Hello,
1) First of all your sister must immediately lodge a police complaint about the torture your sister had been put through and the cruelty to the children.
2) Secondly file a DV case against him before the Magistrate Court in your area. Your wife can seek protection, maintenance, residence and compensation for all her sufferings from her husband.
3) You can separately file a complaint to the police for criminal intimidation as he is threatening to implicate you for abetment of suicide. The report in the police station will help in setting up your defence in case he commits suicide.