Delhi High Court Penalizes Restaurant Associations for Non-Compliance with Service Charge Order

Delhi High Court Penalizes Restaurant Associations for Non-Compliance with Service Charge Order

The matter will be heard on September 5

The Delhi High Court has imposed a fine of Rs. 1 lakh each on the National Restaurants Association of India (NRAI) and the Federation of Hotels and Restaurants Association of India (FHRAI) for failing to comply with its directions on the service charge issue.

In its 12 April 2023 order, the Court directed NRAI and FHRAI to consider changing the term ‘service charge’ on bills to ‘staff welfare fund’ or ‘staff welfare contribution’.

The restaurant associations were also advised to hold a meeting and inform the Court about the outcome. It was to know about the percentage of its members willing to inform the consumers that service charge was not mandatory and the percentage of members willing to give consumers the option to make voluntary contributions.

However, the bench comprising Justice Prathiba M Singh recently noted that there was nothing to show that the Court’s orders were followed. It also observed that the associations filed their affidavits without properly serving the respondents, ensuring the hearing did not proceed further.

Thus, the Judge ordered that the affidavits be filed properly subject to payment of Rs.1 lakh each as a penalty.

The Court held, “One last opportunity is granted to the petitioners to properly file these affidavits within four days subject to the payment of Rs.1,00,000 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. Without the cost being deposited, the affidavits shall not be taken on record.”

Dr Lalit Bhasin, Nina Gupta, Ananya Marwah, Vaishnavi Gupta, and Ajay Pratap Singh appeared for the NRAI.

The FHRAI was represented by Advocates Sameer Parekh, Sumit Goel, Sonal Gupta, Swati Bhardwaj, and Abhishek Thakral.

Additional Solicitor General Chetan Sharma with Central government Standing Counsel Sandeep Mahapatra and Advocates Kritika Sharma and Abhinav Bansal represented the Central government.