Seller not agreeing to refund when loan is not sanctioned due to registered mortgage

Hi Sir, I have given advance of 5 lakhs for a flat worth 47 lakhs. And for the remaining I have applied for a home loan in ICICI. This property is registered mortgaged by the seller in AHFL. The seller promised to release the documents from the AHFL when my loan is sanctioned if balance transfer is not possible. Now my loan is sanctioned by ICICI bank and they are asking me to have the seller close the loan in AHFL and bring the original documents, but the owner says he is not having enough cash to close the loan at the same time he is forcing to take loan in AHFL or any other housing finance . I am only willing to take loan from ICICI bank and this is communicated prior and agreed by seller now he is not willing to close the loan OR return my advance. My parents also requested him very much as interest rates in AHFL is very high . he is not agreeing. I Belive he has no right to force since choosing bank is buyers choice. In sale agreement it is mentioned if any litigation identified during bank loan approval process advance amount to be returned he agreed and signed it. Now he is arguing with me mortgage is not litigation . We used litigation in the sense any issue/dispute he is very much arguing and i felt like cheated . My advance amount stuck with him . Need your suggestions ICICI bank says, they cannot do a Seller Balance transfer as the property is registered mortgaged. There is no clause to forefeit / withdraw mentioned in agreement Kindly let me know