A separate suit should be filed to set aside a preliminary decree or any other decree. The only valid ground is fraud. If some important material facts are suppressed before the court while passing the decree, then it amounts to fraud, and the decree is considered to be a "DECREE OBTAINED BY FRAUD" and considered as nullity or non est in the eyes of law.
The suit should be filed within three years from the date of knowledge of fraud.
The court fee would also be quite high. For example, if the value of preliminary decree or partition suit is rupees one crore, then you have to pay 3% as court fee, which would be Rs. 3 lakhs, to set aside the preliminary decree. In addition, you may have to pay any other court fee depending on the reliefs claimed.
The only valid ground is FRAUD to set aside a decree and you should be able to very clearly establish fraud. Otherwise you would waste your time and money.
In your case, fraud is unlikely because you said that you informed the court about the sale deed and the seller also admitted it, so there is no fraud as far as the sale is concerned. The decree does not appear to be a "DECREE OBTAINED BY FRAUD."
Another remedy is Section 44 of Indian Evidence Act (old), which is now Section 38 of the new evidence act. According to this section, you can show that a decree was obtained by fraud or collusion. In this remedy, you should not file a separate suit. Since partition work is in progress, you can file an IA within the IA of partition work (final decree petition) informing the court that the decree was obtained by fraud or collusion. If you successfully show it to be obtained by fraud or collusion, then the preliminary decree would be treated as non est or nullity. There is no need to actually set aside the decree. If it is shown to be obtained by fraud or collusion, then it would be automatically consdidered as a nullity. However, it depends on whether you can prove fraud or collusion, which may or may not be likely in your case.
I am sharing the above information, because you filed an IA to set aside the preliminary decree.
There is a clear difference between fraud and mistake. If some important material facts are suppressed before the court, then it is fraud. If all material facts are placed before the court but still the court passes a wrong decree, then it is mistake by the court. The above remedies are applicable only in the case of fraud. Not in the case of mistake by court.
Appeal can be filed in the case of mistakes as well as fraud.
If you think you were cheated by the seller and if you think you can prove it, you can file a separate suit to prove that you were cheated and recover the money. You can also obtain a stay on the partition work.
You were wrongly advised to file an IA to set aside the preliminary decree. So, please try to obtain correct advice. I shared the above information, so that you do not get into a wrong path once again.