Consumer Commission Orders PNB Housing Finance to Refund Excess Interest, Pay ₹35,000 Compensation and Costs for Delay in Loan Foreclosure Statement

March 29, 2026 : The Consumer Disputes Redressal Commission, Thrissur, has held PNB Housing Finance Ltd. liable for deficiency in service for delaying the issuance of a home loan foreclosure statement and subsequently charging interest for the period of delay. In a significant consumer rights ruling, the Commission directed the housing finance company to refund ₹18,342 collected as interest, along with ₹25,000 as compensation and ₹10,000 as litigation costs to the borrower.

The complaint was filed by Thrissur resident Siju Raj A under Section 35(1) of the Consumer Protection Act, 2019. According to the complaint, the borrower had availed a housing loan from PNB Housing Finance and submitted a request on January 5, 2023, seeking a pre-closure statement for the loan account. He also paid the prescribed fee of ₹885 for obtaining the foreclosure statement. The borrower alleged that despite receiving the fee, the company failed to issue the statement within the prescribed period of 21 working days and eventually issued it only on February 20, 2023.

The complainant argued that because of the delay, he was forced to continue paying interest on the outstanding loan despite having sufficient funds available to close the account. He claimed that the housing finance company unlawfully charged him ₹18,342 as additional interest for the delayed period and sought a refund along with compensation for the hardship caused. The borrower had also approached the National Consumer Helpline before initiating the consumer complaint.

PNB Housing Finance contested the complaint and admitted receiving the foreclosure request and the prescribed fee. However, the company argued that during the processing of the foreclosure request, it had offered the borrower a reduced interest rate of 8.75% as a goodwill gesture to retain the loan account. According to the company, the borrower initially expressed willingness to continue the loan if the lower rate was granted. As a result, the foreclosure request was temporarily closed while discussions regarding revised loan terms continued. The company maintained that the delay occurred because negotiations were underway and asserted that the foreclosure statement was issued within the permissible period once the request was reactivated.

After examining the evidence and correspondence between the parties, the Commission rejected the housing finance company’s defence. It observed that the borrower had already exercised his right to seek a foreclosure statement by submitting a formal application and paying the required fee. The Commission found that the lender had unilaterally suspended the foreclosure process during negotiations regarding a possible reduction in interest rates, even though no final agreement had been reached between the parties.

Explaining its reasoning, the Commission stated that “mere negotiation or proposal cannot override a valid and subsisting request for issuance of loan pre-closure statement.” It further observed that the lender had pursued negotiations in its own commercial interest and could not allow those discussions to prejudice the borrower’s legal right to obtain a foreclosure statement within the stipulated period.

The Commission noted that the foreclosure statement was admittedly issued only on February 20, 2023, well beyond the applicable timeline. Consequently, it concluded that the delay was solely attributable to the housing finance company and amounted to deficiency in service under the Consumer Protection Act.

In a particularly important observation, the Commission held that the lender could not benefit from a delay caused by its own actions. Referring to the legal principle nullus commodum capere potest de injuria sua propria, it stated that no party can take advantage of its own wrong. Therefore, the additional interest collected from the borrower during the delayed period was found to be arbitrary and unjustified.

The Commission also recognized the mental agony, inconvenience and financial hardship suffered by the borrower. It observed that the delay deprived him of the opportunity to close the loan account within the intended timeframe and exposed him to avoidable financial liability. According to the Commission, financial institutions are expected to act fairly, diligently and transparently while dealing with consumer requests.

Allowing the complaint, the Commission directed PNB Housing Finance to refund ₹18,342 towards the unlawfully collected interest, pay ₹25,000 as compensation for mental agony, hardship and inconvenience, and pay ₹10,000 towards litigation costs. The Commission further ordered that all amounts shall carry interest at the rate of 9% per annum from the date of filing of the complaint until realization. The company has been directed to comply with the order within 45 days from receipt of the judgment.

The ruling reinforces the principle that banks and housing finance companies must strictly adhere to timelines for issuing foreclosure statements and cannot delay the process for commercial reasons. The decision is expected to provide greater protection to borrowers seeking loan closure and may serve as an important precedent in disputes involving delayed foreclosure processing and wrongful interest charges by financial institutions.

Case Reference: Siju Raj A v. PNB Housing Finance Ltd., CC No. 116/23, Consumer Disputes Redressal Commission, Thrissur.