Yes, your sister can sue you and your children for getting share in the ancestral and self acquired property of the father. Your father died intestate i.e. without any Will (testamentary will) hence, all legal heirs are entitled to inherit his properties.
However, you did not give full information about the facts but I suppose that you have inherited your father’s self acquired and ancestral property. Your sister has the right in both properties.
Self acquired property
The facts suggest that there are four legal heirs of your father’s self acquired property. Your mother, brother, sister and you are the legal heirs. All legal heirs will get equal share i.e. ¼ share each, in your father’s self acquired property.
According to the Hindu Succession Act, 1956 son, daughter and widow are the Class I heir towards the self acquired property of the deceased. The Class I legal heirs have the first right over the self acquired property. Thus you cannot accumulate property by excluding other Class I legal heirs.
After the amendment in the Hindu Succession Act 1956, the daughter is also a coparcener. She has the right in the ancestral property as equal as to the son. The ancestral property devolves upon the coparceners only. No other person has any right in the ancestral property.
Thus you cannot refrain your sister from the ancestral property because she is a coparcener. In the Vineeta Sharma case the Supreme Court has held that a daughter has the right in the ancestral property by birth.
Your sister can sue your children
After your father’s death his property had devolved upon his legal heirs. His ancestral property had devolved upon his three children. His self acquired property had devolved upon his wife and three children.
I use “had” because the property automatically devolves upon the legal heir. A property cannot remain without an owner for a single second.
You have the right in ancestral property to the extent of 1/3rd share and 1/4th share in self acquired property (if your mother is alive). If the property in the hands of your children is more that the above said limit then your sister can sue your children.