ORDER
Moksh Mahajan, Member
1. 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 Notice of Enquiry needs to be discharged, contended the respondent.
After completion of the pleadings, the following issues were framed :
(a) Whether the respondent is or has been indulging in restrictive/unfair trade practices as alleged in the complaint as well as in the Notice of Enquiry ?
(b) If the answer to the above is in the affirmative, whether such restrictive trade practices are not prejudicial to the public interest ?
(c) Whether such unfair trade practices are prejudical to public interest, to the consumer or the consumers in general ?
(d) Relief, if any.
7. Evidence in the form of affidavit as well as counter affidavit was filed on both sides. Mrs. S.S. Ahuja, in her deposition could not recollect whether the menu card reflected the service charges. She, however, maintained that there are few hotels/restaurants who do not levy service charges. As per Shri Sanjay Mohindra appearing on behalf of the respondent, service charges are part of the price of the food items served inside the restaurant. The services mentioned in para 8 of the affidavit were stated to be merely a few of illustrations. Quite a few other benefits like offer of complimentary ice-creams to children, etc. were mentioned to justify the service charges by the respondent.
8. We have carefully considered the submissions made on either side and have also gone through the material placed on record. As agreed to on both sides, the photostat copies of the menu cards of the restaurant placed on record by the respondent are not taken into consideration for want of originals. Admittedly the restaurant in question has the approval of the Department of Tourism, Ministry of Tourism, Govt. of India and caters for special kind of food as is clear from its name as well the menu card. Levy of compulsory service charges also has the approval of the Department of Tourism, Ministry of Tourism, Govt. of India (Reference to regulatory conditions for approved restaurant as is evident from Annexure-I annexed with the reply of the respondent). Levy of service charges on the other hand can not be questioned in law as there is no provision prohibiting levy of such charges. The respondent is also not alone in this kind of practice, there being others in the hospitality industry following the same. The menu card clearly mentiones levy of extra service charges at 9% and the same is also displayed outside the restaurant providing infomation to the customer before hand as well before the order is placed for food/meal. A customer who can read the order tor kind of dishes mentioned in the menu card as is the case, can very well read the conditions mentioned in the said card before placing the order for the food/meal. Non-reading of the same would necessarily be at his peril. It is difficult to comprehend that a customer choosing dishes amongst others as mentioned/offered in the menu card can mistake ‘service charges’ for sales tax as is the contention of the complainant. Non-disclosure of reasons for levying service charges, as is the practice in other similar restaurants/hotels, does not make the practice as unfair within the meaning of Section 36A of the Act. There is thus no unfair practice or deceptive method adopted by the respondent as contended by the complainant. In fact the extra levy at 9% would act as a disincentive to the promotion of sales, which is a pre-requisite condition for holding the trade practice to be unfair.
9. It is true that, as generally understood and also impliedly accepted by the respondent, the tip is a voluntary contribution, which cannot be quantified. To the extent the averments of the complainant are correct. In view of the stand taken by the respondent, however, not much weight can be attached to the statement of the waiter. Thus the complainant has not sufficiently demonstrated that the respondent has indulged in unfair trade practice.
10. No doubt any levy of extra charges would push up the price of the product in all circumstances, the practice is to be seen in the context and pretext it has been questioned. Whether the increased cost is justified in terms of the meaning given to the restrictive trade practice under Section 2(o) of the Act needs to be examined. It has not been shown that the levy of service charges would restrict, eliminate or distort competition in general or obstruct the flow of capital or resources into the stream of competition or flow of supplies in the market relating to goods or services in particular. Rather in absence of the aforesaid practice being universally followed, the customer has ample choice to select any one of the restaurants he would like to visit Much can be said about the contention of the complainant that the kind of facilities like maintenance of hygienic conditions, provision of toilet tissues, hand dryers and others are separately accounted for while arriving at the profit of the restaurant. It is also true that such like facilities are offered by many restaurants but one needs to remember that it is for the trader to decide how to manage its business. The facilities in the form of free telelphone, offer of ice-cream to children, magic shows, etc. on the holidays, have, however, not been denied by the complainant.
11. Undeniably the restaurant in question along with serving food at the table has a facility of Carry away service for which no service charges are levied. Normally understood, service charges are levied for the service of food at the table in the restaurant. The choice rests with the customer either to take food in the restaurant bearing the service charges, as-is also a practice in other restaurants, or to carry away the food avoiding the aforesaid levy. There could, however, be no tie up between the sale of food and service of it on the table as is in the present case. This goes along with it. These two cannot be separated. Thereof, the same cannot be covered under Clause (b) of Section 33(i) of the Act. The practice followed by the respondent as well the others in trade in no way harms the competitor in general or customer in particular. It has, thus, been sufficiently demonstrated that the respondent did not indulge in unfair or restrictive trade practices as alleged.
The observations of the Commission made in the order passed under Section 12A of the Act were without considering the evidence on both sides rendered during the course of trial, as such, the same cannot be considered to be conclusive.
In our considered view, the Notice of Enquiry is not maintainable and the same deserves and is directed to be discharged with no order as to the costs on the facts and in the circumstances of the case.