NEW DELHI: The Delhi High Court has imposed a Rs 1 lakh fine each on two restaurant associations for failing to comply with the court’s directions on ‘service charge.’ The court has asked both associations — the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) — to pay as costs to the Department of Consumer Affairs, Government of India in violation of the April 12 order this year.
The April 12 order said that associations should file a complete list of all their members with an affidavit. The affidavits should mention the segregation of the percentage of restaurants that made mandatory and voluntary ‘service charges’. The sworn statement should also mention any objection to the alternative terminology such as ‘staff welfare fund’, ‘staff welfare contribution’, ‘staff charges’, and ‘staff welfare charges’ to remove confusion from the minds of consumers.
“The restaurant associations were required to comply with the court directions. However, neither of the associations filed the affidavits in terms of the order,” says the Department of Consumer Affairs (DoCA) in its press brief.
The court held the restaurant associations in complete non-compliance with its orders dated April 12, 2023.
DoCA’s National Consumers Helpline received over 4,000 complaints against illegal collection of ‘service charges’ in the past year. The consumers complained about “exorbitant”, “harassment”, and “mandatory” service charges. The court also told restaurant owners in April this year not to display the court’s interim order relating to a service charge on their menu cards.
Violation of court order
The court has asked the National Restaurant Association of India and the Federation of Hotel & Restaurant Associations of India to pay as costs to the Department of Consumer Affairs in violation of its April 12 order.