The Jalandhar Consumer Commission directed a restaurant to pay Rs 15,000 compensation to a lawyer after finding that a mandatory service charge of Rs 151.53 was added without consent. The forum held that such automatic charges amount to an unfair trade practice.
The District Consumer Disputes Redressal Commission, Jalandhar, has directed a restaurant to compensate Rs 15,000 to a lawyer after finding that it had illegally imposed a mandatory service charge of Rs 151.53 on a food bill without obtaining the customer’s consent. The consumer forum held that adding a service charge automatically to a bill, without giving the consumer a choice, amounts to an unfair trade practice under consumer protection law.
A Bench comprising Commission President Harveen Bhardwaj and Members Jyotsna and Jaswant Singh Dhillon passed the order on a complaint filed by Advocate Sanjeev Duggal, who challenged the restaurant’s billing practice during his visit in November 2023.
In its order dated June 4, the Commission found that the restaurant had wrongly collected service charges from the customer without his approval.
The Commission observed:
“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,”
Consumer’s Complaint Over Service Charge:
The dispute arose after Duggal visited the restaurant with his family for a buffet dinner. According to his complaint, the restaurant added a 3 per cent service charge to two separate bills, amounting to Rs 128.13 and Rs 23.40, making the total additional charge Rs 151.53.
He alleged that the amount was added without seeking his permission or informing him that he had the option to refuse payment. Duggal also claimed that although he was accompanied by three adults and one minor child, the restaurant prepared the buffet bill by charging for four adults.
He further alleged that when he questioned the additional charges and raised objections regarding the billing, the restaurant staff behaved improperly, did not resolve his complaint and allegedly threatened him with consequences if he pursued legal action.
Arguments and Observations
The restaurant defended its action by stating that the amount was not a service charge but a “staff contribution”. It argued that the same was mentioned in the menu and that customers had the option to request its removal.
However, the Consumer Commission rejected this explanation and emphasised that restaurants have a duty to clearly inform customers about such charges before imposing them.
The Commission stated:
“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,”
The forum noted that there was no material evidence showing that Duggal had been informed in advance about the compulsory nature of the levy or had consented to paying it.
It observed:
“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,”
Apart from the service charge issue, Duggal had also alleged that some food items served during the buffet were of poor quality and unfit for consumption. He also raised allegations regarding staff behaviour and incorrect billing.
However, while considering these claims, the Commission found that Duggal had not produced sufficient supporting material, such as independent witnesses, photographs, medical evidence or any immediate complaint regarding those allegations. Therefore, the forum limited its findings to the issue of the mandatory service charge.
Compensation Awarded
The Consumer Commission directed the restaurant to refund the Rs 151.53 collected as service charges along with applicable interest from the date of filing of the complaint. Additionally, the restaurant was ordered to pay Rs 15,000 as compensation, including litigation expenses, for causing mental harassment to the complainant.
The order stated:
“OPs are directed to pay a compensation including litigation expenses of Rs.15,000/- for causing mental tension and harassment to the complainant,”
The total relief granted to Duggal amounts to Rs 15,151.53, apart from interest. The Commission directed the restaurant to comply with the order within 45 days.
Advocate Sanjeev Duggal appeared in person and argued his own complaint. Advocate I.S. Bhatia represented the restaurant.
The ruling comes amid continuing legal scrutiny over the practice of restaurants and hotels automatically adding service charges to customer bills. In 2022, the Central Consumer Protection Authority (CCPA) issued guidelines stating that hotels and restaurants should not impose service charges automatically or by default.
The Delhi High Court later upheld those guidelines in March last year, observing that consumers should not be compelled to pay such charges unless they voluntarily choose to do so. An appeal challenging that decision is currently pending before the High Court.
The Jalandhar Commission’s decision reinforces the principle that additional charges imposed by restaurants must be transparent and cannot be collected without informing consumers and obtaining their consent.
Case Title: Sanjeev Duggal v Maya Inns Pvt. Ltd