As per your agreement, you are required to serve a three-month notice period before resigning. However, it is not legal for the school to force you to serve the notice period if they have already deducted two months' worth of salary as security deposit. The security deposit serves as a form of compensation to the school for any expenses they may incur in the event of an early resignation, as mentioned in the undertaking you signed.
It is also important to note that withholding your clearance certificate and experience certificate is not legal. It is your right as an employee to receive these documents upon resignation. The school cannot withhold them as a means of forcing you to serve the notice period.
Regarding adjusting the security deposit against the notice period, it would depend on the terms and conditions mentioned in your agreement. If it is not mentioned explicitly, it would be advisable to consult a lawyer to understand the legal options available to you.
As for the lack of EPF, gratuity, or any other benefits, it is not uncommon for private schools to not provide these benefits. However, if the school has more than 20 employees, it is mandatory for them to provide EPF. If they are not providing it, you can file a complaint with the Employees' Provident Fund Organisation (EPFO).
It is certainly unjust that after serving 7 long years, you have not received any benefits or additional leave. As an employee, you have the right to fair compensation and working conditions. If you feel that your rights have been violated, you can seek legal help to understand the options available to you.