Centre, CCPA seeks vacation of HC stay on service charge guidelines for restaurants

The Central Government and the Central Consumer Protection Authority(CCPA) filed an application in the Delhi High Court seeking vacation of the stay on the CCPA 4 July guidelines which prohibited hotels and restaurants from levying service charge on food bills without the express consent of the consumers .

The Single judge bench of the Delhi High Court headed by Justice Yashwant Varma was informed by the Center and CCPA about the filing of counter-affidavits in response to the petition challenging the CCPA guidelines by the National Restaurant Association of India (NRAI) and Federation of Hotels and Restaurant Associations of India.

The court in response asked the two authorities to bring the documents on record after which the petitioners may file their replies and listed the matter for further hearing on October 6.

Earlier, the Delhi High court had stayed the operation of CCPA guidelines while issuing a notice on the petition by the Federation of Hotels and Restaurant Associations of India. CCPA then challenged the order before the division bench to the stay order of the single bench. The division bench however directed the authority to approach the single bench to vacate the stay.

The counsel for Center and CCPA had argued before the division bench that 1000 complaints have been received from the consumers since the single judge’s order on 20 July and that the order by the single judge bench was passed without appreciating that the Guidelines have been issued for safeguarding the rights and interests of consumers.

In its appeal, the authority said, “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 such a charge or not.”

The counsel for Restaurants however argued the issue of levying service charge was not merely like giving a “tip” and that it pertained to an industry practice governed by the right to business under Article 19(1)(g) of the Constitution and that it has been going on for more than 70 years.

The bench observed that restaurants are under a legal obligation to pay their employees but the cost cannot be put on the consumer without staying the single judge bench’s order.

With inputs from agencies

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