I've watched the second episode again in order to write my ff
I've noticed that Advay knows that Something bad happened to Chandni (Kidnapping)
but I don't think he knows the complete details of it.
As I think Shilpa came to Vashisth house after the kidnapping incident. So she too doesn't know the full details.
That's why when some ladies were seen discussing that who would marry such a badnaam girl (don't know the word in english). Advay says "That's its just the beginning I will make u even more badnaam.
That's why he felt very bad after knowing the effect the kidnapping had on her. As he had no idea about the truth of her trauma after the incident.
About ur questions
1- As I've wrote just now. I think, he might wanted to give back the pain he suffered to her or
I think he wanted to see if she's lying about her fear and all. As he said "Whether you changed or u act as being changed. Your fears and tears are a veil on ur true self. I will expose it today"
I think he might expected her to fight back after lighting her dupatta on fire but instead she fainted.
That's why he looked a bit confused while holding her in his arms.
2- I don't think she knew it was him who set fire to her dupatta. Cause he came and put it off
( bcos next day she tells him ...what you did was not right ). I think what she meant here was about what he said to her (About looking beautiful without dupatta and the rest)
That's what I think about the situation