Property named underUnauthorised construction sold

Hello, I had purchased a builder floor from the owner of the property in new delhi and paid the Bayana Amount to the owner. The Sale agreement was signed on stamp paper. Then i applied for the home loan, the loan got rejected. Reason cited by the Bank was MCD unauthorised construction. Upon this i searched the internet and found the name of this property in the unauthorized construction list. I approached the owner of this property and asked him to return the money, as this was against the clauses agreed upon at the time of Bayana (Property free from litigation issues i.e. clean property). He immediately refused to return the money and told us that he has already filed a case with the MCD for regularisation and was suppose to pay the penalty. Few weeks passed now i had to vacate my old house as i had sold it in order to purchase this builder floor. On the day when i had vacated my old house the owner asked us to pay 50% amount and allowed us to shift in this floor of his, as by that time he could not get clearance from MCD, hence Registry could not be done. Days kept passing, the due date of the Bayana agreement had passed and still he could not get the clearance from MCD which was 18th June. In the meantime he even started demanding huge amount of money, though he himself had agreed that the remaining amount would be paid at the time of registry. This was accompanied with lots of threats and even harassment. Finally after waiting for so long we served him a notice from an advocate. On the same day he even got the clearance letter from MCD dated 1st July 2014, which had already crossed the due date i.e. 18th June 2014. Now we again applied for loan in another nationalized bank, which again got rejected and now the reason cited by the bank was documents chain incomplete (Agreement to sell, possession letter, demand letter, allotment letter) were missing. We told the owner to provide these documents he again refused and told us that these were not required and he does not possess these documents in original with him. We are being harassed in bits and pieces. Now we are not interested in buying this property as there have been spats regularly with him. We just demand our money back as he had committed forgery i.e. 420, by selling illegal property (not cleared by MCD). He is refusing to pay back the money and challenges the courts of this country by saying that there is no court in this country which can get us our money back from him. He even threatens us saying that he will file a return case against us claiming breach of contract (Sale agreement), though for this he himself is a defaulter as he could not get his property cleared by due date of agreement. Sir, please help me as i cannot handle this tense situation. And there is a huge amount involved in this transaction in crs. We have already paid him in cash as well as cheque. But we want complete refund of our own money in cash and cheque both.