Completely agree with you.
OP didn't do any research but did only price shopping. He went for the cheapest provider he could find and here imo the saying perfectly fits... "you get what to pay for". Not trying to defend the provider in any way but the matter of fact is there was no research involved.
Another thing is, the guy was threatened/triggered by verification email which he should not have because it's within their rights to verify the ID if they want to. Most of such cases are automatically flagged by the system because of IP/location based triggers or incomplete information. Although in this case I can assume they do this to cover some of the cost for providing cheaper service, but there is no way to confirm this. But ultimately it results in account suspension if not corrected. It's not frequent but happens. Maybe his IP was used for spamming in past or phishing, we can't say for sure why but it happened. And in my experience, if they ask for verification information then you should provide it. Period.
The alarming thing is OP accusing them in return which escalated the whole situation to where it is right now. Company's legal message was a template email and they said nothing wrong in it. But OP tried to teach them English or how they should manage their website or whatever he was trying to do. lol
Now, I can only assume that whoever replied to OPs email is equally hotheaded as OP is. He didn't like the fact what OP accused them or wrote them in that way. To be frank, I "may" also be offended by such an email out of the blue. And whole situation became worse day by day. All this could have been avoided if OP kept his cool and just provided them ID and accepted the additional charges as a cost of learning.
When other people here tried to point it out to him and he replied in the same fashion.
Now, I am not saying the support staff is right. No, they have also lost the cool during the conversation and later stepped over the line with the threats on phone call. The alarming thing is, that it may be OP's first time to deal with such incidence but the company is dealing with such people from last 5-10 years or may be more and they very well know what to do and how to deal in such incidences. So there is that.
It's not like I haven't faced such issues in the past with service providers but I have learned it quickly that support staff is also human and if you treat them poorly, they can and have many ways to return the favor in many different ways. At this stage, I don't want to discourage OPs legal efforts but if I were him and that 2500 rs mean a lot to me then I would apologize to them for my behavior and ask them to resolve the matter peacefully. But that's me, I may be stupid or not know the things how market works but I certainly know I am 2500 rs poorer already and if I go down the same path, I will spend much more time, money and efforts to save that 2500.
Anyway I sincerely wish OP gets his money back or domain.