$~5 & 6 * IN THE HIGH COURT OF DELHI AT NEW DELHI Date of decision: 12^th April, 2023 + W.P.(C) 10683/2022 and CM APPL. 31033/2022 NATIONAL RESTAURANT ASSOCIATION OF INDIA & ORS. ..... Petitioners Through: Dr. Lalit Bhasin, Ms. Nina Gupta, Ms. Ananya Marwah and Mr. Ajay Pratap Singh, Advocates (M:

9953947026).

versus UNION OF INDIA & ANR. ..... Respondents Through: Sh. Chetan Sharma ASG, Mr.

Sandeep Mahapatra SPC, Mr. Kirtiman Singh CGSC with Mr. Amit Gupta, Mr. Saurabh Tripathi, Mr. Vikramaditya Singh, Ms. Vidhi Jain and Mr. Abhinav Bansal, Advocates for UOI (M: 9810045281).

6 WITH + W.P.(C) 10867/2022 and CM APPL. 31645/2022, 38599/2022 FEDERATION OF HOTEL AND RESTAURANT ASSOCIATIONS OF INDIA & ORS. ..... Petitioners Through: Mr. Sameer Parekh, Mr. Sumit Goel.

Ms. Sonal Gupta, Ms. Swati Bhardwaj, Mr. Abhishek Thakral, Advocates. (M: 8077855788)

versus UNION OF INDIA & ANR. ..... Respondents Through: Sh. Chetan Sharma ASG, Mr.

Sandeep Mahapatra SPC, Mr.

Signature Not Verified Digitally Signed W.P.(C) 10683/2022 & W.P.(C) 10867/2022 Page 1 of 9 Kirtiman Singh CGSC with Mr. Amit Gupta, Mr. Saurabh Tripathi, Mr. Vikramaditya Singh, Ms. Vidhi Jain and Mr. Abhinav Bansal, Advocates for UOI (M: 9810045281).

CORAM:

JUSTICE PRATHIBA M. SINGH Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

2. Both these matters have been taken up for hearing. The Petitioners in the present petitions are Associations of hotel and restaurant owners. It is claimed that more than 5 lakh establishments are represented by the Petitioners.

3. The challenge in these writ petitions is to the guidelines dated 4th July, 2022 issued by the Central Consumer Protection Authority (hereinafter ‘CCPA’) and the consequential communication issued on 6th July, 2022 to all the District Collectors for enforcing the guidelines of 4th July, 2022.

4. By the impugned guidelines, which are purportedly issued under Section 18(2)(l) of the Consumer Protection Act, 2019 (hereinafter ‘the Act’) the authority has taken a position that the levying of service charge by restaurants and hotels has been complained against by several consumers. Thus, the authority records that while restaurants and hotels can collect a tip which is voluntarily paid by the consumers, the same ought not to be incorporated into the bill in a manner so as to make the payment compulsory by the consumer. The guidelines, therefore, directed restaurants and hotels as under:

Signature Not Verified Digitally Signed W.P.(C) 10683/2022 & W.P.(C) 10867/2022 Page 2 of 9 “7. Therefore, to prevent unfair trade practices and protect consumer interest with regard to levying of service charge, the CCPA issues the following guidelines -

(i) No hotel or restaurant shall add service charge automatically or by default in the bill.

(ii) Service charge shall not be collected from consumers by any other name, (iii) No hotel or restaurant shall force a consumer to pay service charge and shall clearly inform the consumer that service charge is voluntary, optional and at consumer's discretion.

(iv) No restriction on entry or provision of services based on collection of service charge shall be imposed on consumers.

(v) Service charge shall not be collected by adding it along with the food bill and levying GST on the total amount”

5. The above guidelines are challenged by the present two Petitioners who are associations/federations of restaurants and hotels owners, namely, National Restaurant Association of India and Federation of Hotel and Restaurant Associations of India. Vide order dated 20th July, 2022, an ad- interim order was passed staying paragraph 7 of the above extracted guidelines, subject to the following conditions:

“9. The matter requires consideration. Consequently, and till the next date of listing the directions as contained in paragraph 7 of the impugned Guidelines of 04 July 2022 shall remain stayed subject to the following conditions: -

(1) The members of the petitioner Association shall ensure that the