Delhi HC stays guidelines that ban restaurants from charging service charge

The Delhi High Court stayed the recent guidelines banning hotels and restaurants from automatically levying service charges on food bills on Wednesday.

While hearing petitions from the National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Associations of India challenging the Central Consumer Protection Authority's (CCPA) July 4 guidelines, Justice Yashwant Varma stated that the issue requires consideration and directed the authorities to file their reply.

The situation requires consideration. The court ordered that the stay be extended until the next date of listing the directions, July 4, 2022, as stated in para 7 of the contested guideline, the court instructed. 

Further, the court stated that the stay is conditional on the petitioners' members, ensuring that the levy of a service charge in addition to the price and taxes, and the customer's obligation to pay the same, is duly and prominently displayed on the menu or other places.

The members will also agree not to charge service fees on any takeaway items, as per the court's statement.

Don't enter the restaurant if you do not wish to pay. It all comes down to personal preference. The court stated, "I have stayed the para 7 guidelines subject to these two conditions."

The court scheduled a hearing on the matter for November 25. The NRAI claimed in the petition that the July 4 order's prohibition was arbitrary and untenable and should be overturned because it was issued without considering the facts and circumstances.

(With inputs from PTI)

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• CCPA
• Central Consumer Protection Authority
• Delhi
• Delhi High Court
• Justice Yashwant Varma
• NRAI
• National Restaurant Association of India