@ Ambika- gudone , very nice post.
@ HARSH - You can try to talk and make your sister's MIL understand that her behaviour is not acceptable, in a soft manner.
And if the soft measure does not work, then certainly file Dv. because that will help your sister and her husband also, they can get a seperate potion in the house and your sister will also get protection order . That will help their. A daughter in law cannot be and should not be forced to stay with her inlaws. (If their is a difference or problem.)