Hi
What happened is due to the lack of due diligence from your part.
First of all make sure that the sellor has a clear title. Without any encumbrances.
Do a title search with lawyer if you have not done it.
If you had initiated a housing loan then surely your bank would have asked for the title clearance.
Even if you don't have the original sale agreement as it is missing, first get a title certificate after doing a search in the registrar office of the concerned area and of the title is clear then apply for the duplicate sale agreement from the registrar office after making the seller file for an FIR of missing sale agreement.
If you have done all the above then proceed with the deal further
It could be also possible that his legal heirs may have it , there could be possibility of a transfer by gift or MORTGAGE official or unofficial etc.
Get it right on record that he missed it and reported to police. Next step is to make a Public notice in the news paper that the document is missing and the same will not be used as the owner is obtaining a duplicate , refraining anyone who find the original document to use it,including seller's legal heirs.
FIR, public notice in news paper , application for duplicate in the sub regustrar etc are must.
Also you could mention the same in the original sale agreement which you make with the seller.
Most banks advise the above procedure when you go for a loan, inorder to get the the title clear and to avoid future claims from anyone, including his legal heirs.
Your possession of the property or registration of the sale agreement and the whole deal will not make the transfer legal unless the seller has a clear and marketable title.
Contact a lawyer and do the necessary steps to make sure the property you buy is legally secure.