rent a room but can't get back my deposit.

My friend and i rent a room at Setapak, KL.We didn't sign any agreement. We want to move out on Jan 2011. Now we facing a problem.
We can't get back our deposit from house leader even giving 2 month notice before ( house leader mention to us few days ago ).
House leader said he already mention to us that we can only get the deposit from the new tenant.
And he said he won't return back any kind of deposit. ( like:-  2month rental deposit_RM700, 2month water & electric deposit_RM200, house utilities deposit _RM150, w/machine deposit_RM100, card & key_RM10 )
He don't want deduct our rental from deposit. Now we still need to pay rental for every month and can't get back any single cent of our deposit at all.
House leader ask for rental, and he mention if we still not paying for the rental, he will kick out both of us end of month Nov 2010.
I'm very scare now, no one can give me proper suggestion.
But i make police report last few days already, mention that house leader don't want to return the deposit only. ( i pass the police report to house leader already and ask for a discourse )
One of the reason i make report is the Guy ( house leader ) don't even want to talk with us face-to-face & through phone.
Even i make a call to him, he also be rude and hang up half way of our conversation.
Now we ask him to have a discuss, but he didn't reply our message and didn't back home.

Everything is totally different with our verbally agreement earlier before we move in the room.

Am i doing the right action that make police report? What should i do right now? Can i get back all my deposit except my 2 month rental and continue stay at there? Or you got any idea? HELP ME...