Full and Final settlement held back by employer for recovery of outstanding

I was working for a logistics firm , where one of my client had outstanding amount , which I was following up for recovery, When I resigned and release by organisation, there was outstanding due from the client and I kept following up with client, however, employee held back my full and final settlement and didn't issue relieving letter.
I assured employer that I will follow up for recovery of money and kept pushing client apparently client paid some amount but later even after pushing a lot client kept on giving dates and told that he is in dialogue with employer and will settle dues as agreed with employer.
On other hand Employer held wrote to me that they will release my f & f and letter only after full recovery of outstanding from client. Employer is not going legal against client nor pushing for payment.
I need your assistance on how should I go about this ? does employer has authority to held back f & f , it is almost three months now and both client and employer is not taking any initiative to settle the matter.

It's not right to withhold F&F settlement on the pretext of arrears of collection of dues from clients. As you know F&F settlement consists of EPF & Gratuity which cannot be withheld beyond one month of quitting as per the acts. Even if they withhold you are not going to lose anything because contributions together with interest till the date of settlement have to be settled by the employer that is the act. It's your obligation that you should file the claim papers in the prescribed forms and obtain the ackmt.from your office to support your cause.