened the provisions of any law then prevailing. It is, no doubt, an illegal contract now according to Section 29, Clause (b), of the Bengal Tenancy Act, and if it had been made since the passing of that Act, it could not be enforced, but that section has no retrospective effect. Section 5 of Bengal Act VIII of 1869 lays down that ryots having rights of occupancy (and the defendant is, of course, a ryot with a right of occupancy) are entitled to receive pottahs at fair and equitable rates. But this provision has never, as far as I am aware, been interpreted as meaning that a ryot with a right of occupancy may not agree to pay whatever rate he pleases.
24. Nor can it, I think, be said that the rate of Rs. 4 per bigha, which the defendant has agreed to pay, is an unconscionable rate, which a Court of Equity would be justified in setting aside, inasmuch as in another case, in which, in similar circumstances, a non-occupancy ryot has agreed to pay Rs. 5 per bigha, the judgment in which case will be presently delivered, my learned brother GHOSE and I concur in holding that he is bound to pay that rate. The fact that the defendant in that case is a non-occupancy ryot, does not in my opinion affect the question whether the rate stipulated for is a penalty or not. For if it be a penalty and void for that reason, it must be so, whatever be the status of the ryot. If it be not a penalty, it is not one whether the tenant be an occupancy or a non-occupancy ryot.
25. The respondent's pleader has also alluded to the provisions of Section 45* of the Contract Act, and has raised the plea that the defendant is not bound to fulfil to one of two joint promises a promise made to both jointly. This contention is, in my opinion, met by the fact that a fresh contract was made by the parties in 1296, as is clear from the defendant's written statement and his deposition.
26. I am, therefore, of opinion that this second appeal should be decreed with costs.
* Devolution of joint rights.
[Section 45: When a person has made a promise to two or more persons jointly, then, unless a contrary intention appears from the contract, the right to claim performance rests, as between him and them, with them during their joint lives, and, after the death of any of them, with the representative of such deceased person jointly with the survivor or survivors, and, after the death of the last survivor, with the representatives of all Jointly.]
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