Bayana In Punjab Property Deals: What It Is, When You Lose It, And When You Get It Back ## पंजाब प्रॉपर्टी डील्स में बयाना: यह क्या है, कब आप इसे खो देते हैं, और कब आपको वापस मिलता है ## ਪੰਜਾਬ ਵਿੱਚ ਜਾਇਦਾਦ ਦੇ ਸੌਦਿਆਂ ਵਿੱਚ ਬਯਾਨਾ: ਇਹ ਕੀ ਹੈ, ਤੁਸੀਂ ਇਹ ਕਦੋਂ ਗੁਆਉਂਦੇ ਹੋ, ਅਤੇ ਇਹ ਕਦੋਂ ਵਾਪਸ ਮਿਲਦਾ ਹੈ

You agree a price. The seller wants something to hold the deal. You hand over a sum, somebody writes a receipt, and everyone calls it bayana.

That word carries no legal meaning by itself. What decides whether you get that money back is a distinction most buyers in this market have never heard of.

What bayana is

Bayana is the North Indian term for token or earnest money: the advance a buyer pays a seller on agreeing terms, ahead of the sale deed. The usage runs across Punjab, Haryana, Delhi, Rajasthan, Uttar Pradesh and eastward.

It is paid at the point of the agreement to sell, which is itself a different thing from the sale deed. The agreement records what has been agreed, the timeline for completion, and what happens if either side does not complete. The sale deed transfers the property. Between the two sits a gap of weeks or months, and bayana is what holds the deal across it.

Typical amounts in this market run from one to ten per cent of the price depending on the property and the parties, but there is no fixed figure and the number is negotiated.

Earnest money and advance are different things

Money handed over at an agreement to sell is one of two things in law, and they have opposite consequences.

Earnest money is paid as a pledge for the due performance of the contract. If the buyer fails to complete, it can be forfeited.

An advance, or part-payment of the purchase price, cannot be forfeited, unless it was given as a guarantee for due performance.

The Supreme Court in Satish Batra versus Sudhir Rawal put it plainly: to justify forfeiting money as earnest money, the terms of the contract have to be clear and explicit. Earnest money is paid at the time the contract is entered into, as a pledge for its performance, to be forfeited if the depositor does not perform.

The facts of that case are ordinary. A property agreed at ₹70 lakh in November 2005, with ten per cent paid as earnest money, the balance due by March 2006. The buyer did not pay, the sale deed was not executed, and the seller kept the ten per cent. The Supreme Court held he was entitled to.

The label is not the last word

In May 2025, in K.R. Suresh versus R. Poornima, a bench of Justice J.B. Pardiwala and Justice R. Mahadevan upheld the forfeiture of ₹20 lakh.

The agreement, dated July 2007, was for a plot at a price of ₹55.5 lakh, with ₹20 lakh paid up front and the balance of ₹35.5 lakh due within four months. The document called that ₹20 lakh advance money, which on the ordinary distinction would make it refundable.

The Court looked past the label. It held the sum bore the characteristics of earnest money because of three things: it was paid at the moment the contract was formed, it was adjustable against the sale price, and it functioned as security for performance. On that reading it was forfeitable, and the buyer's failure to pay within four months made it so.

So the wording matters, but not as a magic word. A document that calls a sum an advance can still lose it if the sum behaves like earnest money. A document that says nothing at all leaves both sides arguing about timing, adjustability and function years later, which is the position most bayana receipts in this market create.

The Court also held that a clause forfeiting earnest money is not penal in the ordinary sense, so Section 74 of the Indian Contract Act, which lets courts cut down penalties, does not apply to it.

The clause survived because the Court found it fair and equitable rather than one-sided, since it imposed obligations on both parties: if the sellers defaulted, they were required to refund twice the advance.

That symmetry is the old custom of dugna bayana, return double. A clause that only punishes the buyer looks one-sided. A clause that binds both sides is the one a court is comfortable enforcing.

The trap in how you sue

K.R. Suresh turned on a second point.

The buyer had sued for specific performance, asking the court to compel the sale. He had not pleaded, in the alternative, for a refund of the money if specific performance were refused.

Under Section 22 of the Specific Relief Act, relief of that kind must be specifically claimed. A court cannot grant it on its own motion, though it must allow the plaint to be amended at any stage to include the claim. Having failed to ask for the refund, and having failed to prove readiness and willingness to perform, the buyer got neither the property nor the money.

A buyer who sues to enforce a deal and does not also ask, in the alternative, for the bayana back, can end up with nothing.

How much can actually be forfeited

Not any amount, and the limit is a matter of reasonableness rather than arithmetic.

In Godrej Projects Development versus Anil Karlekar, decided in February 2025, the consumer commission had found a clause forfeiting twenty per cent of the basic sale price unreasonable, and allowed only ten per cent to be deducted with the balance refunded. The Supreme Court's position is that forfeiture of a reasonable amount paid as earnest money does not amount to imposing a penalty, but that forfeiture in the nature of a penalty attracts Section 74.

The Delhi High Court has put the outer limit in blunt terms. Asking whether 100 per cent, or 75, or 80, or 50 per cent of the price could be labelled earnest money so as to be forfeited, it answered that the answer is surely in the negative.

So calling a large sum earnest money does not make it forfeitable. Ten per cent is the figure courts are most comfortable with as a genuine pre-estimate of loss. Well beyond that, the label stops protecting the seller.

The cash rule almost nobody follows

Under Section 269SS of the Income Tax Act, no person may accept an advance of ₹20,000 or more in cash in relation to the transfer of immovable property. Under Section 269T, such an amount cannot be repaid in cash either. The penalty in each case is equal to the amount involved.

A bayana of ₹2 lakh handed over in notes exposes both parties to a penalty of ₹2 lakh each, on money that was never in dispute. It has been the law for years and it is routinely ignored in this market.

What "booked" means on a Mohali listing

When a property here is described as booked, it generally means bayana has been paid and the deal is pending. It does not mean sold. The sale deed has not been executed, the property has not transferred, and if the buyer fails to complete, it comes back to the market.

So a booked listing is a property with a claim on it and no conveyance behind it. Whether it is genuinely spoken for depends on how much bayana was paid, what the agreement says, and how long the completion window has left to run.

The complication specific to this market

Where the thing being sold is a GMADA allotment or a Letter of Intent rather than a registered title, bayana carries an extra risk that does not exist in an ordinary sale.

Completion depends on the authority processing a transfer, and the authority is not a party to your agreement. If the transfer is held up by dues on the ledger, by a defect in the file, or because the parcel sits in a litigated area, neither buyer nor seller has defaulted in the ordinary sense, and yet the deal cannot complete.

An agreement drafted without that contingency leaves the question of whose fault it is unanswered, and the bayana in the middle of it.

What the paper should say

That the sum is earnest money, adjustable against the sale price, and forfeited on the buyer's default. The label alone will not decide it, but a document that recites the purpose removes the argument.

What happens if the buyer defaults, and what happens if the seller does. A clause that binds only one side is the kind courts look at hardest, and the double-refund term is what saved the clause in K.R. Suresh.

The outside date for completion, since the forfeiture only bites once a deadline has passed.

What happens if completion fails for a reason that is nobody's fault, including an authority transfer that does not come through.

And that the payment is not in cash above ₹20,000, because the tax provision applies whatever the parties have agreed between themselves.

Bayana is the most informal moment in an Indian property transaction and the one where the most money moves on the least paper. The word means nothing on its own. The sentence next to it, and what the money actually did, decide whether you keep it.

None of the above is legal advice, and the position in any particular transaction turns on its own agreement and facts.

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Sources

- K.R. Suresh v. R. Poornima, 2025 INSC 617, Supreme Court of India, 2 May 2025, for the characterisation of the ₹20 lakh as earnest money despite the advance money label, the agreement particulars, the holding that forfeiture of earnest money is not penal so as to attract Section 74, the double refund obligation on the sellers, and the requirement that refund be specifically claimed under Section 22 of the Specific Relief Act
- Court allows forfeiture of earnest money, Law.asia, for Satish Batra v. Sudhir Rawal, the ₹70 lakh consideration, the ten per cent earnest money, the March 2006 completion date and the clear and explicit requirement
- Godrej Projects Development Limited v. Anil Karlekar, Supreme Court of India, 3 February 2025, for the reasonableness requirement, the reduction of the twenty per cent forfeiture to ten per cent of the basic sale price, and the distinction between reasonable forfeiture and forfeiture in the nature of a penalty
- Rajbir Singh v. Jaswant Yadav, Delhi High Court, 14 May 2018, on the limits of what proportion of the price can be characterised as earnest money