I am guessing you are acting in VIC.
If you hold the paper Discharge and the Paper Duplicate CT, unless you hold a signed Client Authorisation allowing you to act on behalf of the registered mortgagee, you have no choice but to return both the title and discharge to the registered mortgagee and have them lodge the Discharge of Mortgage.
(If you have more titles and discharges in your custody, may I suggest you do the same with all of them.)
Once you return the paper title and discharge to the registered mortgagee, you then have two options.
Please let me @GeorgePolus know how you get on and please contact me if you have more questions.
Also - please follow the link that Barry provided - there is a lot of material on Community. Thank you Barry.