Delhi HC fines restaurant associations Rs 1 lakh over service charge rules

Centre said that since the guidelines issued by the CCPA in July last year, more than 4,000 complaints have been registered on the National Consumer Helpline

The Delhi High Court (HC) has imposed a fine of Rs 1,00,000 on the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) to pay as costs for non-compliance of service charge directions issued on April 12.

According to a statement by the Ministry of Consumer Affairs, Food & Public Distribution, the costs shall be paid to the Department of Consumer Affairs.

"The Court noted that the clear impression that it gets is that the restaurant associations are in complete non-compliance of the orders dated April 12, 2023, and had filed the affidavits without serving the respondents properly so as to ensure that the hearing does not proceed before the court," the ministry said.

"The court granted one last opportunity to properly file these affidavits within 4 days subject to payment of Rs 1,00,000 as costs in each of the petitions which shall be paid to the pay and accounts office, Department of Consumer Affairs, New Delhi by way of a demand draft," it added.

The matter is now scheduled for a hearing on September 5, 2023.

The ministry also said that since the guidelines issued by the Central Consumer Protection Authority (CCPA) in July last year, more than 4,000 complaints have been registered on the National Consumer Helpline (NCH).

On April 12, the court asked the associations to declare the percentage of their members who impose service charges as a mandatory condition in their bills.

They were also asked to let the court know whether the associations shall have an objection to the term "service charge" being replaced with alternative terminology "so as to prevent confusion in the minds of the consumer".

Moreover, they were also asked to declare the percentage of members who are willing to make service charges voluntary and not mandatory, with the option being given to the consumers to make their contribution.