Delhi High Court Bans Mandatory Service Charge in Restaurants
Delhi High Court Bans Mandatory Service Charge in Restaurants
Delhi 29 March 2025: In a significant consumer rights victory, the Delhi High Court has ruled that restaurants cannot impose a mandatory service charge on food bills, making it entirely voluntary for customers. Justice Prathiba M Singh dismissed petitions filed by the Federation of Hotels and Restaurant Associations of India (FHRAI) and the National Restaurant Association of India (NRAI), which had challenged the Central Consumer Protection Authority (CCPA) guidelines prohibiting such charges.
The court asserted that mandatory service charges mislead consumers by resembling government-imposed taxes, thereby amounting to an unfair trade practice. It emphasized that customers have the right to voluntarily tip restaurant staff if they wish to do so, reinforcing consumer autonomy in financial decisions related to dining.
Furthermore, the Delhi High Court upheld the authority of the CCPA to issue these guidelines and directed the petitioners—FHRAI and NRAI—to contribute Rs 1 lakh each towards consumer welfare. This ruling reinforces the principle that consumer rights take precedence over the commercial interests of restaurants.
Reacting to the judgment, Union Food and Consumer Affairs Minister Pralhad Joshi welcomed the decision, stating that it upholds CCPA’s guidelines and ensures that consumers are not compelled to pay service charges. In a social media post, he highlighted that service charges on food and beverage bills remain voluntary, calling the verdict a major win for consumers.
The decision is expected to bring relief to diners across the country, ensuring transparency in restaurant billing and reaffirming the power of consumers to decide gratuity at their discretion.
