Cancellation of property deals

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

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.