HC fines restaurant bodies ₹2 lakh in case against ban on service charge 

Updated - July 28, 2023 01:06 am IST

Published - July 28, 2023 01:05 am IST - NEW DELHI

The restaurant bodies had moved the court last year challenging the guidelines prohibiting hotels and restaurants from automatically levying the service charge on food bills.

The restaurant bodies had moved the court last year challenging the guidelines prohibiting hotels and restaurants from automatically levying the service charge on food bills. | Photo Credit: File Photo

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The Delhi High Court has imposed a cost of ₹2 lakh on two restaurant bodies for failing to comply with an order passed by the court earlier this year. Justice Prathiba M. Singh directed that the costs be paid to the Department of Consumer Affairs.

The National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Associations of India (FHRAI) had moved the High Court last year with two separate petitions challenging the guidelines prohibiting hotels and restaurants from automatically levying the service charge on food bills.

While hearing their challenge, the court had directed the NRAI and the FHRAI to disclose the complete list of their members in support of the petitions. It had also asked the restaurant bodies to declare the proportion of their members imposing the service charge and those willing to consider it as optional.

The petitioners were also asked to state if they had any objection over the term “service charge” being replaced with an alternative terminology such as “staff welfare fund” to prevent confusion in the minds of the consumer that the same was not a government levy.

Additional Solicitor General Chetan Sharma, representing the Centre, submitted that approximately 4,000 complaints have been received from consumers complaining about the service charge being imposed by restaurants.

In its July 24 order, the High Court observed that the petitioners were “in complete non-compliance” with its directions and had filed their affidavits without serving the Centre properly “so as to ensure that the hearing does not proceed further”.

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