“Lenders take a new course, force borrowers to execute deeds of sale of property”
Lenders are adopting a new way to avoid penalties for usurious loans by forcing borrowers to transfer their properties by registering deeds of sale instead of pledging them.
Former DMK MP D. Radhakrishnan on Monday filed a complaint with Madurai Police Superintendent Sujit Kumar, claiming his relative had cheated him of prime properties worth 9 crore for a loan of 2 crores he had contracted. The SP said it tasked its officials to investigate the complaint.
“He insisted that I pass the deeds of sale for some of my properties with the promise that when the loan is repaid with interest, he would cancel the registration. But now he has gone back on his word with the intention of deceiving me, ”said Mr. Radhakrishnan, who won the Sholavandan Assembly constituency in 1989.
“This is a new practice adopted by pawn shops in some districts like Pudukottai, Madurai and Theni. They believe that borrowers cannot seek legal redress if their property is usurped through deeds of sale, ”said a senior police official.
Previously, pawn shops required borrowers to give blank checks or pledge properties as collateral for the loan. “While the state government has passed a law to abolish the ‘kanthu vatti’ (Tamil Nadu Prohibition on Charging Exorbitant Interest Act 2003), it is trying to protect the registration of deeds of sale.” , did he declare.
Mr Radhakrishnan took out a loan of 1 crore in 2016 in the same way from two people after he signed a deed of sale for 1.70 acres of his farmland in Vadipatti. When the lenders wanted him to repay, he sought help from another lender, who is his relative. After the land was transferred to the new lender by the first lenders, Mr. Radhakrishnan took out a loan of 1.70 crore to settle the original loan.
He then secured a 30 lakh loan for his daughter’s wedding, after registering a few other properties with the same lender. “I told them that I would repay the loan amount with interest soon after I sold my property in Tiruppur. However, as things did not go as planned, I was not able to repay the loan immediately, ”Mr. Radhakrishnan said.
Meanwhile, the loan shark donated the 1.70 acre land to his son and they dug a borehole and tried to put a gas pump in the land without Mr. Radhakrishnan.
When local people, including the early pawn shops, asked him to return the land to Mr. Radhakrishnan against loan repayment, he rejected their suggestion.