Bhoomika Singh
The Delhi High Court on Wednesday stayed the Central Consumer Protection Authority’s (CCPA) new guidelines prohibiting restaurants from automatically adding a service charge to food bills.
While hearing the National Restaurant Association of India’s (NRAI) petition to overturn the newly issued guidelines, Justice Yashwant Varma remarked, “Don’t pay. Don’t enter the restaurant. It’s a matter of choice.”
In addition to granting the stay, the Court has ordered that information about the Service Charge be displayed on menu cards and in other places so that customers are aware of this charge.
The Court also clarified that the Service Charge cannot be applied to takeaway orders. NRAI is relieved that this order was issued because it would have had a direct negative impact on the human capital employed in the trade.
In its response to the verdict, the NRAI stated that it has always maintained that the imposition of the Service Charge is not illegal and that it is a very transparent system. “We are very glad that the Delhi High Court has upheld and confirmed this view. As a responsible Restaurant Body, NRAI will soon send out advisories to all its Members about the conditions spelt out by the Hon’ble Delhi High Court and will urge all Members to comply with them in totality,” it said in a statement.
The plea of the NRAI before the court said: “In the absence of due authentication and promulgation of the guidelines, the contents thereof cannot be treated as an order of the government”.
“The levying of service charge is a matter of contract and decision of the management. The levying of service charge is displayed at various places in the restaurant. The same is also displayed on the menu cards of the restaurants. Once the customer places the order after being made aware of the terms and conditions there comes into existence a binding contract. No authority can interfere with the binding nature of a valid contract until and unless it is shown and proved to be unconscionable or is an unfair trade practice,” it stated.
Reacting to the stay from Delhi HC, Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations of India (FHRAI) says, “I had filed its writ petition in the Delhi HC contesting CCPA’s guidelines as it was curtailing hospitality establishments’ right to conduct business in the manner suitable to them. As per today’s order, all directions under the guidelines in para 7 have been stayed subject to no service charge to be levied on takeaways, and all restaurants shall prominently display in the restaurant that Service Charge shall be levied.”
CCPA, which is part of the Ministry of Consumer Affairs, has issued guidelines for preventing unfair trade practises and violations of consumer rights in relation to hotels and restaurants that charge service fees, stating that the consumer may file a complaint with the National Consumer Helpline (NCH) if such a practise occurs.
According to the CCPA, the consumer may request that the service charge be removed from the bill amount by contacting the hotel or restaurant in question. The consumer may also file a complaint with the Consumer Commission about unfair trade practises.
