A party claiming compensation for breach of contract must prove the loss suffered by him.

T. RAMAPRASADA RAO, C.J. :- The unsuccessful second defendant in O.S. No. 112 of 1972 on the file of the Subordinate Judge. Udumalpat, who could not get relief in this Court in Appeal No. 526 of 1973, is the appellant. The plaintiff entered into en agreement of sale with the defendants under Ex. B-2. A sum of Rs. 10,000/- was paid as advance to the defendants by the plaintiff. Inter alia there were other terms under which the plaintiff should purchase the property from the defendants. On the foot that the defendants committed breach of contract, the plaintiff filed the suit for the recovery of the sum of Rs. 10,000 together with interest from the date of payment. This was resisted by the defendants on the ground that they did not commit breach and that under the terms of the agreement the sum of Rs. 10,000/- was forefeitable. The defence was :

"If the defendants commit default the plaintiff's only remedy was to file a suit for specific performance. In other words, he is not entitled to refund of Rupees 10,000/-."

The trial Court found that it was the plaintiff who committed the breach of contract and that the plaintiff could only file a suit for specific performance and, therefore, would not get back the sum of Rs. 10,000/-. In the course of trial, the parties have examined themselves and the defendants spoke through three witnesses. It is common ground that the defendants did not let in any evidence at the time of trial as to the nature of damage and the quantum of damage suffered by them after the agreement of sale was entered into. Obviously, the defence as well as the trial proceeded on the basis that plaintiff's only remedy was to file a suit for specific performance and not ask for a return of the sum of Rs. 10,000/- paid as advance under the contract of sale. The result was that there was no pleading about the nature or quantum of damage suffered by the defendants by reason of the breach said to have been committed then by the plaintiff and the defendants did not let in any oral evidence as well to show that they did suffer actual damage as a result thereof. It was also the contention of the defendants that they were throughout in possession of the property notwithstanding the agreement of sale, though, in the course of trial, it was found that at some time the defendants parted with possession of the land which was a barren land to the plaintiff. We are, however, concerned at this stage with the above facts and particularly the two important features which loom large in this case, namely, that there was no pleading as to the nature and quantum of damage suffered by the defendants, there was no proof regarding the same and that the express defence of the defendants was that they were in possession and they did not part with the possession of the land agreed to be sold to the plaintiff. As already stated the learned 'Subordinate Judge dismissed' the suit. On appeal, Sethuraman, J., agreed with the trial Court that it was the plaintiff who committed default. But he, however, considered in detail the question whether the plaintiff can have no relief at all in the absence of any proof of damage by the defendants and whether the defendants could unjustly enrich themselves by forfeiting the sum of Rs. 10,000/-paid expressly as advance under Ex, B-2. The learned Judge referred to the relevant decisions and particularly to the decision of the Supreme Court reported in Fateh Chand v. Balakrishna Dass (AIR 1963 SC 1405) which laid down that in assessing damage the Court has, subject to the limit of the penalty stipulated, jurisdiction to award such compensation as it deems reasonable having regard to all the circumstances of the case. The learned Judge also noticed that an undertaking to pay a sum of money or to forfeit a sum of money fixed in terrorem without reference to any estimated damages on breach of the contract is in the nature of penalty and that the party claiming compensation must prove the loss suffered by him