First contact a local advocate, and issue a befitting reply denying the knowledge of the payee and the payee is fabricating a transaction with forgery. The presumption is that the cheques were not signed in the blank when the cheque book was lost. If the payee is really a culprit, he may not proceed further and purchase problem.
When the cheque book was treated as lost, the bank should have withheld that instrument and informed you as it was reportedly stolen.. Contact the bank and explore for getting a copy of such cheque issued to get forensic examination of signature, handwriting etc.
Then with the help of an advocate file complaint before jurisdictional Police. for interrogation of the payee and to get the entire lost chequebook to avoid abuse through the fraudulent transaction.
First, try to ascertain the place from which it was presented as this is a new threat of opening an account of a Chennai person at Delhi, and present instruments drawn on Chennai through such Delhi bank to threaten and harass innocent drawer and to extort some amount as a compromise with the threat of warrants etc.