Hi Prajeena.
I'm very sorry this has happened to you and your family, but I do agree with some of the comments i have read that the breeder is right to take the dog back into their care. Breeders have a duty to care for all their puppies and it sounds to me this is what they are doing.
It sounds to me like your family was not really ready to take in a dog. You said your husband had a pretty busy work load at the time. Many things will scare a little puppy when they leave their mothers and littermates. They have had that protection for around 8 weeks and to be taken from their mother and brothers and sisters and into a very strange new place they do get scared and should be carefully done. I believe that when you bring home a new puppy you should allow 2 weeks, when you are not so busy, nice and relaxed, and spend some time with them and to start on their training slowly. Make the training fun and don't train too long, about 10 minutes each time. Don't overwhelm with too much. Training your dog should be fun for both owner and dog.
I wish you and your family the best of luck if you decide to get another dog.