I have landed Rs.385000 to my friend against his personnel chq.now after3 years he just want to pay me Rs.220000 only.as he say he lost in business asking me a letter as full and final payment as settlement.

It is called a settlement offer, and common on old debts where the chance of collection of law.
So would you rather take that much money and have some of it back, or risk never getting any of it back ?

Your choice, the next step would be legal action in court if you do not want to accept the lower amount.