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Synopsis

The Delhi High Court has imposed Rs. 1 lakh costs on each, the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India (FHRAI), for complete "non-compliance of the directions" as per its previous order.

Justice Prathiba M. Singh said, “One last opportunity is granted to the Petitioners to properly file these affidavits within four days subject to 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”.

During the hearing on July 24, Additional Solicitor General (ASG) Chetan Sharma told the court that approximately 4,000 more complaints had been received from consumers who were complaining about the service charges being imposed by the petitioners and their members.

The court was also apprised that an affidavit was filed by the National Restaurant Association of India on July 21. However, the Union Government was not served. It was also informed by the Central Government’s counsel that the service of the affidavit filed by the Federation of Hotels and Restaurant Associations of India was made at an incorrect email address despite the correct email address being shown on the index where he had been filing affidavits.

The single-judge bench noted that the clear impression that it got was that the petitioners were in complete non-compliance of the orders dated 12th April 2023 and had filed the affidavits without serving the respondents properly so as to ensure that the hearing did not proceed before the high court.

As per the April 12 order, the court had directed both associations to file a complete list of all their members who were supporting the present writ petitions by April itself. However, neither of the associations filed the affidavits.

The court directed the respondents to file their response to the affidavits, if necessary by August 20 and posted the matter for further hearing on September 5, 2023.

The court was dealing with a plea by NRAI and FHRAI challenging a July 4 guideline by the Central Consumer Protection Authority (CCPA) which barred hotels and restaurants from levying default service charges on food bills.

The CCPA guidelines also stated what steps consumers can take in case of violation of the guidelines.

The plea suoght to set aside the CCPA guidelines as it is "arbitrary, untenable and ought to be quashed" as they have been issued without an appreciation of the facts and circumstances.

"Levy of service charge has been a standing practice in the hospitality industry for more than 80 years which is evident from the fact that the Supreme Court took notice of this concept way back in 1964…," the plea stated.

The plea further stated that service charges are a common and accepted practice throughout the world and the new guidelines have created unnecessary confusion.

Case Title: National Restaurant Association v. Union of India & Anr.