Delhi High Court Declares Service Charges in Restaurants Optional

In a landmark decision, the Delhi High Court has ruled that service charges on food bills at hotels and restaurants are entirely voluntary, reinforcing consumer rights and preventing unfair trade practices. The court upheld the Central Consumer Protection Authority’s (CCPA) 2022 guidelines prohibiting the mandatory imposition of such charges.

Justice Prathiba M Singh delivered the verdict, dismissing petitions from restaurant associations that challenged the CCPA’s directives. The court clarified that the CCPA is not merely an advisory body but has the authority to issue guidelines aimed at safeguarding consumers and curbing deceptive business practices.

The CCPA’s guidelines explicitly state that restaurants and hotels cannot automatically add a service charge to food bills or disguise it under a different name. Additionally, businesses must inform consumers that paying a service charge is completely optional. The guidelines further prohibit establishments from denying entry or services based on a customer’s decision not to pay the charge.

The High Court ruled that enforcing service charges as mandatory misleads customers, often creating the impression that they are paying government taxes such as GST. The judgment emphasized, “The CCPA is an authority empowered to issue guidelines under the Consumer Protection Act, 2019. Compliance with these guidelines is mandatory.”

Restaurant associations argued that the guidelines were arbitrary and should not be treated as binding government orders. However, the court rejected these objections, asserting that the CCPA’s directives are crucial for protecting consumer rights and eliminating misleading practices in the hospitality sector.

This verdict strengthens consumer protections in India, ensuring that customers are not obligated to pay additional charges unless they choose to do so voluntarily.

SEBI’s Market-Friendly Reforms to Boost Investment Growth

​The Securities and Exchange Board of India (SEBI) is initiating reforms to enhance market efficiency and stimulate investment growth. Under the leadership of Chairman Tuhin Kanta Pandey, SEBI plans to establish a high-powered committee to review and recommend measures aimed at streamlining compliance, reducing regulatory costs, and expediting fundraising processes across various financial markets. 

These reforms come in response to recent market volatility, marked by significant foreign institutional investor (FII) sell-offs between October 2024 and February 2025, leading to notable declines in mid-cap, small-cap, and Nifty stocks. The proposed regulatory adjustments are designed to restore investor confidence and foster a more conducive environment for capital raising and efficient fund deployment. 

SEBI’s commitment to eliminating outdated regulations and rationalizing necessary ones reflects a strategic shift towards balancing effective oversight with market-friendly policies, aiming to support growth while safeguarding investor interests.