ranjit (self service) 28 February 2014

Cancellation of property deals

Dear Sir,

I having a property in Delhi, Due to sell of property , I having a meeting with purchaser to sell of my property for Rs. 20 lac, during meeting he give me 50000/- as advance against sale of property and a document in white paper and pasting a revenue stamp Iwas signed between us and three witness, the details of documents are given below :-

RECEIVED A SUM OF RS. 50000/- (RUPEES FIFTY THOUSAND) ONLY AGAINST SALE OF HOME (Details of Address of my home) FROM PURCHASER, TOTAL SALE OF PROPERTY IS RS. 20 LAC, ADVANCE RECEIVED RS. 50000/-.

Now I have decided not to sale the property and like to refund rs. 50000/- to purchaser, now the purchaser asked to pay me a penalty amount of Rs; 50000/- more. otherwise he may file a case against me in court and my property become siezed from sale in future by the order of court. So my question to you all the stated true and what are the consequences ?

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2 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 ) 28 February 2014

If there is no agreement between you and purchaser, no need to pay penalty.

Suneet Gupta (www.vashiadvocates.com) 01 March 2014

Actually all property sales are finalized on the basis of verbal agreements, and it is a mutually accepted procedure that cancellation of sale by any party will invite payment of penalty to the other party. If the buyer cancels the purchase, then the earnest money (in your case Rs.50,000/-) is forfeited. If the seller cancels, then he has to refund the earnest money and pay an additional equivalent amount as penalty.

Please understand that while this may or may not be legally tenable it is a long-standing custom in sales of property and will usually be enforced by the courts. If the buyer files a case against you, then your property will be stuck in litigation for a long time and you will end up spending much more on the litigation expenses.

Further, please introspect and realize that if the buyer had cancelled the transaction in this case, you would not have returned the earnest money. It is only fair that you apply the same yardstick to yourself and pay him the penalty amount. Please do not try to go into the legal nitty gritties but act on the principle of fairness and justice.