Tough time for time-share resorts

A recent order of the National Consumer Court will make time-share companies more accountable

Time-share companies that make tall promises at the time of marketing their services had better make sure that they keep up their words. Or else, they will end up paying for unethical business practices.

Even though initially, consumer rights suffered a setback vis-ŕ-vis time-share companies on account of a bad judgment of the apex consumer court, this was subsequently set right by the Supreme Court. Ever since, consumers have been getting relief against unfair trade practices and deficient services rendered by time-share companies.

But a recent order of the National Consumer Court is sure to make things even tougher for these companies, many of whom, often take consumer courts lightly. At times, these firms even dare to ignore consumer courts’ notices or simply exploit the appeal provision in the consumer court to delay the process of adjudication and harass consumers. The recent order of the consumer court should force these time-share companies to change their attitude towards the consumer as well as the consumer courts.

This particular case has its origin in the invitation received by Mr and Mrs Parthasarathy, residents of Secunderabad, to attend a meeting called by RCI India and Gemawat Resorts, Bangalore. At the meeting, the consumers were induced into investing in the time-share resorts of Gemawat, by the name of ‘The Village’ in Bangalore. The couple booked studio apartments there.

At times, these time-share firms exploit the appeal provision in the consumer court to delay the process of adjudication and harass consumers
At times, these time-share firms exploit the appeal provision in the consumer court to delay the process of adjudication and harass consumers

However, the consumers were in for a shock when they went to Bangalore to enjoy a holiday at The Village. Instead of the promised dream holiday accommodation, they found that the property was not even fully developed. So much so, that they had to find alternate an accommodation, at a huge cost.

Upset over the incident, they sent a legal notice, to which the RCI claimed that it had cancelled its affiliation with the Gemawat Resorts and since it had not collected any money from the resort, it had no liability, whatsoever.

This was the plea that the RCI put in before the consumer court, too, when the couple lodged a complaint there.

The district forum, however, disagreed with this contention. The forum held that the RCI, too, was fully involved in the scheme. Even though Gemawat had collected money from the consumers, the RCI, too, had collected money from Gemawat, in form of affiliation fee and membership fee. It had also corresponded with the complainants and promised to provide certain services. So holding the RCI as well as Gemawat guilty of unfair trade practices and deficient service, the district forum asked both to jointly pay Rs 1,15,175, along with 9 per cent interest calculated from February 2005, till the date of payment, besides Rs 10,000 as compensation and Rs 1,000 as costs.

When the state commission, too, agreed with this order and dismissed the appeal of the RCI, the latter filed a revision before the National Commission, arguing that it had no liability, whatsoever, in this case.

After going through the orders of the lower consumer courts in detail, the apex consumer court dismissed the revision petition. While doing so, the commission came down heavily on the company for filing an appeal without any merit, just to waste the time of the commission, and slapped costs of Rs 20,000 to be paid into the account of the Consumer Legal Aid Unit. (RCI India Pvt Ltd Vs Patharasarthy and others, RP No 443 of 2007, decided on January 11, 2012)

This should send out a clear signal to all service providers, who file merit-less appeals, that the apex consumer court will not take such practices lightly anymore. This, in turn, will help in cutting down on adjudication time. Another positive development in the recent times is the decision of the National Commission not to use its revisional powers lightly. `A0Keeping in mind the judgment of the Supreme Court in Mrs Rubi Chandra Dutta Vs M/s United India Insurance Company on the subject, the National Commission has decided that it will not interfere with the orders of the lower consumer courts unless there is prima facie jurisdictional error or miscarriage of justice. So, where the lower forums have given well-reasoned judgments, appeals against these judgments will be considered as mindless appeals meant to waste the time of the commission. The commission, will then, slap punitive damages or costs on the appellant. As of now, this amount has been in the range of Rs 20,000 to Rs 30,000, but may well go up. These are highly positive developments meant to strengthen consumer justice in the country. Hopefully, it will also bring about an attitudinal change in the manufacturers, retailers and service providers vis-ŕ-vis consumers and consumer courts.