You can forfeit earnest  money or the token amount only if there is a forfeiture clause in your agreement for sale

The verbal agreement is not maintainable nor enforceable in law.

The unregistered sale agreement will be an acknowledgement for the receipt of payment.

The conditions verbally agreed would be maintainable only when the opponent admits it.

1. It is not clear if the deviated cluse is part of written agreement or oral.
2. If it is written, you can forfeit a reasonable amount towards any loss suffered.
3. If it is oral, the buyer has to give valid reason of refusing to proceed.
4. Even in that case only a reasonable amount can be deducted, in equity, not 13L.

To determine whether you can forfeit the entire earnest amount (₹13 lacs) or just the token amount (₹2 lacs), the following points are critical:

1. Nature of the Agreements:

• 
  Advance Token Receipt: If this document mentioned that the token amount (₹2 lacs) is non-refundable in case of the buyer backing out, you can retain this amount.
• 
  Agreement to Sell: If this agreement was signed and contains a clause regarding forfeiture of the earnest money (₹13 lacs) in case of default by the buyer, you may be entitled to forfeit the entire amount.

2. Buyer's Default:

• If the buyer has deviated from a mutually agreed clause and is refusing to continue with the deal, it constitutes a breach of contract.
• A clear breach of the "agreement to sell" (if signed) allows you to enforce the forfeiture clause.

3. Proportional Forfeiture:

• Courts in India often view the token amount (₹2 lacs) as a guarantee of good faith and may allow forfeiture of this amount.
• Forfeiture of the earnest money (₹13 lacs) is valid only if the agreement to sell explicitly states that this amount is non-refundable upon the buyer’s default.

4. Legal Position:

• 
  Supreme Court Guidance: Indian courts generally consider forfeiture of a small percentage of the total sale consideration as reasonable. If the earnest money (₹13 lacs) is a substantial portion of the total value of the property, the court might limit forfeiture to the token amount unless the agreement to sell justifies the larger amount.

Suggested Actions:

1. 
   Review the Agreement to Sell: Check for specific clauses related to forfeiture of the earnest money and buyer default.
2. 
   Document the Deviation: Collect evidence of the buyer’s deviation from the agreed clause and refusal to proceed.
3. 
   Consult a Lawyer: Seek advice to initiate legal proceedings if required, as the enforceability of forfeiture will depend on the terms of the agreements.

For detailed, personalized advice, consider a phone consultancy. Hope you find the information helpful. You are free to contact me for further discussion. If you could spare two minutes of your time to write a review, it would be greatly appreciated and bring immense happiness to read it. Thank you. Shubham Goyal.

The token, because as per law, token constitutes the earnest.

Token/earnest, is the sum received at the very inception to secure the transaction.

You can forfeit the token and any loss occurred to you by the said deal

Dear Client,

In your case, forfeiture of the token or earnest amount would depend upon the terms agreed upon in the advance token receipt and the subsequent agreement to sell. In case the agreement provides that the earnest money may be forfeited in case of the buyer's default, you are well within your rights to forfeit the entire earnest amount of 13 lacs, subject to the factthat the deviation by the buyer would amount to a breach of contract. However, in a silent agreement aboutforfeiture, generally only the token amount, or 2 lacs, can be forfeited.This is because earnest money exceeding this is typically refundable,unless stated otherwise. Analyze the terms specified in the token receipt and the agreement, and if required, file a suit to recover loss caused by breach of contract from the buyer.

In this scenario, the issue revolves around the enforceability of the verbal agreement, the written agreement to sale, and the conditions specified in both. Here's how the situation can be assessed:

1. Verbal Agreement and Token Amount

• The token amount of ₹2 lakhs is typically understood as an initial deposit to secure the deal. This amount is usually non-refundable if either party decides to back out of the deal, depending on the terms agreed upon. In your case, if the verbal agreement on 20th December included a clear understanding that the token amount is non-refundable in case of a breach or failure to proceed with the sale, then you may have the right to forfeit the token amount if the buyer backs out.

2. Earnest Amount of ₹13 Lakhs

• The earnest amount of ₹13 lakhs typically represents a more significant commitment towards the sale and is often paid before the execution of the final sale agreement. This amount would be subject to the specific terms outlined in the agreement to sale.

• If the buyer deviates from the terms in the written agreement (which was executed after they made the earnest payment), the provisions in the agreement will govern how the earnest money should be treated. Common clauses include:

  • 
    Non-performance by the buyer: If the buyer backs out or fails to comply with the terms, they may forfeit the earnest money.
  • 
    Non-performance by the seller: If you, as the seller, back out or fail to comply, you may be required to return the earnest money or face legal consequences.

3. Clause on Deviation

• Since the buyer has deviated from one of the clauses discussed and included in the agreement to sale, breach of contract would likely apply. If the agreement to sale clearly stipulates that the earnest money would be forfeited if either party deviates from the agreed terms, you could potentially keep the entire earnest amount of ₹13 lakhs as compensation for the buyer’s breach of contract.

  However, if the agreement only covers specific situations where the buyer can forfeit the earnest money, the situation might be more complex and depend on the exact wording of the contract.

4. Legal Considerations

• If the agreement to sale is a legally binding document and the buyer is in breach of it, you have the right to enforce the agreement. In such cases, a court may allow you to forfeit either the earnest money or the token amount, depending on what was agreed upon in the contract. If the clause for forfeiture of earnest money is clear and the buyer is in breach, you may have a stronger case to retain the ₹13 lakhs.

5. Recommendation

• Review the terms of the agreement to sale carefully to check if there are any provisions that discuss the forfeiture of earnest money or the token amount in case of a breach by the buyer. If the contract allows you to forfeit the entire earnest money (₹13 lakhs) due to the buyer’s deviation, you can hold on to that amount. If the contract limits forfeiture to just the token amount (₹2 lakhs), you might only be able to retain that amount.

• To avoid any disputes or potential legal challenges, it may be best to engage a legal professional to draft a formal letter to the buyer, referencing the breach and notifying them of the forfeiture of the agreed-upon amount as per the terms of the agreement.

If the agreement to sale explicitly allows forfeiture of the earnest amount in case of a breach by the buyer, you may be entitled to keep the ₹13 lakhs. However, if the agreement or verbal understanding only covers the token amount, you may only be entitled to retain ₹2 lakhs. Legal advice will be crucial to ensure that the forfeiture is properly enforced according to the terms.

Thanks and Regards,
Advocate Aman Verma, Legal Corridor.