Ritwika Bhattacharjee 11 October 2017

Rule for return of token money

Hi,

In Dec'16, one of the potential buyers liked our property & immediately agreed to Pay a Token money of 1 lakh.

They told us they have started with bank Proceedings & will complete that within 40-45 days.So the deal was that once they get the cheque, they will hand it over to us which we will give to our bank and close our loan on the property. In April'17 they informed us they are no more intrested & want their token money back, to which we told them was not possible for us to give as we were already paying the EMI on the property & cancelled all the other deals that we had received within these 4 months.

Please suggest, what does Law advice, is there a mandate for returning token money when the buyer ditches you after 4 months that they are not intersted and when you have faced heavy monetary losses because of paying the EMI thinking that it is just for another couple of months.

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5 Replies

manoj 11 October 2017

As per the supreme court guidelines limitation for refund of earnest money is 12 years. it is categorically explained in that authority that when you pay advance amount some interest is created on that property, so the Limitation is 12 years. But when we deal with the Limitation act, there is no mention about the Limitation for refund of earnest money in that Act, Article 113 of Limitation act is attracted. As per the limitation Act Article 113 says "Any suit for which no period of limitation is provided elsewhere in this Schedule ", the limitation is three years. Though the supreme court Judgment is contrary to Article 113 of Limitation Act, but all the advocates and all High Courts will follow the Apex Court order.

manoj

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Ritwika Bhattacharjee 11 October 2017

Thanks Manoj for your prompt Response.

However, If possible could you please explain me in layman terms, it will be helpful for me to understand whether I am liable to pay back the money or not.

manoj 11 October 2017

my language itself is in layman terms

manoj

advocate

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manoj 11 October 2017

as per the supreme court directions referred by me, you are suppose to pay the advance amount when the transcation is stopped due to any reason, other wise the supreme court said that the advance paid by the opposite party he will be having right in the property. so you are suppose to pay back the advance within 12 years if he file the suit, it is better you can return the money now itself. This is my opinion as per Law. More than these I dont no how the Layman speak

manoj

advocate

8686159292