Mumbai Restaurant Imposed Mandatory Service Charges, Slapped With Fine Of This Much

Many times a lot of restaurants and cafes levies mandatory service charges on our overall bill. However, is this really justified? Not really. Mandatory service charges are unjust because they undermine the principle of customer choice and erode trust between businesses and their clients.

Now, recently, the South Mumbai District Consumer Disputes Redressal Commission has issued a judgment against Cream Centre, a popular restaurant located in Girgaum Chowpatty, Mumbai, for imposing a mandatory service charge on its customers.

Cream Centre, a renowned eatery based in Mumbai is fined Rs 25000 after levying mandatory service charges from its customers

In a significant ruling, the South Mumbai District Consumer Disputes Redressal Commission has found Cream Centre, a renowned eatery based in Girgaum Chowpatty, Mumbai, in violation of consumer rights.

The commission declared the restaurant’s imposition of a compulsory service charge as unlawful and unwarranted. As a consequence, the establishment has been instructed to refund Rs 29 to a local attorney and further compensate with a sum of Rs 25,000.

The commission’s decision came after investigating a complaint filed by lawyer Yogesh Patki back on July 21, 2017. He lodged the complaint against the restaurant’s owner, Prince Cuisines Pvt Ltd, alleging that the mandatory service charge was deceptive and not backed by statutory authority. The commission agreed, determining that imposing a compulsory 5 percent service fee on top of food and beverage bills constituted unfair trade practice and misled customers.

Misleading presentation of Charges by the Cream Centre on its menu

One of the key issues highlighted by the commission was the way Cream Centre presented the service charge in its menu. The menu combined “service tax” and “service charge” in the same line, creating the impression that both were statutory levies.

This misleading representation led customers to believe that they had no choice but to pay the service charge, implying that it was enforced by law. The commission emphasized that this was not the case and that no statutory mandate allowed the restaurant to impose such a charge.

The commission’s verdict also clarified that gratuity and tips are voluntary transactions between the customer and the service staff, not the responsibility of the restaurant’s management. The commission said as we quote,

“Hotel management has no role in it. It is the customer to decide the amount of tip and gratuity.”

By mandating a service charge, the restaurant undermined the customer’s freedom to decide whether to tip and how much to give. This practice contradicts the principles of fair business, as customers should have the final say in rewarding service quality.

The narrative used by the restaurant to defend the compulsory fee is illegal, said the Commission

The commission noted that Cream Centre’s attempt to justify the mandatory service charge by citing additional services, such as quality crockery, ambiance, and furniture, was not only objectionable but also illegal. The commission said,

“All additional services completes the experience of customers who comes to the restaurant to dine in. It is highly objectionable as well as illegal to build the narrative to collect 5 percent mandatory service charge from customers. Hence, it cannot be justified at all”

The narrative used by the restaurant to defend the compulsory fee was deemed deceptive and unfair. The ruling clarified that offering a pleasant dining experience does not grant the restaurant the right to impose mandatory charges on its customers.

We believe that this judgment against Cream Centre serves as a warning to other businesses that seek to enforce mandatory service charges without legal justification. What are your thoughts? Do share via the comments below.