On Tuesday, the Delhi High Court issued a directive to the Federation of Hotel and Restaurant Association of India (FHRAI), mandating the use of the term 'staff contribution' instead of 'service charge.'

Additionally, the court specified that the staff contribution should not surpass 10% of the total bill amount.

The single-headed bench of Justice Prathiba M Singh the court also instructed that approximately 3,300 hotels and restaurants affiliated with FHRAI must prominently display on their menu cards with bold letters thatips need not be given after staff contribution is paid.

The said order will not be applicable to the restaurants associated with National Restaurants Association of India (NRAI).

While dealing with a plea filed by FHRAI and NRAI challenging the guidelines of Central Consumer Protection Authority (CCPA), hotels or restaurant should not add service charge automatically or by default to food bills, the Court passed the interim order.

During the hearing on Tuesday, the Court said that while FHRAI agreed to change the terminology, NRAI has not.

Senior Advocate Sandeep Sethi appeared for FHRAI and submitted that ''the association has no issues with renaming the charge and that the same will be displayed on the menu. He further stated that no service charge is levied on home delivery of food.''

During the course of hearing the Court noted that CCPA’s jurisdiction to issue guidelines effectively banning levy of service charge.

However, the bench held that the Court is dealing with the issue under writ jurisdiction and therefore, it cannot turn a blind eye to the submissions by the CCPA that some of the restaurants are charging service charges up to 20%.

“CCPA jurisdiction is one thing. But this court is dealing with it in writ jurisdiction. How can I turn a blind eye to this? This affects the entire country.”

The next date of hearing is on October 3.