A Delhi consumer commission has held a restaurant guilty of unfair trade practice for allegedly compelling a customer to pay a service charge despite his objection. The commission ordered the restaurant to refund ₹949 collected as service charge with interest and pay ₹25,000 as compensation for harassment.
Service Charge Dispute Escalates into Consumer Case
A family dinner at a Delhi restaurant turned into a consumer dispute after a customer objected to a service charge added to his bill.
Neeraj Dubey and his family visited House of BOHO in Delhi on October 19, 2024. The restaurant raised a bill of approximately ₹11,761, which included a service charge of ₹949.
Dubey objected to the additional charge and requested the restaurant to remove it from the bill. He relied on the Central Consumer Protection Authority (CCPA) guidelines on service charges, which provide that payment of a service charge by a customer is voluntary.
According to the complaint, however, the restaurant staff allegedly surrounded the customer’s table and told him that he would not be permitted to leave unless the entire bill, including the service charge, was paid.
The customer ultimately paid the amount, claiming that the payment was made under pressure and against his wishes.
Consumer Commission Holds Restaurant Guilty
Dubey subsequently approached the South Delhi District Consumer Disputes Redressal Commission, seeking a refund of the service charge along with compensation for the alleged harassment and litigation expenses.
The case was heard by Commission President Monika A. Srivastava and Member Kiran Kaushal.
House of BOHO did not appear before the commission despite being served with notice. Consequently, the commission proceeded ex parte against the restaurant and examined the evidence and written submissions presented by the complainant.
After considering the material on record, the commission found the collection of the service charge and the use of different descriptions for such a charge to be misleading and deceptive.
The commission held that such conduct falls within the definition of an “unfair trade practice” under Section 2(47) of the Consumer Protection Act, 2019.
CCPA Guidelines Prohibit Mandatory Service Charges
The commission relied upon the CCPA Guidelines on Service Charges, issued on July 4, 2022.
Under these guidelines, hotels and restaurants are prohibited from automatically or by default adding a service charge to a customer’s bill. Restaurants also cannot collect the amount under another name or compel a consumer to pay it.
Importantly, a restaurant cannot deny entry or restrict services merely because a customer refuses to pay a service charge.
Therefore, a service charge is fundamentally different from government-imposed taxes or statutory levies. A customer may choose whether to pay it.
The commission observed that compelling a consumer to pay such an amount defeats the voluntary nature of the charge and can constitute an unfair trade practice.
Delhi High Court Judgment Strengthens Consumer Protection
The commission also referred to the Delhi High Court’s judgment dated March 28, 2025, in proceedings involving the National Restaurant Association of India and other restaurant associations challenging the CCPA guidelines.
The High Court upheld the validity of the CCPA guidelines concerning service charges and recognised that automatically imposing or collecting such charges can be misleading and deceptive.
The South Delhi consumer commission relied on this legal position while deciding Dubey’s complaint.
The ruling therefore adds another layer of consumer protection against restaurants that attempt to treat service charges as mandatory components of a customer’s bill.
Restaurant Ordered to Refund ₹949 with Interest
After finding the restaurant liable, the consumer commission directed House of BOHO to refund the ₹949 service charge collected from Dubey.
The refund is to carry interest at 7% per annum from the date on which the amount was paid until its realisation.
In addition, the commission awarded ₹25,000 as compensation for the harassment allegedly suffered by the complainant due to the restaurant’s conduct.
The restaurant was directed to comply with the order within three months from the date of pronouncement.
The commission further ordered that if the amount was not paid within the prescribed period, the restaurant would be liable to pay 6% per annum interest on the entire amount until realisation.
Key Legal Takeaway for Restaurants and Consumers
The decision reinforces an important principle: service charge cannot be imposed on a customer as a compulsory payment merely because the restaurant has included it in the bill.
Consumers who do not wish to pay a service charge can object to it. A restaurant cannot threaten, intimidate or otherwise restrict a customer for refusing to make such payment.
At the same time, the ruling highlights the remedies available under the Consumer Protection Act, 2019 when a business engages in an unfair trade practice or causes harassment to a consumer.
Conclusion
The Delhi consumer commission’s decision sends a clear message to restaurants that service charges must remain voluntary. Automatically adding the charge to a bill or coercing a customer into paying it can have legal consequences.
For consumers, the judgment provides further reassurance that they can challenge the forced collection of service charges and seek appropriate relief before consumer commissions.