NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
(From the order dated 16.6.94 in O.P. No.532/92 of the State Commission,
1. T.V. Sunderason and & Anr. .. Appellants
M/s. Sterling Holiday Resorts (India) Ltd. .. Respondent
(From the order dated 13.5.2002 in Revision Petition No.3/02
of the State Commission, Himachal Pradesh)
Sterling Holiday Resorts (I) Ltd. .. Appellant
Smt. Sunila Malik w/o Shri Vinod Malik .. Respondent
(From the order dated 19.6.2002 in O.P. No C-258/98
of the State Commission, Delhi)
B.K. Jha & Anr. .. Appellants
Managing Director, Five Star Holidays (Pvt.) Ltd. & Anr. .. Respondents
(From the order dated 5.8.98 in S.C. Case No. 565/A/1996
of the State Commission, West Bengal)
M/s. Toshali Resorts International .. Petitioner
Rattan Lal Banerjee .. Respondent
(From the order dated 30.10.1999 in Appeal No.391/97
of the State Commission, Karnataka)
S. Amarlal .. Petitioner
Rattan Lal Banerjee .. Respondent
(From the order dated 8.10.02 in Appeal No.A-1115/02
of the State Commission, Delhi)
Dr. B.K. Rohtagi .. Petitioner
M/s. Five Star Holidays Pvt. Ltd. & Ors. .. Respondents
HONBLE MR. JUSTICE D.P. WADHWA,
MRS. RAJYALAKSHMI RAO, MEMBER.
MR. B.K. TAIMNI, MEMBER.
HONBLE MR. JUSTICE K.S. GUPTA, MEMBER.
Holiday resorts - 'property time share' - defeciency in service - complaint maintable - earlier judgements of the commisiion in Dalmia Resorts international (P) Ltd. vs. Ranjana Gupta [I(1997) CPJ 63 (NC)] and Punjab Tourism Development Corporation ltd. vs. kirit P.Doshi [(1997) 5 CTJ (CP)] - held not good law.
For the appellant in FA 163/95: : Mr. David Rao, Advocate
For the appellant in FA 187/02 and : Mr. R.L. Roy, Advocate
For respondent in RP 1216/00,
RP 1100/98 and FA 163/95
For the petitioner in RP 1216/00 : Mr. M.P. Jha, Advocate
For the petitioner in RP 316/02 : Mr. M.S. Ahluwalia, Advocate
For the petitioner in RP 1100/98 : Mr. S.K. Agarwal, Mr. G.K. Laha and
Ms. Sujata Padhy, Advocates.
For the petitioner in RP 376/03 : Professor Amar Nath Gupta, Advocate
Mr. Vijay Hansaria, Sr. Advocate/Amicus Curiae
DATED THE 8th MAY, 2003:
D.P. WADHWA, J. PRESIDENT:
In this batch of appeal/revisions the principal question that arises for consideration is if a consumer dispute is raised when the complainant alleges deficiency in service against operators of resorts where the complainant had purchased time share in the holiday resort.
As to what is meant by time share or property time share we may refer to the case of M/s. Sterling Holiday Resorts (India) Ltd. [First Appeal No. 163/95]
Complainants are the appellants before us. Their complaint against opposite party M/s. Sterling Holidays Resorts (India) Ltd., was dismissed by the State Commission.
Complainants entered into agreement with the opposite party, who is promotor of Holiday Resort, for purchase of a cottage promoted by it in Udagamandalam (Ooty) on property time share. As per agreement complainants were entitled to stay for one week in a year in the Holiday Resort and if the complainants did not use the property time share, they could inform the opposite party to rent out the same and the opposite party would reimburse them with a sum equivalent to 20% of the investment as rental value. Complainants alleged that sale deed and possession certificate had not been executed. They also alleged that they had invested money in shares in the maintenance company to be floated by the respondent, the opposite party, but the same had not been issued.
On notice being issued by the State Commission, respondent filed its written version. Respondent admitted that it had entered into an agreement dated 11.11.88 with the complainant for sale of property time share in the holiday resort at Ooty. Respondent stated that it had allotted to the complainants a cottage for occupation in the 24th week of every English calendar year commencing from 12th June to 18th June. Respondent accepted that there was some delay in construction of all the cottages and consequently sale deed and possession certificate could not be issued. Respondent also accepted that the complainants are entitled to accumulation facility of their time share subject to maximum of 3 weeks or 21 days. Respondent then contended that it did not agree that it would reimburse a sum equivalent to 20% of investment made by the complainants as rental value in case they did not use their time share. Respondent further stated that these facilities would be available only for fixed week/season week in which there was demand for accommodation that the resort.
State Commission framed a question for its consideration: whether there had been any deficiency in service on the part of the opposite party and to what relief, if any, are the complainants entitled?
During the course of hearing on 1.6.94 before the State Commission the sale deed and possession certificate were handed over the complainants agent by the respondent. So the complainants had no grievance in regard to sale deed and possession certificate. As regards reimbursement of a sum of equivalent to 20% of the investment made by the complainants, respondent contended that a separate agreement called agreement for assured returns was required to be entered with the complainants. No such agreement was entered with the complainants and the complainants were not entitled to claim any reimbursement of any equivalent to 20% of their investment as rental value. So far as issuance of share certificates to the complainants in the maintenance company was concerned, opposite party pointed out that only after the execution of sale deeds to all the allottees, the company would be formed and thereafter equity shares would be issued to the complainants.
State Commission directed the opposite party to issue equity shares to the complainants in the maintenance company within three months and dismissed the complaint in respect of a sum equivalent to 20% of the investment as rental.
When we examine the agreement styled as sale deed between the Holiday
Resorts and the complainant it is not that Holiday Resorts i.e. respondenthad divested itself of whole ownership of the property being the holiday resorts. It still retains the control over the property and charges money for transfer or exchange if the complainant wants to sell his interest in the property covered under the sale deed. Property time share which is a subject matter of the sale deed is defined in the deed to mean:
ownership of a specified undivided share over the Land on which a Holiday Resort is situated, a specified undivided share in a particular cottage built in the Holiday resort, a specified undivided share in all the movables kept in the said cottage and a specified undivided share in the super structures and movables provided in respect of the common facilities, common amenities, and common properties in the common areas situate in the Holiday resort, subject to a restrictive covenant to enjoy the said ownership rights only during a specified week in every year for ever, in common and consistent with similar rights of the owners of the remaining weeks in the said cottage and co-owners of the remaining cottages in the HOLIDAY RESORT;
Various restrictions are imposed on the complainant under the sale deed and those restrictive covenants can be enforced only by the respondent. There are other rights granted to the complainant under the sale deed which can be enforced against the respondent. The maintenance company under the name Sterling Holiday Resorts (Ooty) Limited, is to be formed as per the terms of the sale deed which is to manage the holiday resorts. This maintenance company is public limited Company. Holiday resorts will have 49% of the shares and 51% shares are to be sold out to the complainant and other persons similarly situated allotting them one equity share in the proposed maintenance company. A first glance at the various terms of the sale deed shows that the maintenance company is nothing but an extended arm or shadow of the respondent. It is the respondent which exercises complete control over the maintenance company. All these terms in the sale deed cannot divest the complainant of his right to contend that the respondent and its maintenance company are deficient in service and to claim damages. Even on the assumption that the complainant gets an interest in the property of the holiday resorts having purchased property time share under the sale deed it cannot be said that a complaint under the Consumer Protection Act, 1986 would not be maintainable against the holiday resorts i.e. respondent if there is any deficiency in service in not providing accommodation to the complainant or otherwise not to render proper services for the maintenance of his portion of the property time share.
There are two earlier judgments of this Commission which hold the view that a consumer dispute does not arise.
First is the Dalmia Resorts International (P) Ltd. Vs. Dr. Ranjana Gupta decided on 17.6.96 reported as I(1997) CPJ 63 (NC) and the second is Punjab Tourism Development Corporation Ltd. Vs. Kirit P. Doshi (1997) 5 CTJ (CP) (NCDRC) decided on 6.1.199. Following these two decisions of National Commission, District Forums and the State Commissions dismissed all the complaints filed against resorts. One of such matters went straight to Supreme Court against an order of the District Forum in Special Leave Petition (it being Civil Appeal No.120/2003 K.N. Sharma vs. Toshali Resorts International & Anr.). Supreme Court granted relief and by order dated 10.1.2003 disposed of the same with the following orders:
A complaint was made to the District Consumer Disputes Redressal Forum (for short the Forum) in regard to time share in resorts belonging to the respondents. The Forum took the view that the matter was covered by an earlier decision of the National Commission in respect of time share in the immovable property and therefore would not be a consumer dispute.
This Court in the case of Lucknow Development Authority vs. M.K. Gupta 1994(1) SCC 243 took the view that even in respect of matters where immovable property is involved, the question to be examined was whether there was any service to be rendered in relation thereto and whether the complaint made was in respect of the same or not. That aspect seems to have been lost sight of by the Commission. Therefore, we set aside the order made by the Forum and remit the matter to it for fresh consideration in accordance with law. The appeal is allowed accordingly.
[S. RAJENDRA BABU ]
[ BRIJESH KUMAR ]
[ G.P. MATHUR ]
January 10, 2003
It would be seen from the order of the Supreme Court that the whole question which was set out in the beginning of this order has been opened up for this Commission to have a fresh look. In the case of Dalmia Resorts International (P) Ltd. this Commission held the view that the transaction between the parties is one of the purchase of a time share in immovable property and any dispute between the parties arising out of the said transaction cannot be regarded as a consumer dispute.
In the case of Punjab Tourism Development Corporation Ltd. (for short PTDCL) a detailed judgment was rendered by this Commission, though it followed the law settled by this Commission in the case of Dalmia Resorts International (P) Ltd. In this case PTDCL floated a scheme of holiday home club which proposed to provide certain rights, benefits, privilege to a person to be enrolled as a member of the club in the holiday home which was to be set up. Any person could get himself registered with the PTDCL as a member of the holiday home club on paying requisite money. Bye-laws of the club had been framed which governed the rights and obligations of the parties. On becoming a member on payment of requisite fee the member became entitled to stay for a period of seven days at the holiday home in a year without payment of any rent except charges for electricity, water and washing of linen etc. The member had also freedom to sell, lend, exchange or alienate the assets as per his option and the scheme and bye-laws. Complainant had alleged that when he visited the holiday home set up by the PTDCL services and facilities provided in the holiday home suffered from deficiencies in respect of quality, grade, standard and nature of performance. The fact that there was any deficiency in service as alleged by the complainant was denied by the PTDCL. Prospectus issued by PTDCL for running holiday home club was placed on record of the Commission. It was noticed that concept of holiday home had become popular all over the world. The scheme conferred certain rights and benefits and privileges to the members. A person on paying the requisite money in lump sum or installment became member of the club. Member was entitled to a time share in the immovable property of the club for seven days in a year. The membership entitled the member to the exclusive use of the apartment based on the simple concept of time sharing in immovable properties. Bye-laws gave the member right of complete freedom to sell, lend, exchange or alienate the assets as per his option. This Commission was of the view that after going into the bye-laws that the clauses therein established that the member purchased a vacation ownership in immovable property for a week coupled with his right to sell, lend, exchange, alienate or even bequeath the same and that there was no hiring of the services of the PTDCL for consideration. It was held that it was merely a creation of interest in immovable property for a week and that therefore, the transaction between the parties was one of purchase of a time share in immovable property and no consumer dispute arose.
We are of the view that perhaps the National Commission took erroneous view that a member gets interest in the immovable property which is the building of the resort. The ownership of the property vests with the promoter and in the case before this Commission at that time in PTDCL. It was not the case of PTDCL that any interest in the immovable property vested in the member. What the member purchased was his right of stay only and had to pay for separate services. He would certainly transfer his rights of stay for consideration to any other person subject to bye-laws of the holiday home club and it would certainly devolve on his heirs in case the member dies. Supreme Court in the aforesaid order in Civil Appeal No.120/2003 has clearly observed that there may be deficiency in service where immovable property is involved. When a member has purchased right of stay for seven days in a resort and he is denied that right of stay or services rendered are not as per standard, agreed to, it is a clear case where there is deficiency in service on the part of owner running the resort.
In the case of Lucknow Development Authority vs. M.K. Gupta (1994) 1 SCC 243 Supreme Court has held that if the service is defective or it is not what was represented then it would be unfair trade practice as defined in the Consumer Protection Act. Further any defect in the construction activity would be denial of comfort and service to the consumer. When possession of the property is not delivered within the stipulated period the delay so caused is denial of service. Supreme Court thus held that such dispute or claims are not in respect of immovable property but deficiency in rendering of service of a particular standard, quality or grade. This Commission held that there can be deficiency in service in respect of immovable property sold by the owner to the complainant and complaint would lie under the Act.
It was strenuously argued by the learned counsel appearing for the holiday resorts that the view taken by this Commission in earlier two decisions was correct and that the law so laid cannot be upset by this Commission in subsequent proceedings. We are unable to agree to such submission for various reasons: (i) that the earlier decision holding that dispute relating to immovable property cannot be subject matter of complaint under the Act is against the law as settled by the Supreme Court, (ii) Supreme Court in its order dated 10.1.2003 in Civil Appeal No.120/2003 K.N. Sharma vs. Toshali Resorts International & Anr. set out above, had taken a view that even in respect of immovable property question which is to be examined is whether there was any service to be rendered in relation thereto and whether the complaint made was in respect of the same or not. Certainly this aspect was not considered by this Commission in its earlier two decision, (iii) principle evolved in earlier two decisions appears to be so unreasonable to a consumer when he is totally deprived of his right under the sale deed and the deficiency in service is writ large on the face of it.
Definition of service under clause (o) of Section 2(1) of the Act is wide and extends to any or actual or potential users. Against whom the purchaser of property time share is to complain if he is denied of his right to use the cottage in which he has a right to stay for one week under the sale deed or during that period cottage is not properly maintained and food and other services like water, electricity, sanitation are not provided? As observed by us the maintenance company is nothing but its own shadow.
Professor A.N. Gupta, Authorised Representative of the petitioner in RP 376/2003 brought on record extracts from judicial treatise viz. Jurisprudence by Sir John Salmond 10th and 12th Edition and Words and Phrases, Volume 25, Permanent Edition, West Publishing Co., to contend that earlier decisions rendered by this Commission are not binding precedents inasmuch as they are contrary to the decisions of the Supreme Court in the case of Lucknow Development Authority vs. M.K. Gupta & Ors. and when these do not stand to reason.
Mr. Gupta also said that in earlier two decisions this Commission was under erroneous assumption that any dispute relating to property time share was a dispute relating to immovable property. Mr. Gupta is right in his submission when he says that this Commission ought to have held that dispute in the present case related to rendering of service of a particular standard, quality or grade.
We do not think it is necessary for us to refer to Salmond on Jurisprudence or Words and Phrases brought on record by Mr. Gupta as we are of the view that earlier decisions rendered by this Commission cannot stand being contrary to the law laid by the Supreme Court and against the very spirit of the Act when it deprives the consumer of his rights conferred by the Act. We would, therefore, hold that dispute pertaining to property time share which is subject matter of sale deed between the holiday resorts and consumer-complainant is maintainable. Having held so we proceed to decide individual appeals/revisions pending before us.
The facts of this appeal has been narrated in sufficient detail above. Here also an objection was raised at the outset by the learned counsel for the holiday resorts that a Consumer Forum has no jurisdiction under the Act in view of the aforesaid two judgments earlier rendered by this Commission. We have already held that a Consumer Forum has jurisdiction in the matter as the dispute raised is consumer dispute. However, we find that the State Commission did not consider the letter dated 23rd January, 1998 of the complainant and the reply thereto dated 3.2.98 of the Sterling Holiday Resorts. In this reply it was mentioned by the Sterling Holiday Resorts that regarding rental return please note that you are eligible for this only in case of non-occupancy as per your stipulation and not for opting for similar accommodation in other resorts. At that time no question was raised by the Sterling Resorts that to seek a reimbursement of the same equivalent to 20% of the investment any separate agreement was required. We will, therefore, to that extent set aside the impugned order of the State Commission and remand the matter to the State Commission for reconsideration after allowing parties to lead further evidence and after hearing further submissions, if any. State Commission shall issue notice to the parties indicating the date of hearing. The appeal is allowed in part,.
FIRST APPEAL NO. 187 OF 2002:
In this case complainant-Smt. Sunita Malik filed complaint before the District Forum where it was pending for over five years. State Commission in exercise of its jurisdiction under Section 17(b) of the Act itself decided the complaint as it was of the view that in spite of repeated adjournment taken by the opposite party it did not produce any evidence and was adopting delaying tactics. State Commission treated the complaint as revision, went into the merits of the complaint and passed the following order:
For the reasons recorded above, we accept the complaint and direct as follows:
(i) the opposite party-Sterling Holiday Resorts (India) Ltd., Madras through its Managing Director shall refund the amount of Rs.1,10,875/- to the complainant within one month;
(ii) it shall also pay 18% interest on the above amount of Rs.1,10,875/- from the date of the complaint i.e. 22.9.97 till realization; and
(iii) for the harassment and the subterfuge caused to and practiced on the complainant by the opposite party company, it shall pay damages/compensation of Rs.10,000/-.
Against the order of the State Commission present appeal was filed. At the time of admission this Commission passed the following order:
It is stated that similar matters are coming up on 9.9.02.
Admit. Issue notice to the Respondent, returnable on 9.9.02. Meanwhile copies of the pleadings and other documents which were before the State Commission shall be filed by the appellant.
On the Appellant depositing a sum of Rs.1,11,000/- by means of a bank draft drawn on a nationalized bank, with the Deputy Registrar of this Commission, there shall be a stay of the impugned order of the State Commission. The amount shall be paid within four weeks. The Deputy Registrar shall keep the amount in a short term fixed deposit with a nationalized bank. In case of default, the stay shall stand vacated automatically, without any further reference to this Commission.
Counsel for the appellant shall also bring on record copies of such judgments on which he might rely, before the next date of hearing.
No steps have been taken by the appellant to bring on record copy of the pleadings and documents which were before the State Commission. This appeal is dismissed for non-prosecution.
Complaint was dismissed by the State Commission on the ground that no consumer dispute arose. State Commission did not go into the merit of the case. The order of the State Commission is set aside. Matter is remanded to the State Commission for fresh consideration and in accordance with law.
This revision petition is by the Holiday Resorts. District Forum allowed the complaint and State Commission affirmed the order of the District Forum. Because of the view which we have taken this revision petition is dismissed.
In this case complaint was dismissed by the District Forum. On appeal filed by the complainant, State Commission affirmed the order of the District Forum. The order of the District Forum and the State Commission are set aside and the matter is remanded to the District Forum.
REVISION PETITION NO. 316 OF 2000
District Forum on merit held that there was no deficiency in service. It was also of the view that complaint did not raise any consumer dispute. State Commission on appeal filed by the complainant did not go into the merit of the complaint but disposed of the matter on the ground that no consumer dispute is raised. The order of the District Forum and State Commission are set aside and the matter is remanded to the State Commission to dispose of the appeal in accordance with law.