Delhi High Court to Rule on Controversial Service Charge Guidelines

Delhi High Court to decide on restaurant industry petitions against CCPA guidelines banning automatic service charges. The guidelines, currently stayed, are challenged for lacking jurisdiction and natural justice. Petitioners argue service charges benefit staff and are a traditional practice, while CCPA asserts consumer rights infringement.

The Delhi High Court reserved its decision on petitions challenging the prohibition on automatic service charges in restaurants and hotels on Friday. Justice Prathiba M Singh concluded the hearings but withheld judgment.

The Federation of Hotels and Restaurant Associations of India (FHRAI) and National Restaurant Association of India (NRAI) filed petitions last year against the Central Consumer Protection Authority's (CCPA) guidelines dated July 4, 2022. These regulations were later stayed by the court.

FHRAI claims that CCPA's action bypasses natural justice, asserting that service charges benefit restaurant staff. However, the Centre argues no evidence supports this benefit, labeling the automatic charges as unlawful consumer burdens. Both the compliance with consumer rights and traditional industry practices hang in the balance awaiting the court's decision.

(With inputs from agencies.)