Cheque Bounce

Hello Sir / Madam, 1. I issued a Security Cheque (with Amount in words and Numbers & signatures) in 2007 to One known Family Friend as they transferred money to my account to handover token money for purchase of property for them, since they live outside India. 2. And later they paid fully and got Possesion of property upon their visit next time to India. However they told us that they destroyed the Cheque already - We believed them ! 3. While purchase of property it was agreed with them, they'd pay us a commission (upto 10 % of total) profit they'll earn while selling property. 4. They sold that property in 2012 - appreciated by 200 % from their purchase cost (so our commission should have been 20 % of that profit they earned). 5. They denied to pay our commission, we kept following up with them but they didn't bother. 6. On Oct 06, 2016 we received notification from their lawyer stating - Cheque was dishonored due to insufficient money in your account (this was same Cheque was given to them as a Security). And also was mentioned that we took a friendly loan from them in 2012 which we were supposed to be repaid by 2014 with an interest of 2% monthly per lac. 7. Cheque is from year 2007 and that account isn't in use since year 2010 - 11 We never took any loan from them. What shall we do now as they're threatening to take us to court?