The Delhi High Court (HC) has fined the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) ₹1,00,000 each for failing to comply with service charge directions issued on 12 April. The court has instructed them to remit the costs to the Department of Consumer Affairs. Failure to follow this directive may result in the rejection of their affidavits.
The court’s order in April required the National Restaurant Association to take specific actions, including submitting a comprehensive list of their members supporting the writ petitions by 30 April. They were also required to file an affidavit addressing crucial aspects, such as the percentage of members imposing mandatory service charges on their bills and their willingness to use alternative terminology to avoid confusion among consumers.
However, both NRAI and FHRAI did not adhere to the court’s directions and failed to file the necessary affidavits. The court observed that the associations were in complete non-compliance with the previous orders and that the affidavits were filed without proper service to the respondents, suggesting an attempt to hinder the progress of the hearing.
The matter is scheduled for a hearing on 5 September. The issue of forceful collection of service charges has raised significant concern among consumers, leading to numerous complaints being lodged on the National Consumer Helpline. The Consumer Complaints and Grievance Redressal Guidelines, issued by the Consumer Protection and Complaints Analysis in July 2022, have received over 4,000 complaints, highlighting various grievances, including restaurants/hotels compelling customers to pay service charges even when dissatisfied with the services provided.
Consumers have reported incidents of service charges being made mandatory and falsely presented as government-approved or government-imposed charges. Additionally, there have been allegations of harassment by restaurant personnel, including bouncers, in cases where customers resist paying the service charge. The charges themselves have been reported as excessive, often referred to by different names like ‘S/C.’, ‘SC’, ‘S.C.R.’, or ‘S. CHARGE’.
