M J Antony: Holiday from consumer law

OUT OF COURT

Those who complain against time-sharing companies are caught in smoggy interpretations.

The booming tourist industry offers several packages for holiday seekers. The real vacation freaks sometimes go for time-sharing schemes where a company offers something like a free week's stay in a resort annually for a lifetime once you become a member after paying a hefty amount. It is offered as a transferable and inheritable asset. As the room rates in hotels soar, some choose such membership expecting blissful breaks year after year. However, this plan has disappointed several persons in recent times. Those who had gone to their chosen haven dreaming of sun and sand have found that the accommodation was awful and all their hopes belied.

If they choose to invoke the consumer law, they would find that it is more like a gamble. The National Consumer Commission, in two leading judgments in the last decade, has ruled that such disenchanted persons should take the slow and expensive path to civil courts, and not go to consumer forums.

The reason given is that it is a contractual matter and, therefore, the consumer forums have no jurisdiction. There is no element of goods or services and there is no consumer-seller relationship in these package deals. The first ruling of the commission was delivered a decade ago in Dalmia Resorts International Ltd vs Ranjana Gupta. It was soon reiterated in Punjab Tourism Development Corporation vs Kirit Doshi.

This view sounds so unconscionable that consumer forums and state commissions have often taken a contrary view. Recently, the Delhi state consumer commission was reported to have ordered Diamond Resorts Pvt Ltd to pay compensation to a member of the scheme who had paid Rs 38,000 but complained of gross deficiency in service. The Maharashtra and Tamil Nadu state commissions have also taken a view different to that of the national commission, though the decision of the apex body is binding on the state panels.

When hotels and lodges fall in the net of the consumer law, it is difficult to accept an interpretation which grants the time-share companies a holiday from their obligations. The National Commission has compared the scheme to the purchase of immovable property and, therefore, there was no consumer dispute in the case of the members. This appears to be contrary to the well-known view of the Supreme Court in the Lucknow Development Authority case in which it held that offer of flats or properties by government corporations could be brought within the consumer law.

Though the provisions dealing with this complaint in the Consumer Protection Act and the Monopolies and Restrictive Trade Practices Act are common, the MRTP Commission has taken a kinder view in its judgments. For instance, in V N Sabharwal vs Green Fields India Ltd, the commission ruled that members of such schemes are entitled to receive compensation from time-sharing companies. When the member in this case went to the resort looking forward to fabulous facilities, he found that even the building was not complete. The commission found that there was deficiency in service, a term common to both the consumer legislation and the MRTP Act. It asserted that the petitioner in this case had a right to demand compensation. The judgment also emphasised that the commission had jurisdiction to decide the case, even though other forums might be open to those who have such complaints. Therefore, the commission directed the company to refund the membership amount with 12 per cent interest.

In a similar complaint, Sunita Malkani vs Five Star Holidays Ltd, the commission passed a similar order. Though the commission itself is in the sunset stage, this view should be followed and carried on by the consumer forums in the interests of tourists. Even the relief granted by the commission is far short of the actual entitlement of the tourist as he only gets back the money he paid with interest. There is little by way of compensation.

There are some time-sharing corporations which have not only failed to provide the facilities promised in their brochures but also declined to refund the money. The Punjab Tourism Development Corporation, a government company which floated such a scheme some time ago, has scrapped the scheme after a miserable performance for over two decades. Though it had offered a week's free stay every year in ten coveted tourist spots in the country and collected huge sums, it had hardly built any facility in any of those places. Its plan to lease lodges also failed. Then it tried to sell the scheme to private entrepreneurs. But none was willing to carry the burden. It now pleads that it has no money even to return the original sum paid by the members, leave alone demands for compensation. It still has an address as it is a government entity. Its many private counterparts do not have even that.