Consumers are sometimes made to sign a declaration that they have read the terms and conditions or rules. What is the legal implication of such a declaration without the rules having actually been furnished ?
Case Study: Hemant Wadekar had taken a timeshare membership of Mahindra Holidays & Resorts. Under the scheme, members could enjoy holidays at any Mahindra resort either in India or abroad. Hemant enrolled for a 25-year membership (from May 1, 2007 to April 30, 2032) by paying a sum of Rs 2,08,985. He was given a welcome kit and food vouchers worth Rs 8,000.
Soon after becoming a member, Hemant tried to avail of some of the facilities but was refused after being shown some rules governing these actions. Feeling aggrieved, Hemant requested for cancellation of the membership and sought a refund. The resorts group informed him that refund would be subject to deductions of Rs 1,25,391 as cancellation charge, Rs 7,500 as RCI enrollment charges and Rs 8,000 for the food vouchers. The refund offered after deductions came to Rs 68,094. Hemant filed a complaint with the district forum alleging a deficiency in service.
The company contested the claim, contending that the dispute should be resolved through arbitration. The resort blamed Hemant for not adhering to the rules governing the arrangement.
The forum allowed the complaint, and directed the resort to refund the entire memberhsip fees of Rs 2,08,985 along with 9% interest, compensation of
Rs 10,000 and cost of Rs 1,000.
Mahindra Resorts challenged the order but the Maharashtra State Commission dismissed the appeal and upheld the forum’s order.
Mahindra Resorts approached the national commission. The crux of the dispute was that Hemant had signed that he had read the rules and agreed to abide by them, so was not entitled to dispute the refund amount. On the other hand, Hemant claimed had the rules had not been shared, which was borne out from the email correspondence where the company had admitted that it had run out of rule book.
The national commission observed that merely by signing the application form with this declaration that he confirms receipt of membership rules, cannot lead to a presumption that the rule book was furnished. The commission noted that rules, if furnished, may be binding even if the consumer does not bother to read them. But when the rules are not communicated, merely signing that the rules had been read, would have no meaning.
Accordingly, through its judgment on August 31, 2015 delivered by Justice K S Chaudhari, the national commission modified the order, and directed the resort to refund the membership charges after deducting the admission fee. The rest of the order for compensation and costs was upheld.
Conclusion: Terms and conditions not communicated cannot be enforced.