The court established that the forfeiture clause in the contract was a penalty and not enforceable, applying the principle of forfeiture as laid down in relevant cases.

Venkataramana Rao, J.

1. The main question argued In this second appeal is whether the plaintiff is entitled to retain the sum of Rupees 1,500 paid by the defendant under a contract of sale. The said contract was entered into on 19th September 1930, in and by which certain lands of the plaintiff were agreed to be sold to the defendants for a sum of Rs. 3,000. The terms of the contract were embodied in a karar between the parties. Ex. A was executed by the defendant in favour of the plaintiff and Ex. I which is a counterpart was executed by the plaintiff in favour of the defendant. There is no difference in regard to the terms in both these documents. Ex. A runs thus:

In the presence of some mediators I have settled the sale price of the land mentioned hereunder at Rs. 3,000 (Rupees three thousand). Out of the said amount, I have paid in cash this day a sum of Rs. 1,500 (Rupees fifteen hundred) as advance and I have taken possession of the said land from now. I shall pay the remaining entire amount of Jits. 1,500 (Rupees fifteen hundred) together with interest thereon from this day at Re. 1 (one Rupee) per cent, per mensem by 16th Vaisagha Suddha of the year Prajothpathi (2nd May 1931) and I shall get the deed of sale executed in respect of this land at my own expense. If I should fail to pay the said amount on the prescribed date, the amount of Rs. 1,500 paid as advance shall become forfeited and you shall be entitled to take possession of your land. I shall have no rights whatever to the said land.

2. In pursuance of the said agreement Rs. 1,500 was paid on the date of the contract and the lands were put in possession of the defendant. The defendant did not pay the balance of the purchase money Rs. 1,500 according to the plaintiff on 2nd May 1931, and therefore he sent a registered notice on or about 19th May 1931, in and by which he called upon the defendant to deliver possession of the land within eight days from the receipt of the notice. The defendant failed to deliver possession. Thereupon the plaintiff instituted the present suit, for recovery of possession of the lands and for damages for use and occupation for 1931-32 which was estimated at Rs. 50 and for damages till delivery of possession. The main defence of the defendant was that he did pay the balance of the purchase money by the execution of a mortgage of some of his lands to one Ramachar of Kosgi under an agreement with the said Ramachar that he should pay the said sum of Rs. 1,500 to the plaintiff within the time stipulated in the agreement, that the plaintiff obtained the transfer of the said mortgage and therefore he had fulfilled his part of the contract. A further plea was taken which is thus formulated in para. 9 of the written statement:

Without prejudice to the foregoing pleas, the defendant submits that the forfeiture clause in the said agreement is a penalty, and cannot therefore be enforced. The suit for the recovery of the land is therefore not maintainable.

3. The learned District Munsif who tried the suit came to the conclusion that the balance of the consideration was paid by the defendant as contended. Therefore he dismissed the plaintiffs suit. On appeal the learned District Judge did not give a definite finding as regards the transfer of the mortgage and was of the opinion that the transfer should not be held as equivalent to Rs. 1,500 payable in cash by the defendant. However, he held that the forfeiture clause was a penal one and that the amount forfeited was out of all proportion to the total consideration and therefore he gave a nominal compensation of Rs. 100 and gave a decree for possession of the lands subject to the payment by the plaintiff of Rs. 1,300 deducting the sum of Rs. 100 for compensation and Rs. 100 for mesne profits. When the matter came up for hearing before me on 10th March 1936, I called for a revised finding in regard to the transfer of the mortgage and the alleged payment of the balance of consideration as pleaded b