False case of IPC420

We had rented a property in the year 2014 June for merely 19000Rs rent and started a labour job work. Adjustment was such that we were working for the the landlord and rent was adjusted in the labour job work done from us. And if there is any thing extra we used to bill them and get the payment via cheque or cash. However in the period of Oct'15 to Feb'16 we billed him for approximately for about 5 Lakhs, These were VAT bills and were paid approx 2 Lakhs for the same with an O/S of 3 Lakhs. At the time of vacating the property there was an outstanding of 3.8 Lakhs of electricity bill that was pending and we mutually agreed that our payment will be adjusted towards the electricity bill and any thing extra if there is any will be paid by us. After the mutual agreement we left the premises and continued our normal business. After almost 6 months now someone from there end has filed a private case of 420 stating that we have cheated them and is stating that we will need to make the payment of the same or else will get us arrested. As the properitor of the company is a lady and hence there is an issue and we are getting scared. We had asked for the out of court settlement from the mediator who had filed the case and he had promised us for the same. However took 18500Rs from us and later on asked us to make the payment. This is not right. And also till date we are being quite and didnot filed any case for our non payment of bills. Wherein we had to make the payment of Taxes from our end. This has been more then 2 years that we have not been paid. But at this stage of life they have filed a false case and this mediator is sending me messages and watsapp calls at different ours of the day stating that will get us arrested and all that. What should be the next step from our end.