In a landmark decision, the Delhi High Court has ruled that service charges levied by restaurants and hotels cannot be made mandatory. The court’s decision is a major relief to consumers who have long contested the compulsory addition of service charges to their food bills.
Presiding over the case, Justice Pratibha M. Singh dismissed a petition filed by the Restaurant Association challenging the guidelines issued by the Central Consumer Protection Authority (CCPA). The association had argued that the CCPA’s order was arbitrary and unfair.
The court decreed categorically that it is unfair to make customers pay a service charge along with the bill for food and that it amounts to unfair trade practices. The decree establishes beyond doubt that service charges cannot be charged at the will of restaurant or hotel management.
Consumer Rights Upheld
The court again confirmed that consumers have the right to make an informed choice while dining out. Any mandatory inclusion of service charges goes against the principles of consumer protection. The court again confirmed that restaurants have the right to suggest service charges as a voluntary tip but not as a mandatory addition to the bill.
Background and Implications
The Central Consumer Protection Authority had issued guidelines earlier that prevented restaurants and hotels from charging service charges automatically to bills. The guidelines were opposed by a number of hospitality associations, which argued that service charges had to be added to ensure that staff is appropriately compensated. The court verdict now, however, compels customers to be informed clearly that service charges are voluntary.
This ruling will make a big difference to the hospitality industry in Delhi because most restaurants and hotels have continued to include service charges on bills despite the CCPA guidelines. Legal professionals state this ruling is a victory for consumer rights and bill transparency.
As news spreads, industry players will probably go back to their billing practices to align with the court ruling. Consumers, however, were elated with the ruling, saying that it safeguards their right to decide whether or not to tip for a service.
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