Mumbai: Legal proceedings against restaurant in Mahim for charging service fee, refund ordered

A Mahim restaurant was ordered to compensate a customer for unlawfully charging a service fee, violating 2017 guidelines. Ridhina Nagvekar of Prabhadevi complained after being charged Rs 75.30 during a 2021 dinner. The restaurant refused to remove the charge.

Restaurant in Mumbai penalised for charging service fee.
(Image for representation: Getty Images)

Mumbai: A Mahim-based restaurant has been ordered to compensate a customer after unlawfully charging a service fee, contravening the 2017 guidelines set by the National Consumer Protection Authority. Ridhina Nagvekar, a resident of Prabhadevi, lodged a complaint against Thangabali restaurant in June 2022 after being charged a Rs 75.30 service fee during a family dinner on January 30, 2021. The total bill amounted to Rs 1,393. Upon noticing the service charge, Nagvekar promptly informed the restaurant’s manager that such fees are prohibited by the Central Consumer Protection Authority. She requested its removal, emphasising that any tip or similar payment should be voluntary, but the manager refused her request.

Compensation for deficiency in services

Unyielding, Nagvekar followed up with an email to the restaurant and a legal notice, neither of which received a response. Consequently, she brought her case before the Central Mumbai District Consumer Commission, seeking a refund of the service charge along with compensation for what she argued was a deficiency in service.

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Representing Nagvekar, advocate Prashant Nayak pointed out that levying a service charge is an unfair trade practice under the established guidelines. The restaurant, however, contested the complaint, maintaining that Nagvekar had paid the bill without raising any objections at the time. They further argued that they did not enforce payment of the service charge and thus could not be accused of unfair trade practices.

Restaurant suggested guidelines from Delhi High Court

The restaurant also referenced guidelines from the Delhi High Court, which suggested using terms like “staff contribution” instead of service charge, with a cap of 10 per cent of the total food bill. They claimed these guidelines supported their actions, though the court noted that these guidelines are currently under challenge.

However, the Consumer Commission rejected these arguments, ruling that the guidelines in force at the time were binding. The commission found the restaurant guilty of a deficiency in service and ordered a refund of the excess amount with 6 per cent annual interest. Additionally, the restaurant must pay Rs 5,000 to Nagvekar as compensation and litigation costs, with the payment due within 45 days.

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