Don't Go To Restaurants If You Don't Want To Pay Service Charge, Says Delhi High Court

The Delhi High Court on Wednesday stayed the guidelines issued by the Central Consumer Protection Authority (CCPA) earlier this month which restricted hotels and restaurants from adding service charges to food bills.

The court, while hearing a plea filed by the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India challenging the CCPA guidelines, stayed it till the next hearing saying that the issue requires consideration and also directed the authorities to file their reply.

BCCL

Guidelines stayed till the next hearing?

The Court has posted the case for hearing next on November 25.

"The matter requires consideration, until the next date of listing, the directions as contained in para 7 for the impugned communication/guidelines of July shall remain stayed," Justice Yashwant Varma said.

The court further said that if a restaurant levies service charges, they should be displayed prominently on the menus.

"The members of the petitioner association shall ensure that levy of service charge in addition and the obligation of customers to pay the same is duly and prominently displayed on the menu or other place where it may be deemed to be expedient. The members of the petitioner associations further undertake not to levy or include a service charge on any takeaway orders," the order said.

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During the hearing, the court also made an oral observation saying: "If you don’t want to pay don’t enter the restaurant. It is essentially a matter of choice.”

What CCP guidelines said

The CCPA which comes under the Ministry of Consumer Affairs had on July 4 issued guidelines for preventing unfair trade practices and violation of consumer rights with regard to the hotels and restaurants levying service charges, stating that the consumer may lodge a complaint with the National Consumer Helpline (NCH) against such practice.

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Hotels and restaurants protest?

However, this was opposed by NRAI, which claimed that the new government guidelines have no legal stand.

"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 unconscionable or is an unfair trade practice," it had argued.

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