Threats related to Personal loan

My mother took a personal loan of Rs 70000 five years ago from HDFC bank. She paid Rs 58000 and when she was paying last installment out of Rs 58000, an executive from HDFC bank suggest them not to pay further 12000 Rs as bank is going to shut down. When she next time visited the bank for next installment, there was no office in that building. It was closed. Now, few days back, she got a call from her school principal (my mother is a teacher, in govt job) that some inspector is asking her (my mother's number) as she has done some fraud. Then my mother got a call from inspector saying that : arreast warrant has been issued for her and she is going to be arrested soon. Moreover, he also said that your termination letter has been sent to education ministry of the state, she is going to be terminated soon. Same thing was also repeated by a lawyer from Delhi to my mother over call. They both threatened my mother and as a result, she fell sick and was in a stress. There were the chances of Heart attack as she is a heart patient. However, same day my mother paid the amount. She was asked to pay Rs 42000 instead of 12000 to settle the case to Kotak Mahindra bank ( as hdfc branch was took over by Kotak Mahindra bank) My queries are: 1. Where would she have paid the amount if there was no office? 2. She never got any call or any notice from bank to pay remaining 12000. 3. Is it justified to give a threatening call like this? She did not have any issue with payment but what she could do if there was no office. 4. She suffered a lot of mental problems due to this.This whole incident defamed her in school. 5. Is this the way to recover the amount? What can we do in this case?