Cancellation of Sale Agreement

I entered into a sale agreement on 7th Aug 2016 for sale of independent house in Hyderabad. A token advance of rs 1 lakh was paid by cheque which was never encashed. The agreement was made on a Rs 100 stamp paper and not registered. The house was bequethed to me by my father through his notarized Will. The property was mutated in my favour by GHMC on the basis of this will in 2014 The agreement had specific clause saying agreement is time bound and expires on 30th sept 2016 if the sale deed is not executed by that date for any reason what so ever. The Agreement also had a clause that I would hand over vacant possession of the property at the time of registration of sale deed. The tenant in the property made a claim for buying the property at the same rate. I had advised them to sort out amongst themselves. The matter was not resolved and the agreement holder did not execute the sale deed or offer to pay the balance amount at any time. On 26th Sept the Tenant sent a lawyers notice saying that I had not complied with the documents and not provided clearance from my siblings ( My only brother is dead and this is mentioned in the will ) and that The notice states that the time limitation in the sale agreement is now become inoperative, The notice also referred to having a tenant in the property. That I should confirm my readiness to execute the sale deed and that i should not enter into agreements with any third party. I responded to the notice on 29th sept by speed post delivered on 30th sept AM and by e mail to the lawyer on 29th, saying that I was always willing to hand over possession on the date of registration. however the buyer had never come with proof of funds needed to complete the registration or shown me the draft sale deed. Further I stated that the documents were all available with him from even before signing the agreement and the request for additional documents such as sibling clearance was never made by the buyer either verbally or in writing. I had sent a termination notice on 1st October and returned the unencashed cheque by speed post. The agreement holder subsequently said verbally that he was not pressing for execution of the sale deed and returned his copy of the sale deed to me. saying verbally that I am free to sell the property Now my tenant says he is willing to buy but he is asking that the previous agreement be cancelled through a deed of cancellation since a lawyesr notice was sent. Is this essential in view of ? 1. My having both copies of the previous sale agreement with me 2. The previous sale agreement was not registered or notarized. 3. The agreement holder had sent a legal notice