Lawyer gets ₹15,000 compensation after restaurant charged ₹151 service charge

The District Consumer Commission in Jalandhar recently directed a restaurant to pay ₹15,000 as compensation to a lawyer for imposing a mandatory service charge on his food bill [Sanjeev Duggal v Maya Inns Pvt. Ltd].

The consumer forum ruled that such a mandatory levy of service charges without the customer's consent amounts to an unfair trade practice.

A coram of President Harveen Bhardwaj and Members Jyotsna and Jaswant Singh Dhillon passed the ruling on a complaint filed by advocate Sanjeev Duggal against the restaurant over the latter's billing practices during a November 2023 visit.

In its judgment dated June 4, the consumer commission found clear fault on the restaurant's part for levying the service charges without the customer's consent.

"It is proved that the OP (the restaurant) charged service charges and not the staff contribution, without obtaining consent from the consumer which constitutes an unfair trade practice and the complainant is entitled to refund of the said amount. He has suffered mental harassment also and thus, the complainant has proved the unfair trade practice," it observed.

Duggal had approached the commission alleging that after visiting the restaurant with his family for a buffet dinner, the restaurant had charged a 3 per cent service charge, amounting to ₹128.13 and ₹23.40 across two bills (totaling ₹151.53 as service charges) without his consent.

He had also argued that although he dined with three adults and one minor child, the restaurant gave a buffet bill for four adults.

He further alleged that when he had objected to the service charge and the billing, the restaurant staff misbehaved with him, failed to address his grievance, and even threatened him with consequences if he chose to pursue action.

The restaurant, however, contended that the charge was in the nature of a “staff contribution”, which was disclosed in its menu, and could be waived upon request.

Rejecting this defence, the commission stressed on the obligation on restaurants to ensure transparency and prior disclosure in such matters.

"Even if for the sake of arguments, it is assumed that the terminology ‘staff contribution’ is being used, but even then it is duty of the Restaurant to disclose the customers about the guidelines and about the levy of such charges," it stated.

The commission also found no evidence to show that Duggal had been properly informed beforehand or had consented to such a levy.

"The entire pleadings and even the documents, nowhere show that the complainant (Duggal) was ever informed before hand in a clear and unambiguous manner regarding the compulsory levy of such service charges/staff contribution," the commission said.

Additionally, Duggal had claimed that certain food items served during the buffet were of substandard quality and were not fit for consumption.

On the remaining allegations, including misbehaviour, substandard food, and incorrect buffet billing, the Commission held that Duggal had failed to back his claims with evidence, such as witness testimony or any contemporaneous complaint.

Accordingly, the commission confined to addressing his complaints about the mandatory service charge levy. It directed the restaurant to refund the amount of ₹151.53 collected as service charges, along with interest from the date of filing of the complaint. The restaurant was also directed to pay ₹15,000 as compensation to Duggal, inclusive of litigation expenses.

"OPs are directed to pay a compensation including litigation expenses of Rs.15,000/- for causing mental tension and harassment to the complainant," the ruling reads.

The total relief awarded amounts to ₹15,151.53, excluding applicable interest. The commission has ordered the restaurant to pay this amount within 45 days.

Advocate Sanjeev Duggal (complainant) argued his own case.

Advocate IS Bhatia represented the restaurant (opposite party).

Notably, in March last year, the Delhi High Court had upheld guidelines issued by the Central Consumer Protection Authority (CCPA) in 2022 stipulating that hotels and restaurants should not add service charge automatically or by default to food bills. An appeal against this ruling is pending before the High Court.

[Read consumer commission judgment]