Full Text
HIGH COURT OF DELHI
Date of Decision: 12th April, 2023
NATIONAL RESTAURANT ASSOCIATION OF INDIA & ORS. ..... Petitioners
Through: Dr. Lalit Bhasin, Ms. Nina Gupta, Ms. Ananya Marwah and Mr. Ajay Pratap Singh, Advocates (M:
9953947026).
Through: Sh. Chetan Sharma ASG, Mr. Sandeep Mahapatra SPC, Mr. Kirtiman Singh CGSC with Mr. Amit Gupta, Mr. Saurabh Tripathi, Mr. Vikramaditya Singh, Ms. Vidhi Jain and Mr. Abhinav Bansal, Advocates for UOI (M: 9810045281).
JUDGMENT
6 WITH + W.P.(C) 10867/2022 and CM APPL. 31645/2022, 38599/2022 FEDERATION OF HOTEL AND RESTAURANT ASSOCIATIONS OF INDIA & ORS...... Petitioners Through: Mr. Sameer Parekh, Mr. Sumit Goel. Ms. Sonal Gupta, Ms. Swati Bhardwaj, Mr. Abhishek Thakral, Advocates. (M: 8077855788)
VERSUS
UNION OF INDIA & ANR...... Respondents Through: Sh. Chetan Sharma ASG, Mr. Sandeep Mahapatra SPC, Mr. Kirtiman Singh CGSC with Mr. Amit Gupta, Mr. Saurabh Tripathi, Mr. Vikramaditya Singh, Ms. Vidhi Jain and Mr. Abhinav Bansal, Advocates for UOI (M: 9810045281). CORAM: JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
2. Both these matters have been taken up for hearing. The Petitioners in the present petitions are Associations of hotel and restaurant owners. It is claimed that more than 5 lakh establishments are represented by the Petitioners.
3. The challenge in these writ petitions is to the guidelines dated 4th July, 2022 issued by the Central Consumer Protection Authority (hereinafter ‘CCPA’) and the consequential communication issued on 6th July, 2022 to all the District Collectors for enforcing the guidelines of 4th July, 2022.
4. By the impugned guidelines, which are purportedly issued under Section 18(2)(l) of the Consumer Protection Act, 2019 (hereinafter ‘the Act’) the authority has taken a position that the levying of service charge by restaurants and hotels has been complained against by several consumers. Thus, the authority records that while restaurants and hotels can collect a tip which is voluntarily paid by the consumers, the same ought not to be incorporated into the bill in a manner so as to make the payment compulsory by the consumer. The guidelines, therefore, directed restaurants and hotels as under:
5. The above guidelines are challenged by the present two Petitioners who are associations/federations of restaurants and hotels owners, namely, National Restaurant Association of India and Federation of Hotel and Restaurant Associations of India. Vide order dated 20th July, 2022, an adinterim order was passed staying paragraph 7 of the above extracted guidelines, subject to the following conditions:
6. The above order was challenged by way of Letter Patent Appeals by the Respondents, in which the Respondents were permitted by the ld. Division Bench to file an application for the vacation of stay. The order of the Division Bench in LPA 473/2022 titled ‘Central Consumer Protection Authority & Anr v. Federation of Hotels and Restaurant Associations of India & Ors.’ and LPA 479/2022 titled ‘Central Consumer Protection Authority & Anr. v. National Restaurant Association of India & Ors.’ dated 18th August 2022 reads as under: “CM APPL. 35376/2022 in LPA 473/2022 and CM APPL. 35747/2022 in LPA 479/2022 Exemption allowed, subject to all just exceptions. The application stands disposed of. LPA 473/2022 & CAV 232/2022. CM APPL. 35375/2022. CM APPL. 35377/2022 and LPA 479/2022 & CM APPL. 35746/2022. CM APPL. 35748/2022 The present LPAs are arising out of the common order dated 20.07.2022 passed in W.P.(C) NO. 10683/2022 titled National Restaurant Association Of India & Ors. Vs. Union Of India & Anr. and W.P.(C) No. 10867/2022 titled Federation Of Hotel And Restaurant Associations Of India & Ors. Vs. Union Of India& Anr. The facts of the case reveal that the Writ Petitions were preferred by the Petitioners being aggrieved by Guidelines dated 04.07.2022 issued by Central Consumer Protection Authority (CCPA). The Learned Single Judge while issuing notices on 20.07.2022 had granted 8 weeks' time to file reply. Meaning thereby, there was no reply to the Applications for grant of interim relief nor was there any reply on merits. The Learned Single Judge has passed an interim order in the matters. Learned Additional Solicitor General has vehemently argued before this Court that practically no opportunity for filing reply was granted to the Union of India, and an interim order has been passed by the Learned Single Judge. The interim order deserves to be set aside. He has argued the matters on the merits also but the fact remains that there was no reply before the Learned Single Judge either to the Applications for grant of interim relief or to the main Writ Petitions. Therefore, without averting to the merits of the case, liberty is granted to the Union of India to file a reply to the Application for grant of interim relief as well as to the main Writ Petition, and they shall certainly be free to file an Application for vacating the stay in the petitions as well. The Office is directed to list the matters i.e. W.P.(C) No. 10683/2022 and W.P.(C) No. 10867/2022 immediately after 10 days before the Learned Single Judge on 31.08.2022. The Learned Single Judge is requested to pass appropriate order in respect of the Application for vacating Stay/ Final Hearing in accordance with law without being influenced by the interim order passed by him. The LPAs accordingly stand disposed of.”
7. Pursuant to this order, vacation of stay is being sought by way of an application.
8. On behalf of the Petitioners, Mr. Sameer Parekh and Dr. Lalit Bhasin, ld. Counsels have partly made their submissions. Mr. Chetan Sharma, ld. ASG has also made his part submissions.
9. Considering the submissions made and the concerns raised on both sides, the following directions are issued: i. At the outset, it is noticed that both these petitions have been preferred by associations/federations of hotels and restaurants. In order to have clarity as to the members qua whom the present writ petitions have been preferred, taking into consideration, orders passed in WP(C) 3324/1999 titled ‘Kuber Times Emp. Assn. v. State & Ors.’, both the associations/federations shall file a complete list of all their members who are supporting the present writ petitions. The said list shall be filed by 30th April 2023. The Registry to compute the court fee which would be payable, which shall also be informed to the Petitioners. The necessary court fee shall then be deposited by the Petitioners. ii. Ld. counsels for the associations/federations have submitted that they have lakhs of members. In view of the fact that both these associations/federations have preferred these writ petitions, this Court is of the opinion that the associations/federations ought to consider the following aspects and place their stand before the Court: a. The percentage of members of the Petitioners who impose service charge as a mandatory condition in their bills. b. Whether the said members and the associations/federations would have any objection in the term `Service Charge’ being replaced with alternative terminology so as to prevent confusion in the minds of the consumer that the same is not a Government levy. Some terminologies that could be considered are ‘Staff welfare fund’, ‘Staff welfare contribution’, ‘Staff charges’, ‘Staff welfare charges’, etc. or any other alternative terminology. c. The percentage of members who are willing to make service charge as voluntary and not mandatory, with option being given to the consumers to make their contribution to the extent that they are voluntarily willing subject to a maximum percentage that may be charged.
10. The ld. ASG has expressed grievance to the effect that after the passing of the interim order, the Petitioners’ members are further misusing the interim order and have sought to give the impression that this Court has approved the Service Charge. Examples quoted by ld. ASG are extracted below- “ Service charge Grievances Registered on NCH from 21st July to 29th October 2022
1. Punjab grill Responds as “It is wrong to state that the service charge is charged without the customer consent and customer is forced to pay the same. It is very clearly mentioned in our menu cards that we charge service charge and if the customer asks us to remove the said service charge component from the bill than we happily remove the same. But the customer paid the bill without any protest or demur on service charge and with his consent. Please note, Hon’ble Delhi High Court on 20th July 2022, stayed the guidelines issued by CCPA dated 04th July 2022 on service charge and levying service charge by restaurants is completely legal, if prominently mentioned on the Menu Cards. Therefore, service charge is not charged illegally and is as per the norms issued by the government.
2. The Beer Café Responds as “In line with the directions of the Hon’ble High Court of Delhi as per order dated 20.07.2022, BTB Marketing Private Limited has complied with the guidelines laid down for all the restaurants of in PARA 9 of the order. We have mentioned prominently on our menu and we have also put up stickers, everywhere in our premises, where it is expedient to be seen by the customer, that We levy 10% Service Charge. Please note that the same order has put a stay on the order of the CCPA dated 04th July
2022.
3. The Urban Foundry Respond as “Sir, Information regarding leving of service charge is listed on the menu as well as at prominent place in the restaurant. the Hon. Delhi high court order court no. w.p(c) 10683/2022CM,APPL31033/2022b Dt. 20.07.2022 which was shown, it lists the guidelines for levying the charge & information around the same. The guest was informed about the same before levying the charge.
4. Distillery Responds as “it is submitted that we levy a 10% service charge on all invoices. The said charge ensures well being of our staff which diligently serves the consumers at the café. The said levy of service charge @10% has been”
11. Considering the fact that the establishments appear to be using the interim order as giving a mandate and permission to impose service charge, it is made clear that the interim order of this Court dated 20th July, 2022 which is continuing shall not be shown on the display boards and menu cards in a manner so as to mislead the consumer that service charge has been approved by this Court.
12. A specific affidavit shall be filed by both the associations/federations on the above aspects.
13. List for further hearing on 24th July, 2023 on the top of the Board.
14. These shall be considered as part heard matters.
PRATHIBA M. SINGH JUDGE APRIL 12, 2023 dj/rp (corrected & released on 18th April, 2023)