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Be careful with holiday exchange programmes

Jehangir Gai 

Time-share holiday schemes mushroomed some years ago. Many of these are run in a dubious manner. Monies are pocketed, but resorts are not developed. (RCI, a holiday-exchange network) promises a beneficial among many affiliated resorts, which appears an attractive proposition. However, when the consumer actually tries it, does he realise he has been taken for a grand ride.

Gemawat Resorts, an RCI-affiliated resort, was marketing its time-share through Promo Property Management. They had organised meetings where many were induced into buying a timeshare in Gemawat Resort's property named The Village. Parthasarthy and wife Jayashree, both advocates, had attended one such meeting and were persuaded to purchase a timeshare for a studio apartment.

When the Parthasarthys went to Bangalore on a vacation, they found the studio apartment had not been developed. So, they were compelled to stay elsewhere, putting them to a huge expenditure. Later, they issued a legal notice. RCI replied stating that Gemawati Resort's affiliation had been cancelled, and they were not concerned with the amounts paid by the couple. However, RCI offered to extend facilities on payment of additional charges.

The couple then approached the district consumer forum. RCI reiterated its stand that since no payment had been directly made to it by the Parthasarthys, it could not be held liable. But, since RCI membership fees had been routed through Gemawati Resort, the forum held both RCI and Gemawati liable. It ordered them to jointly and severally pay Rs 115,175 to the Parthasarthys, along with interest of nine per cent a year February 23, 2005, plus compensation of Rs 10,000 and cost of Rs 1,000.

RCI appealed to the Andhra Pradesh state commission, which upheld the order of the district forum. RCI then filed a revision petition before the national commission, reiterating its stand that its role was only to facilitate a holiday-exchange system.

The commission observed that the documentary evidence showed there was an affiliation agreement between RCI and Gemawati Resort. According to this, Gemawati Resort had paid affiliation fee to RCI. In addition, the Parthasarthys had paid an enrollment fee of Rs 4,200 for a five-year membership to RCI, routed through Gemawati Resort. Thus, the couple had become members of RCI.

In acknowledgement of having received the affiliation and enrollment fees, RCI had agreed to perform obligations, services and duties associated with the holiday-exchange programme. The commission observed that the correspondence revealed several instances where RCI had directly interacted with the Parthasarthys and promised to render services. However, they failed to render any. Hence the commission refused to exonerate RCI.

While confirming the orders of the district forum and the state commission, the national commission indicted RCI for deficiency in service and held it guilty of engaging in unfair trade practice. Accordingly, RCI's revision petition was dismissed with a direction to pay an additional sum of Rs 20,000 as costs payable to the Consumer Legal Aid Account. [Judgement dated 11.1.2012 in revision petition number 443 of 2007 in the case of RCI India Pvt Ltd v/s Parthasarthy & Ors]

This judgement will help consumers to take action not only against the parent resort whose time-share they purchase, but also against RCI for making false promises.

The writer is a consumer activist.
Views expressed are his own.

First Published: Fri, February 24 2012. 00:36 IST