Mischievous neighbor

My father has a plot of land in his name in the state of Orissa (India). Earlier we used to stay there but as of now all my family members have moved out and settled in different places. The said plot is in the main marketplace with residences as well as shops nearby. The front side of the plot is protected from intrusion by a 10-12 ft brick wall with a wooden gate. On the other 3 sides (including the back side ), there are boundary walls of neighbors i.e no boundary built by my father on the other 3 sides. Due to location of the plot (in the market place) it has got very high value. There are many prospective buyers for this piece of land. However, our neighbor to the left side of the plot has built his residence whose boundary wall demarcates our land on the left side. He first approached us with the intention of buying our land and made an offer to us. Somehow the deal could not materialise and now he has resorted to all sorts of mischief to acquire this land. First he started telling everybody else in the market (since it is a small place and everyone knows everyone) that he has already purchased the land so that nobody else would come forward to buy this land. Very recently he has spread the rumor that he has already got the land registered long back ago and got it written by a Zamindar ( we have heard he is showing some documents) and sent a legal notice to us. We have got this information from our acquaintances there My father on the other hand is a clear title holder of the land and has been been paying the requisite taxes like holding tax etc. We have the receipts in our possession. The rumor is worrying for us due to following reasons: 1) None of my family members live there any more 2) Due to this rumor no other party is willing to approach us though we are willing to sell the land As on date we have not received any legal notice as is being claimed by our neighbor. This situation has created some sort of tension. We have not written/displayed anything on the front wall of the plot. It is requested to kindly advice how to tackle this mischief of our neighbor and ensure that our land is safe and protected. And in case if we do receive any notice, then what should be our next course of action? Kindly advise.