Levying of service charge on food bills: Division bench asks CCPA to approach single bench to vacate stay order

The Bench of Justice Satish Chander Sharma and Justice Subramonium Prasad on Thursday disposed of the appeal moved against the stay order of the single bench and suggested the CCPA approach the single bench to vacate the stay.

Earlier today, the bench observed that restaurants are under a legal obligation to pay their employees but the cost cannot be put on the consumer. The court, however, did not stay the single judge's order which had allowed the restaurants to levy service charges on an appeal by the CCPA.

During the hearing, ASG Chetan Sharma appeared for the appellant and told the court that 1000 complaints have been received from the consumers since the single judge's order on July 20.

The appeal stated, "The Guidelines have been issued for safeguarding the rights and interests of consumers and to protect the consumers from unfair trade practices and violation of consumer rights due to mandatory collection of service charge and adding such charge automatically or by default in the food bill without allowing consumers the choice or discretion to decide whether they want to pay the such charge or not."

It is also stated in the appeal that the guidelines were formulated based on complaints received from consumers.

The appellant submitted that the single Judge bench even after recording that the issues raised in the said writ petition require consideration did not call for any Counter Affidavit and passed the Impugned Order. It is the humble and respectful submission of the Appellants that the Impugned Order has been passed posthaste without appreciating that the Guidelines have been issued for safeguarding the rights and interests of consumers.

The Delhi High court last month while issuing notice on the petition challenging the guidelines, also stayed the operation of guidelines issued by the Central Consumer Protection Authority restraining the levying of service charges by restaurants and hotels.

Justice Yashwant Varma had issued notice to the Ministry of consumer affairs, CCPA on the petition moved by the Federation of hotels and restaurants of India and others.

The single bench while issuing the notice also set down conditions that restaurants prominently display the service charge component in the price of the food. Restaurants will not charge service charges on takeaway/delivery of food, the High court said.

The counsel for CCPA had submitted that, "Consumers should not be forced to pay". He also said that anything beyond the maximum retail price (MRP) is unfair trade practice. The guidelines were issued to protect the right of the consumer. The counsel also said that various complaints were received that restaurants were restraining entering consumers who were not paying the service charge.

The single bench had said, "It's a matter of choice. Don't enter the restaurant if you don't want to pay." (ANI)