A penny saved is a penny earned. Every economical person is expected to be very cautious about expenditure and savings. It is not uncommon to look at the price tag of a product before purchase or to compare it with competitive products. Even restaurants to dine out are chosen based on multiple factors – the main being PRICE. Fair trade demands that the price indicated in the menu card be reasonable, fixed and inclusive of taxes. However, there is no law as such to regulate the said facets.
Pricing – Completely Discretionary
Pricing has always been the restaurant owners’ domain and is upon their discretion to fix an exorbitant price for a particular exotic dish. Even dual pricing for dine in and take away has not been seen as unfair, as held in the case of Nitin Mittal v. Pind Balluchi Restaurant.[i]
In Federation of Hotels and Restaurants Association of India v. Union of India,[ii] the Apex Court finally settled the law on charging a price for packaged water bottle over and above the Maximum Retail Price. It is only a service incidentally coupled with the sale of packaged drinking water. The Court went on to state that, “…It may well be that a client would order nothing beyond a bottle of water or a beverage, but his direct purpose in doing so would clearly travel to enjoying the ambience available therein and incidentally to the ordering of any article for consumption. Can there be any justifiable reason for the Court or Commission to interdict the sale of bottled mineral water other than at a certain price, and ignore the relatively exorbitant charge for a cup of tea or coffee. The response to this rhetorical query cannot but be in the negative.” The plea of the Consumer Affairs Ministry to review the judgment was also negated.
Is it mandatory to pay service charge?
Often restaurants end up levying service charge as a part of the bill. Consumers too, unaware that it is not mandatory, end up tipping a hefty sum irrespective of whether they like the service or not. Often service charge is imposed on consumers as a ‘management policy’. What is worse is that, even after paying the service charge, the consumers leave behind a sum as ‘tip’ to the waiters at the restaurant. It is often debated whether paying service charge is mandatory or not. The Department of Consumer Affairs, by notification No. J-24/9/2014 – CPU (pt) dated 14th December, 2016 clarified that paying the service charge is completely discretionary. Should a consumer be dissatisfied with the dining experience, he/she can have it waived off. The clarification notification highlights it as an unfair method or deceptive practice adopted to deceive the consumer. Hence, service charge is completely voluntary and can never be asked to pay on a compulsory basis. It is pertinent to note that while service tax fills the government’s treasury, service charge is for the restaurant owner’s pocket though levied in the guise of paying to the waiters at the restaurant.
Is the restaurant owner obliged to sell at the price mentioned in the menu card?
As per the provisions of the Indian Contract Act, 1872 a menu card is only an invitation to treat / an invitation to offer and not an offer itself. A Shopkeeper’s catalogue or list price is only an invitation to intending customer to make an offer to buy at the indicated price and is not an offer. Advertisements in newspapers or in any other media are invitations to treat, which allows vendors to refuse to sell products at list price. They can also be considered offers in certain cases of unilateral contracts. If a shop mistakenly displays a good for sale at a very low price it is not obliged to sell it for that amount.[iii] A display of goods at a fixed price in a store is an invitation to treat, not an offer. An offer may be made by a prospective buyer and the retailer may accept or reject that offer.[iv] However, the legal position also has a differential view under Carlill v. Carbolic Smoke Ball Company[v] and Section 8 of the Indian Contract Act which states when the performance of the conditions of a proposal is fulfilled is an acceptance of the proposal. Depending on the performance of conditions, the menu card may also be treated as an offer. Only in such a case, the owner is obliged to offer the food items at the said rate. Otherwise, it is a mere ‘invitation to offer’.
What can be done when there is a difference in price between the menu card and the bill?
The question that now arises for consideration is what can be done when there is a difference in price between the menu card and on the bill. Primarily, there are two gimmicks by which restaurants can effectuate and deceive the consumer on this –
1. Clandestinely indicating a different price in the menu card and claiming it to be an older menu card.
2. Having a menu card that does not include the taxes.
Unfair Trade Practices – Consumer Protection Act
If the restaurant is resorting to have different prices on menu card and bill, it may be brought within the ambit of ‘Unfair trade practices’ as defined under S.2(r) of the Consumer Protection Act, 1986. Sub clauses (1) and (6) of the said definition may be conjointly read to infer that it is a ‘practice of making any statement that falsely represents that the services are of a particular standard, quality or grade and that it is adopting deceptive practices in the provision of services.’
The absence of any specific legislation or precedent in this particular matter makes us construct arguments on a corollary basis. Though the definition of MRP includes only packaged commodities,[vi] the decision of the National Consumer Disputes Redressal Commission in Cargo Tarpauline Industries v. Mallikarjun B Kori,[vii] wherein the ratio was that excess amount charged over and above MRP was an unfair trade practice, may be a persuasive argument in our question. A menu card, as much as an MRP tag is an indicator of the price of the product, is an indicator of the service rendered by the restaurant. Hence, any false statement that deceives the consumer and tricks him into accepting the service may be brought within the ambit of ‘deceptive practices.’
Variation in prices due to unfair taxation:
If there is a variation in price due to taxes too, there is no remedy unless it is a blatant violation by levy of tax other than what is the slab rate for that particular restaurant. In such a case,
1. Visit the page of Central Board of Indirect taxes and Customs (CBIC) at https://cbic-gst.gov.in/.
2. Scroll down to find the ‘Mitra – Helpdesk’.
3. A toll free number and email ID will be provided wherein a complaint may be registered that there is tax fraud happening in the restaurant.
4. It is suggested to keep the bill and any photo of the menu card, if available, safely so that they may be of evidentiary value.
There is a Latin maxim which applies here: vigilantibus et non dormientibus jura subveniunt, which is translated as the law aids the vigilant and not the indolent. A vigilant and shrewd consumer should know the purpose for paying every penny. Any unfair trade practice adopted by the service provider is legally a wrong committed to the consumer, whereby the consumer suffers an injury. Hence, the law comes to aid in such situations. However, it is important that the consumer is vigilant enough to analyze the bill and seek legal remedy in appropriate situations.
Suggestion and Recommendation:
It is highly recommended that the existing legislations be amended to be more specific and include this case or a new law regulating the pricing in restaurants be enacted.
Edited by Pragash Boopal
Approved & Published – Sakshi Raje
[i] Order dated 01/08/2012 of National Consumer Disputes Redressal Commission in RP No. 1999/12.
[ii] Order of the Supreme Court dated 12/12/2017 of Civil Appeal No.21790, arising out of SLP No.28685/2015.
[iii] Fisher v Bell, 1961 1 QB 394.
[iv] Chitty on Contracts (2004).
[v] (1893) 1 QB 256.
[vi] R.2(m), Legal Metrology (Packaged Commodities) Rules, 2011.
[vii] (2007) III CPJ 305 (NC).