Delhi restaurant ‘forces’ man to pay Rs 949 service charge, he wins Rs 25,000 payout

“The collection of service charge and use of different terminologies for the said charge is misleading and deceptive in nature. The same constitutes an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019,” the commission said, relying on the Delhi High Court’s judgment upholding the Central Consumer Protection Authority (CCPA) guidelines on service charges.

According to the complaint, Dubey and his family dined at the restaurant on October 19, 2024. When the bill of Rs 11,761 included a service charge of Rs 949, he objected and requested that it be removed, citing Central Consumer Protection Authority (CCPA) guidelines which state that service charges are voluntary and cannot be imposed on consumers.

Staff ‘forced’ him to pay

Dubey alleged that after he sought removal of the service charge, restaurant staff surrounded his table and threatened him and his family members. He alleged that staff members warned him that if he failed to pay the full bill, including the service charge, he would not be allowed to leave the restaurant. According to the complaint, he eventually paid the amount under duress.

Dubey argued that the restaurant’s conduct amounted to an unfair trade practice and deficiency in service under the Consumer Protection Act, 2019. He also contended that it violated the CCPA guidelines issued on July 4, 2022, which prohibit restaurants from automatically adding service charges and require them to treat such payments as voluntary and entirely at the consumer’s discretion.

Despite being served with notice, House of BOHO did not appear before the commission, prompting the panel to initiate ex parte (unilateral) proceedings on April 8, 2025. The commission considered the complainant’s evidence and written submissions before deciding the matter.

Commission relies on CCPA guidelines

The commission reproduced the CCPA guidelines issued on July 4, 2022, which provide that no hotel or restaurant shall automatically or by default add a service charge to a bill, collect it under any other name, force consumers to pay it, or impose any restriction on entry or services if a consumer refuses to pay it.

The commission also referred to the Delhi High Court’s March 28, 2025 judgment in National Restaurant Association of India vs Union of India and Federation of Hotel and Restaurant Association of India vs Union of India, which upheld the validity of the CCPA guidelines. The high court had held that the collection of service charge is misleading and deceptive in nature and constitutes an unfair trade practice, directing all restaurant establishments to adhere to the guidelines.

Relying on the CCPA guidelines and the Delhi High Court’s ruling, the commission directed House of BOHO to refund the Rs 949 collected as service charge along with interest at 7 per cent per annum from the date of payment until its realisation.

It further directed the restaurant to pay Rs 25,000 as compensation for the harassment caused to the complainant on account of indulging in an unfair trade practice.

The commission ordered that the amounts be paid within three months from the date of pronouncement of the order. Failing this, the restaurant will be liable to pay interest at 6 per cent per annum on the entire amount until realisation.

Significance

The order reinforces that restaurants cannot automatically levy or force consumers to pay service charges, which remain voluntary under the CCPA guidelines. It also makes clear that coercing customers into paying such charges can amount to an unfair trade practice, attracting refund and compensation orders under the Consumer Protection Act.

For consumer-related grievances, individuals may contact the consumer helpline in their respective states and Union territories or call the National Consumer Helpline at 1915 for assistance.