Delhi HC imposes Rs 1 lakh on Restaurant and Hotel Associations for non-compliance of directions pertaining to service charge

New Delhi [India], July 27 : Delhi High Court passed an order on July 24 directing the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI) to pay Rs 1 lakh each as costs for complete non-compliance of the directions as per its order dated April 12, 2023. The Hon’ble Court has directed that the costs shall be paid to the Department of Consumer Affairs, Government of India, stated a Ministry of Consumer Affairs, Food and Public Distribution release on Thursday.
The Court noticed that the clear impression that it gets is that the restaurant associations are in complete non-compliance with the orders dated 12th April, 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 Court granted one last opportunity to properly file these affidavits within four days subject to payment of Rs 1 Lakh 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. Non-compliance with this direction will result in the affidavits not being taken on record.
The matter is now scheduled for a hearing on September 5, 2023.
A number of consumers have complained about the forceful collection of service charges on the National Consumer Helpline (NCH). Since the guidelines issued by the CCPA in July, 2022, more than 4,000 complaints have been registered.
The complaints highlight forcing consumers to pay service charge involuntarily even when they are dissatisfied with the service provided by the restaurant/hotel, making payment of service charge mandatory, Portraying service charge as a charge which is levied by or has the approval of the government, Embarrassing and harassing consumers including by bouncers in case they resist paying service charge, Charging exorbitant amount of money in the name of such charge as 15 per cent, 14 per cent etc. 
It was also noticed that the Service charge has also been collected by disguising it by other names such as ‘S/C.’, ‘SC’, ‘S.C.R.’ or ‘S. CHARGE’ etc.       
Earlier, in an order by the Court, both associations has to file a complete list of all their members who are supporting the present writ petitions by April 30, 2023. Both the associations were asked to place their stand and also file a specific affidavit on the percentage of members who impose service charges as a mandatory condition in their bills.
Whether the associations have an objection in the term service charge being replaced with alternative terminology so as to prevent confusion in the minds of the consumer that the same is not a Government levy such as ‘Staff welfare fund’, ‘Staff welfare contribution’, ‘Staff charges’, ‘Staff welfare charges’, etc.
Associations were also asked about the percentage of members who are willing to make service charge as voluntary and not mandatory, with option being given to the consumers to make their contribution to the extent that they are voluntarily willing subject to a maximum percentage that may be charged.