Party promised to give plot, but cannot give that, what can i do

Around 1 year ago, my mom agreed on a agreement with a lady in our locality stating that we will give that lady money in small sum for the plot she had near our colony. We commonly agreed to do the registery when half of the amount is paid i.e. 400000 out of around 800000. She agreed to the point that the separate money she had taken from us other then this amount will have an interest of 10% and the interest amount will be added to the above plot amount. Within a year the total amount, including the interest reached to around Rs 650000. But now they are saying that they can't give the plot for 800000 and will return the money and gave us 2 checks. The checks now can be deposited but they have a bad financial record and have a number of bounced checks. Now they are neither give money back nor plot. Yesterday, the husband of that lady went to Police station and talked with TI that we are mentally harresing them. What should we do now ? Should we deposite the check and get it bounced.