Rental agreement expired and vacating the house

We have taken apartment for rent of Rs.11,500 in April 2015. The rental agreement was for 11 months. The agreement was not renewed after the completion of 11 months. We are still staying in the same house and paying same agreed rent. This was communicated with the owner vocally and he accepted the same. We are paying the rent via bank transfer. We have also paid Rs.50,000 as security deposit. Now the landlord told me on July 20th that he wants a new rental agreement with Rs 1000 rent increase. Also, he wants to increase rent from July 1st. We did not want to increase the rent and we told him that we will vacate the house. Landlord wants us to vacate the house on July 31st and is reluctant to return security deposit. We requested him that we will vacate the house after expiration of the notice period of 3 months as per the agreement. I have given the relevant clauses below: Clause 1) On expiry of the lease period the same shall be renewable at the option of the lessor and lessee for the further period as mutually agreed by the parties. In case no fresh lease deed executed on expiry of the period mentioned herein, the lessee shall occupy the rented premises till the lessor requires possession on the same terms and conditions mentioned herein". Clause 2) That the lessee shall deliver the vacant possession of the rented premises to the lessor on expiration of the agreement period of 11 months or on expiration of the extended period if any in good condition. Clause 3) The lessor and lessee should give 3 months prior notice to vacate the premises before the expiry of lease period. Please advise me whether my understanding of 3 months notice period is correct. We do not have any problem in vacating the house in one month but it will not be possible in 10 days. We are also afraid that the landlord will not return the deposit amount after vacation. Please let me know my rights as tenants.