Double mortgage loan paid ,how to close loan?

kishore kumar (Querist) 13 October 2025 This query is : Resolved
Hello Sir, in 2016-17, a female family friend of mine took out a loan of ₹400,000 from a private financial institution for her business. The bank retained the original property documents as collateral. The mortgage was not registered. While she continued to pay EMIs, the EMI was increased by adding the moratorium interest from the COVID-19 period to the original loan amount. Due to the weakened financial situation after COVID-19, and the EMIs remaining unpaid after 2023, the institution obtained an order from the Tehsildar Court for physical possession of the property after taking symbolic possession. Against a loan of only ₹400,000, a total EMI of ₹860,000 has been paid so far, but the finance company has stated that approximately ₹250,000 remains to be recovered. What should be done in such a situation? Under which law and order can this be challenged, and in which court? Thank you, Sir.

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A user is seeking advice after paying off a significant portion of a business loan secured by property documents. Despite paying over ₹860,000 on a ₹400,000 loan, the finance company claims a balance of ₹250,000 remains. The user is concerned about a Tehsildar Court order for physical possession of the property, questioning its legality and jurisdiction, especially since the mortgage was unregistered. Forum members suggest the Tehsildar's order is likely beyond their authority and advise consulting a local lawyer to challenge the proceedings, possibly through the Debt Recovery Tribunal (DRT) or High Court.

kavksatyanarayana (Expert) 13 October 2025
A moratorium does not change the interest rate on a loan; instead, interest continues to accrue on the outstanding principal balance during the payment-free period. This means the total amount of interest owed increases, and the accumulated interest is added to the principal, which can lead to higher EMIs or a longer loan tenure once repayments resume.

T. Kalaiselvan, Advocate (Expert) 14 October 2025
The finance company cannot invoke SARFAESI ct for the sum as low as Rs. 2,50,000/- hence what you say is not believable nor relevant.
The finance company cannot give mortgage loan with registering the mortgage deed.
An unregistered mortgage deed may not be legally enforceable.
An unregistered mortgage deed cannot be used to enforce the mortgage itself, but it can be used in a suit for recovery of the money owed, provided the suit is for a monetary claim and not for enforcing the property rights. The deed can be admitted as evidence to prove the existence of a debt or the personal liability of the debtor, especially if it contains a personal covenant to repay. However, the deed will not confer any enforceable rights over the property itself.
Therefore you may come out with the facts if your question is real and not hypothetical or academic.

kishore kumar (Querist) 14 October 2025
Thank you very much respected forum members for your valuable information.

kavksatyanarayana (Expert) 14 October 2025
You are welcome sir.

P. Venu (Expert) 14 October 2025
"Tehsildar Court"! What is it? How it has got the authority to take possession?

"private financial institution"! Is it RBI approved? If so, under which law?

kishore kumar (Querist) 15 October 2025
Sir,
following order text details for your valuable suggestions and advice. How to stop this order or challenge it?
Thanks and regards Sir.

Court of the Tehsildar, Tehsil and District, Ratlam (M.P.)

No. Xx/xx/25

To,

1 Mrs. Xxxxx wife of xx xx

2 Mr. Xxxx son of xxxxx

Address: House No. Xxx, Street No. Xx xxx (M.P.)

Subject: Regarding the agreement regarding the secured property.

It is hereby informed that in accordance with the order passed in District Ratlam (xx/B-xxx/24-25 and order dated xx.0x.2024), the secured mortgaged property, situated at plot No. Xx, xx Nagar, Surve No. Xxx/xxx, Tehsil and District Ratlam, with a total area of xxx square feet, has been ordered to be handed over to the authorized officer of the applicant, xxxxxx Finance Corporation Limited.

The Bank has created a security interest for the repayment of the secured property. Therefore, you are hereby ordered to hand over the possession of the secured property mentioned in the referenced order to the authorized officer or representative and inform this Court.

Dated xx/xx/xxxx

Until the possession of the said property is handed over to the authorized officer of the xxxx Finance Corporation Limited. The applicant will be handed over to the bank. In this case, the secured property must be handed over to the bank on the 16/10/2025 date of possession so that the loan can be handed over to the bank.

In the absence of the borrower on that date, if the secured property is locked, Finance compa will break the lock and prepare a panchnama and video record the list of the secured property and all the belongings. The applicant will be fully responsible for this.

Schedule dated 28th * xx September 2025 today itself.

Tehsil and District, Ratlam

Case xxx-1-1

Dated

The applicant agrees and makes the panchnama report and submits to the bank.

As per the order dated xx/xx/2025, the applicant has taken over the possession of the secured property. (MP) case, to provide the necessary manpower and strength on December 16, 2025.

3. Authorized officers at the xxxxx Corporation are ordered to contact and obtain information.

Superintendents of Police / Urban

Legal action will be taken by police if they are found involved in the crime. they will be sentenced to mprisonment.

T. Kalaiselvan, Advocate (Expert) 15 October 2025
You may consult your advocate on all such further issues because it involves practical solution based on the prevailing circumstances

kishore kumar (Querist) 15 October 2025
Thank you very much respected forum members.
State DR Tribunal is in Jabalpur MP that is 1200 km away from his town. Poor man already in great tention to arrenge the remaining 2.5 lakhs due.
One and last imp Question to all respected forum members:
If he paid remaining 2.5 lakh amount to finance company to avoid possession by Finance company, who will listen his appeal, Highcourt or DRT?
Many Thanks to all respected forum members again.

kavksatyanarayana (Expert) 15 October 2025
The financial institution gave the loan on an unregistered mortgage, that too not on the property, which is not valid. The financial institution moved to the Tahsildar court, the same is not for such cases. What is the opinion of your lawyer? If the party arranges the money, it shall be deposited in the shape of a cheque to the DRT only to avoid further disputes.

kishore kumar (Querist) 16 October 2025
Thanks a lot to all respected forum members, Sri T. Kalaiselvan Sir, Sri Kavaksatyanarayan Sri. P. Venu Sir, hope for the same guidence in future.

T. Kalaiselvan, Advocate (Expert) 16 October 2025
You are welcome for your appreciations.

Dr. J C Vashista (Expert) 18 October 2025
You have stated, that, "......the institution obtained an order from the Tehsildar Court for physical possession of the property after taking symbolic possession." if it is true and correct the order is beyond jurisdiction of a Tehsildar.
Unbelievable statement.
Recheck.

kishore kumar (Querist) 21 October 2025
Respected Sri JC Vashishth Sir, Namskar,
Sir, I have an order from the Tehsildar Court, which clearly states that the financial institution or its representative should hand over possession on this date and inform the court. The order letter is in Hindi, so you may find it difficult to read.

Now, on the scheduled date, the institution sent its lawyer and demanded Rs. 4,10,000 from the party, including all the expenses incurred so far, penalty, interest, cheque Bouncing Charges and outstanding EMI. When the outstanding EMI of Rs. 2,37,000 was not deposited immediately, they took possession of the property and sealed the house by locking it and report also submitted to tehsildar court.

Please also tell me whether he should go to the D.R.Tribunal or the High Court?
Thank you very much, Sir.

Dr. J C Vashista (Expert) 23 October 2025
Tehsildar has no jurisdiction to entertain recovery case(s) as stated by you.
Show the order and complete case file to a local prudent lawyer for proper appreciation of facts, professional advise and necessary proceeding.

kishore kumar (Querist) 23 October 2025
Respected Sri J.C.Vashista Sir, Thank you very much for your valuable information and advice., Namskar.

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