Delhi HC fines restaurant associations Rs 1,00,000 over non-compliance of service charge rules

The HC observed that it strongly appeared that the restaurant associations deliberately exhibited complete non-compliance with its order dated April 12. Representative Image

Delhi High Court has directed the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) to pay Rs 1,00,000 each as costs for complete non-compliance with the directions as per its order dated July 24.

Additionally, the amount shall be paid to the Department of Consumer Affairs, Government of India.

According to a Ministry of Consumer Affairs, Food & Public Distribution press release, since the issuance of CCPA (Central Consumer Protection Authority) guidelines, the National Consumer Helpline (NCH) has received more than 4,000 complaints regarding service charges.

Also Read: Restaurants claim 'service charge' by default: 43% pay, only 9% oppose forced levy

As per the order dated April 12, the court directed both the NRAI and FHRAI to:

1. Provide a complete list of members supporting the writ petitions by April 30, 2023.
2. Submit specific affidavits regarding: (a) The percentage of members imposing mandatory service charges. (b) Potential alternative terminologies for service charges to prevent confusion. (c) The percentage of members willing to make service charges voluntary, with a maximum charge limit.

The HC observed that it strongly appeared that the restaurant associations deliberately exhibited complete non-compliance with the orders dated April 12. Furthermore, they filed the affidavits without properly serving the respondents, seemingly attempting to hinder the court proceedings.

The high court granted one last opportunity to file the affidavits within four days, subject to payment of Rs 1,00,000 as costs for each petition. Non-compliance will lead to the rejection of the affidavits.

The HC has fixed the next hearing in the matter on September 5.