In cases of breach of contract, reasonable compensation can be awarded under Section 74 of the Contract Act, but the compensation should not exceed the amount named in the contract or the penalty stipulated. The party claiming compensation must prove the actual loss suffered, and the court cannot award damages simply because a sum is mentioned in the agreement.

V. P. TYAGI, J.

( 1 ) BOTH these appeals arise out of the judgment of the learned District Judge, jaipur District, Jaipur, dated February 7, 1973, in a suit filed by the plaintiff dayaldas and Co. for the refund of Rs. 10,000/- which was paid to the defendant as an advance money for the purchase of lands Khasra Nos. 261, 266 and 268 measuring 6 Bighas and 9 Biswas.

( 2 ) THE facts giving rise to this litigagation are, in a nut shell, as follows : mohanlal defendant entered into an agreement on June 8, 1970, to sell to the plaintiff agricultural land measuring 6 Bighas and 9 Biswas (bearing Khasra Nos. 261, 266 and 268 ). The plaintiff paid to the defendant as an advance Rs. 10,000/ -. It was agreed between the parties that by December 6, 1970, the defendant shall execute the sale deed in favour of the plaintiff and the possession of the plots of land agreed to be sold by the defendant shall be transferred to the plaintiff. One of the conditions of the sale was that out of these three plots of land, one Biswa of land shall be retained by the defendant. It appears that the plaintiff did not comply with the obligation cast on him under the agreement and, therefore, the sale could not take effect on December 6, 1970. Thereafter the plaintiff filed a suit for the refund of Rupees 10,000/- paid by him as an advance money, because in his opinion the agreement was void due to the vagueness. Before filing a suit a notice was served by the plaintiff on the defendant to return the money, but it was not paid and, therefore, the plaintiff claimed interest by way of damages @ Rs. 12% per annum.

( 3 ) THE defendant admitted the agreement between the parties but he came out with a plea in his written statement that the plaintiff committed the default and, therefore, he was liable to pay damages as per the stipulation in the agreement, which reads as follows: -. . (VERNACULAR MATTER OMMITED ). . It was, therefore, claimed by the defendant that he was entitled to retain Rs. 10,000/- by way of damages, as the plaintiff was guilty of breach of contract.

( 4 ) THE learned Judge after framing issues and recording the evidence of both the parties, recorded his conclusion that the plaintiff himself was guilty of breach of the contract, but while dealing with the issues Nos. 3 and 7 the learned Judge held that the reasonable compensation could be determined for the breach of contract in accordance with Section 74 of the Contract Act and taking into consideration the entire circumstances the learned Judge awarded a decree of Rupees 5,000/- in favour of the defendant and ordered that he would refund to the plaintiff Rs. 5,000/- from the advance that he had received at the time of the execution of the agreement. It is against this judgment that both the parties have come in appeal.

( 5 ) LEARNED counsel appearing on behalf of the plaintiff-appellant, who opened the arguments in appeal No. 74 of 1973, frankly conceded that he would not like to challenge the finding of the court on issue No. 4 whereby the learned judge has come to the conclusion that the plaintiff was himself guilty of breach of contract, but he urged that even if the plaintiff did not carry out his part of the contract the defendant cannot claim any damages, because in the month of march 1970 the defendant sold these three pieces of lands to a third party at an enhanced price of Rs. 23,000/- per Bigha and, therefore, he contended that instead of suffering any damages, the defendant has made profits out of this breach of contract.

( 6 ) LEARNED counsel appearing on behalf of the defendant-respondent in Appeal no. 74 of 1973, however, urged that for six months his land remained idle and he could not cultivate these three pieces of lands, because he had to deliver vacant possession on December 6, 1970, and, therefore, he is entitled to get the damages and since the plaintiff had already agreed to pay Rs. 10,000/-as damages he had no case for the refund of the advance money. He