Eatery owners challenge service charge guidelines in Delhi HC

The Delhi High Court will hear in detail on Thursday a plea moved by the eatery owners challenging the newly issued Central Consumer Protection Authority (CCPA) guidelines which restrained restaurants from adding a service charge by default to food bills.

The plea of the National Restaurant Association of India (NRAI) will be heard in detail on July 21 which was deferred following a short hearing earlier.

The restaurant body reiterated its stand in the plea before the court, stating the new government guidelines have no legal stand.

Also Read: Hotels object CCPA guidelines on service charges

"In the absence of due authentication and promulgation of the guidelines, the contents thereof cannot be treated as an order of the government," read its plea.

"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.

"The levying of service charge is a universally accepted trade practice. Service charge is being levied in various countries like the UK, Singapore, Japan, and the US with varying percentages between 8 per cent and 12.5 per cent. In the UK, accounting and distribution of service charge is also done through an independent agency through a system called Tronc," it said further.

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

The CCPA said that the consumer may make a request to the concerned hotel or restaurant to remove service charge from the bill amount. The consumer may also file a complaint against unfair trade practices with the Consumer Commission.