Timeshare Buyers Are Not Consumers

Summer has arrived in its full fury and it is time to think of holidays in the hills or beaches. It is also the season for holiday resort companies to hard-sell their timeshare schemes. Some of them in Delhi have been using unfair means to lure customers to buy timeshares. Many others already feel cheated, but they have appealed to the consumer forums and MRTP Commission in vain.

A series of judgments of the National Consumer Commission has denied people deprived of their dreams of snow and surf compensation from the companies that took them for a ride. According to the commission, a person who buys timeshares is not a consumer and therefore cannot move the consumer forums. Since the definition of consumer is almost identical in the Consumer Protection Act and the MRTP Act, the bar applies to the prospective tourist at the MRTP Commission also.

 

The first definitive ruling came in Dalmia Resorts International Ltd vs Ranjana Gupta last year. The National Commission overruled the judgment of the Delhi state consumer commission and held that the remedy for the timeshare buyer lies in the civil courts, not in the consumer forums. According to the National Commission, the agreement between the timeshare buyer and the resorts company was in the nature of a contract and there was no consumer-seller relationship.

This was followed in another case, Punjab Tourism Development Corporation vs Kirit Doshi. The corporation had promised ten holiday homes at popular tourist towns. But after ten years, it managed to build only four holiday homes and lease some seedy buildings. Though the corporation had promised family suites with kitchens and lawns, the conditions were abominable in most places. Even tap water was not available in some homes.

Disenchanted buyers moved against the corporation at several places and some courts had, in fact, awarded compensation. In one earlier case, the Maharashtra state commission had awarded compensation to a timeshare buyer. Three years ago, the Tamil Nadu state commission had awarded damages against Sai Siddharth Resorts. But that was negated by the National Commission's judgment which stated that the corporation was not providing any "service" to the buyers.

The latest judgment of the Delhi state commission _ H K Raizada vs T K International Ltd and Five Star Holidays Ltd _ follows the Dalmia Resorts ruling. In this case, the complainant applied for "studio type" apartments for two occupants for Rs 1.25 lakh and paid an advance. Later, he wanted to withdraw it but the amount was not refunded. So he moved the consumer forum, but failed.

The commission's view is that the buyer has a remedy in the civil courts. But as anyone who has had even casual contact with the civil courts would know, it is a long and expensive remedy. The consumer forums were set up to cure precisely this problem.

Also, all buying and selling involve contracts. The consumer commissions and the MRTP Commission have dealt with innumerable cases against housing companies and tourist agencies. The judgments have mostly gone in favour of those who had been given defective flats or those who were disappointed by the quality of the package tours.

The commission ought to have noticed the rampant cheating going on in the name of holiday resorts. It is almost like plantation companies that sold shares/trees on the promise that when the trees grew, the share value would also have grown. While these companies have been reined in, holiday companies are frolicking with public money.