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MONOPOLIES AND RESTRICTIVE TRADE
PRACTICES COMMISSION, NEW DELHI
Mr. R.K. Anand & Ms. Moksh Mahajan, Members
MRS. S.S. AHUJA—Applicant
versus
PIZZA EXPRESS—Respondent
R.T.P.E. No. 133 of 1999—Decided on 10.12.2001
For the Applicant :Mr. H.D. Pithawala and Dr. V.K. Aggrawal, Advocates.
For the Respondent:Mr. A.N. Haksar, Sr. Advocate with Mr. U.A. Rana and Mr. A. Deepankar, Advocates.
The court established that the levy of service charges, when approved by relevant authorities and transparently displayed, does not constitute unfair or restrictive trade practices.
Headnote:
Unfair Trade Practices - Service Charges - Monopolies and Restrictive Trade Practices Act, 1969, Sections 10(a)(i), 36A, 36B(a), 37
Fact of the Case:
The complainant alleged that a restaurant was indulging in unfair and restrictive trade practices by levying compulsory service charges at 9% of the total bill for dining in the restaurant. The respondent defended the practice, stating it was approved by the Department of Tourism and displayed on the menu card.
Finding of the Court:
The court found that the levy of service charges was not unfair or deceptive, as it was approved by the Department of Tourism and clearly displayed on the menu card. The court also noted that the practice did not restrict competition or harm consumers.
Issues: (a) Whether the respondent is indulging in restrictive/unfair trade practices? (b) If so, whether such practices are prejudicial to the public interest? (c) Whether such unfair trade practices are prejudicial to the public interest or consumers? (d) Relief, if any.
Ratio Decidendi: The court held that the levy of service charges, approved by the Department of Tourism and displayed on the menu card, did not constitute unfair or restrictive trade practices.
Final Decision: The Notice of Enquiry was discharged, and the complaint was disposed of with no order as to costs.
Ms. Moksh Mahajan, Member—In a complaint filed, the complainant who is a resident of Mumbai, charged the respondent namely, Pizza Express, Connaught Place, New Delhi for having indulged in unfair and restrictive trade practices as covered under Sections 10(a)(i) and 36A read with Section 36B(a) as well as Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Act). The allegation consists of recovery of compulsory service charges at 9% of the total bill for taking food in the restaurant.
2. Briefly stated the facts are that one Mrs. S.S Ahuja during her visit to a restaurant namely, Pizza Express, Connaught Place in New Delhi, discovered that the bill for food included additional amount of 9% towards service charges along with cost of food. On an inquiry made from the waiter, the amount was stated to be compulsory tip charges recovered from all customers who visit the restaurant. Understanding the tip charges to be optional, the practice of recovering service charges at a specified rate for serving food at tables was considered to be an unfair trade practice imposing unjustified cost on the customers. The matter was taken up with the respondent through her Advocate and in absence of any reply received, the complaint was filed against the respondent for having indulged in unfair as well as restrictive trade practices under respective provisions of the Act.
3. On the facts as stated in the complaint, a Notice of Enquiry was issued to the respondent, which was duly replied to.
4. An application under Section 12A of the Act was also filed with the prayer that the respondent be restrained from levying any service charges for whatever name called during the pendency of the proceedings and suitable order to the effect may be passed in the circumstances of the case.
5. The Commission vide its order dated 17th August, 1999 while rejecting the interim relief at that stage, however, observed that the complainant has been able to establish a prima facie case against the respondent in regard to the prayer that no service charges for the purpose could be levied. This was for the reasons stated in para 3 of the order.
6. The respondent refuted the charges on the ground that it is an approved restaurant by the Department of Tourism, Ministry of Tourism, Government of India. In compliance to the stipulations and requirements laid down by the Department of Tourism, the restaurants duly displayed on menu card the rates charged by it. As required, it also indicated sales tax, service charges, etc. It levied service charges as duly approved by the Department of Tourism as is the case in most of the hotels/restaurants. These are duly reflected on the menu cards. As the customers are duly informed of the charges to be levied, no unfair or deceptive method is stated to have been adopted to recover the amount. There is also no tie up between the products sold by the respondent and the service charges levied by it. There is a take away service available in the restaurant as clearly indicated in the menu card and it is only the food served in the premises that carry service charges reflected in the menu card. The charges so levied are not in the nature of compulsory tip but a commercial decision taken in accordance with the hospitality industry. In distinction to fast food restaurant, most of the hotels and restaurants as in the present case, in addition to personal services, provide services like liquid soaps, hand dryers, tissue papers, tissue rolls, toilet rolls, cloth napkins etc. For maintenance of a restaurant in a hygienic condition some extra amount is charged, which is also for certain magic show, mimicry shows etc. provided on holidays. There are number of hotels in Delhi like Centaur Hotel, Air India Hotel at Mumbai and others who collect such like charges from the customers. On the facts of the case, the charges of restrictive as well unfair trade practices having not been established, the Not
