Breach of trust, money laundering, cheque bounce

Hi experts, brief about my query: I have purchased a house (resale) for 19 lakhs. As it was closed for 5-6 years, required renovation to make it ready to move. Bank said it can give top up loan for renovation only after 1 year of emi repayment. Thus I tied up with seller and inflated agreement amount, so as to take home loan amount to cover renovation costs. Seller agreed to return the same to the tune of 3.5 lakhs out of home loan amount cheque from bank. Thus I took loan of 22.5 lakhs. But after the cheque encashed in his account he started to avoid me and giving reasons. And finally denying to give me back 3.5 lakhs as orally agreed before. He is taking advantage of my situation that I have taken excess home loan if I say actual transaction was of 19 lakhs only, And can't take any legal action against him. He has sent text messages/whatsapp saying I will pay you through black money, as my hospital's transactions are regularly routed through "hawala". And he has tied up and given 3.5 lakhs to hawala person to pay me back. I want to know from experts, 1. can I recover this amount from him. Any remedy available under law? 2. Can I file a police complaint against him under PMLA (money laundering act) on the basis of his sms and call recordings stating he has hawala connections? Can he be arrested? 3. Can bank take any action against me as I've inflated agreement amount and taken excess loan.? I have paid stamp duty on entire inflated agreement amount.