Delhi HC Slaps ₹1 Lakh Fine on NRAI and FHRAI for Non-Compliance of Service Charge Directions

New Delhi, July 27, 2023: In a significant move, the Delhi High Court (HC) has imposed a fine of ₹1,00,000 on the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) for their failure to comply with service charge directions issued earlier on 12 April.

The court’s directive came after the NRAI and FHRAI neglected to undertake certain actions outlined in the previous order, including filing a comprehensive list of their members supporting the writ petitions by 30 April.

Moreover, they were expected to submit an affidavit addressing key aspects, such as the percentage of members mandatorily imposing service charges in their bills and their willingness to adopt alternative terminology to avoid confusion among consumers.

However, the associations not only failed to comply with the court’s directions but also filed the necessary affidavits without proper service to the respondents, raising concerns about hindering the progress of the hearing.

The imposed fine of ₹1,00,000 is to be remitted to the Department of Consumer Affairs. Failure to comply with this directive may result in the non-acceptance of the affidavits.

The issue of forceful collection of service charges has been a matter of concern for consumers, with thousands of complaints being registered on the National Consumer Helpline. Consumers have alleged harassment by restaurant personnel when they resist paying the service charge, and charges have been reported to be exorbitant, sometimes referred to by other names such as ‘S/C.’, ‘SC’, ‘S.C.R.’, or ‘S. CHARGE’.

The matter is now scheduled for a hearing on 5 September. As the case progresses, it remains crucial for the associations to adhere to the court’s directives to address consumer grievances effectively and transparently.