Delhi HC slaps ₹1 lakh fine on restaurant associations for non-compliance of service charge directions

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₹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 12 April. The court has directed that the costs be remitted to the Department of Consumer Affairs.

Failure to comply with this directive will result in the non-acceptance of the affidavits. In an order passed on 12 April, the court had directed the associations to undertake certain actions, including filing a comprehensive list of all their members supporting the writ petitions by 30 April.

Additionally, they were required to submit a specific affidavit addressing key aspects, such as the percentage of members imposing service charges mandatorily in their bills and their willingness to replace the term “service charge" with alternative terminology to avoid confusion among consumers. However, both the NRAI and FHRAI failed to comply with the court’s directions and neglected to file necessary affidavits, leading the court to observe that the associations were in complete non-compliance with the previous orders.

Furthermore, the court noted that the affidavits were filed without proper service to the respondents, seemingly to hinder the progress of the hearing. The matter is now scheduled for a hearing on 5 September.

The issue of forceful collection of service charges has been a matter of concern for consumers, with numerous complaints being registered on the National Consumer Helpline. The Consumer Complaints and Grievance Redressal Guidelines issued by the Consumer Protection and Complaints Analysis in July 2022 have garnered over 4,000 complaints, shedding light on various grievances, including forcing consumers