Loan repaid, mortgage stayed: Hyderabad man awarded Rs 40.3 lakh

Hyderabad: A consumer commission here has directed Telangana Grameena Bank to pay Rs 39.75 lakh to a city resident whose house was still shown as mortgaged to the bank years after he had cleared his loan.

The Hyderabad District Consumer Disputes Redressal Commission-II held the bank responsible for not getting the mortgage entry removed from the official property records. It fixed the compensation at Rs 5,000 a day for 795 days, along with interest at 9 per cent.

The bank was also asked to pay Rs 50,000 for the mental agony caused to the complainant and Rs 5,000 towards litigation costs. It was directed to complete the mortgage cancellation without delay.

Loan cleared in 2016

The complainant, M Ram Reddy of Saidabad, had availed an education loan of Rs 8 lakh from the bank’s Saroor Nagar branch in 2013 for his son’s studies. He pledged the title documents of his house as security.

He repaid the loan in full, with interest, by September 2016.

The bank handed back the original documents. However, it did not file the notice and release deed with the Sub-Registrar’s office, which is needed to cancel a mortgage in the registration records.

Sale held up

Reddy found out about the lapse in 2018, when he decided to sell the house. The encumbrance certificate (EC) he obtained still showed the property as mortgaged to Telangana Grameena Bank.

With the entry on record, he could not go ahead with the sale. He then approached the consumer commission, seeking compensation and the removal of the mortgage entry.

The commission found the bank at fault for not completing the paperwork that should have followed the closure of the loan account.

Telangana Grameena Bank is a regional rural bank sponsored by the State Bank of India.

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