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| Legal Brief |
| Newsletter by Mansukhlal Hiralal & Co. |
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| INSIDE THE LEGAL BRIEF |
- Feature Insight
- Brief Updates
- Success Highlights
- Spotlight
- Ask MHCO
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MHCO Legal Brief :
Insights, Updates, and Expertise Unveiled |
| Stay ahead with MHCO’s latest legal insights, success stories, and expert guidance on emerging laws and industry developments. |
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| Feature Insight |
| Inside the Legal Landscape |
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Delhi High Court Upholds Voluntary Nature of
Restaurant Service Charges
Background:
On 28 March 2025, the Delhi High Court delivered a
significant judgment in the matter of National
Restaurant Association of India & Ors. v. Union of
India & Anr addressing the legality of mandatory
service charges levied by restaurants and hotels.
The case arose from widespread complaints about
automatic service charge additions to bills,
prompting the Central Consumer Protection
Authority (CCPA) to issue guidelines in July 2022
prohibiting such practices.
Issues for Consideration:
The Court considered the following key questions:
- Whether restaurants and hotels can lawfully
add a mandatory service charge to customer
bills.
- Whether the CCPA guidelines, which prohibit
automatic or compulsory service charges, are
valid and enforceable under the Consumer
Protection Act, 2019.
Held:
The Delhi High Court upheld the validity of the
CCPA guidelines, affirming the following
principles:
- No Automatic or Compulsory Service Charge:
Restaurants and hotels cannot add a service
charge to bills by default. Service charges must
be voluntary and at the consumer’s discretion.
- Transparency and Consumer Choice:
Establishments must clearly inform customers
that any service charge is optional. Customers
cannot be denied entry or service for refusing
to pay a service charge.
- No GST on Service Charge: GST cannot be levied
on service charges.
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Did You Know?
The Jan Vishwas Bill 2.0
decriminalised over 100 minor
offences under the Companies
Act, 2013-replacing criminal
penalties with civil fines to ease
compliance for businesses,
effective April 2025. |
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Did You Know?
The Supreme Court, in M/s C&C
Constructions v. IRCON (April
2025), held that appeals under
Section 37 of the Arbitration
and Conciliation Act, 1996 are
confined strictly to grounds
under Section 34, reinforcing
judicial restraint in arbitral
awards |
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- Consumer Remedies: If a service charge is
added against these rules, consumers have
the right to request its removal and can seek
redress through consumer helplines,
commissions, or relevant authorities.
The Court emphasized that automatic or
compulsory service charges constitute an unfair
trade practice under the Consumer Protection
Act, 2019. The judgment reinforces consume
rights and mandates that any service charge
must be transparently communicated and
entirely voluntary
Implications:
This decision prioritizes consumer protection,
requiring the hospitality industry to revise billing
practices and ensure that service charges, if
levied, are strictly optional. The ruling
mayimpact revenue models for restaurants and
hotels but provides clarity and legal backing to
consumers’ right to choose.
MHCO Comments:
The judgment marks a crucial policy stance in
the ongoing debate between industry practices
and consumer rights. By upholding the CCPA’s
guidelines, the Delhi High Court has effectively
subordinated the interests of service providers
to the statutory rights of consumers, ensuring
that voluntary consent is central to any
additional charges levied in the hospitality
sector. |
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| Brief
Updates |
| Capturing the fast paced changes |
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MHCO Regulatory Update: Reserve Bank of
India (Digital Lending) Directions, 2025
The Reserve Bank of India (RBI) has issued the
Digital Lending Directions under the
recommendations of the “Working Group on
Digital Lending”. Digital lending refers to the
process of disbursing loans digitally, replacing
the traditional system of approaching banks in
person. While the majority of the directions are
being enforced immediately, the directions
relating to multiple lenders shall come into effect
from 1 November 2025, and the reporting of
Digital lending applications to the RBI shall come
into effect from 15 June 2025. Learn More. |
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Arbitration Update: Supreme Court
clarifies limits on modification of
arbitral awards.
issue of whether courts
exercising jurisdiction under Sections 34
and 37 of the Arbitration and Conciliation
Act, 1996 ("Arbitration Act") have the
power to modify arbitral awards. This
decision resolves conflicting judicial
precedents and clarifies the scope of
judicial intervention in arbitration,
emphasising the balance between limited
judicial oversight and the need to
prevent protracted litigation while
adhering to the legislative framework of
the Arbitration Act. Learn More |
Legal Update: Promoter Liability For
Housing Societies In Redevelopment
The Hon’ble Maharashtra Real Estate
Appellate Tribunal (MREAT) vide order 2
June 2025 in the case of D. N. Nagar
Shivneri CHS Ltd. v. Various Allottees
held that a cooperative housing society
undertaking self-redevelopment does not
automatically qualify as a "promoter" under the Real Estate (Regulation and
Development) Act, 2016 (RERA Act), and is
not liable for obligations toward thirdparty
flat purchasers from a terminated
developer under Section 18 of RERA Act.Learn more. |
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Excerpts from Experts:
The Bombay High Court issued an interim injunction in favour of Marico Limited, restraining Zee
Hygiene Products from using packaging and labels similar to Marico’s “Parachute” hair oil
brands. Marico argued that Zee Hygiene copied not just the brand name but also the product’s
trade dress, including bottle shape and label design. Learn More |
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| Success
Highlight |
| deals or judgements that MHCO procured. |
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Deal Update: Kilitch Healthcare
India Limited: INR 161 crore capital
raise
Mansukhlal Hiralal & Co acted as legal
counsel to Kilitch Healthcare India
Limited on its INR 161 crore fund-raise, a
blended structure comprising INR 150
crore subscription to secured nonconvertible
debentures and INR 11 crore
equity infusion from Neo Special Credit
Opportunities Fund, with Catalyst
Trusteeship Limited appointed as
debenture trustee.
Our mandate covered the full suite of
transaction documentation, including the
Debenture Trust Deed and Agreement,
Share Subscription Agreement, security
creation instruments, disclosure letter
and ancillary close-out deliverables,
underscoring our capability to steer
complex equity-plus-debt financings in
the life-sciences sector.
Congratulations to Kilitch Healthcare on
this strategic milestone. We value the
trust placed in us and look forward to
supporting the company’s continued
growth. |
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| Spotlight |
| In the
Limelight. |
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Mansukhlal Hiralal & Co. (MHCO) achieved
significant recognition in 2025, winning the title of
“Winning Law Firm in Real Estate” at the IBLJ India
Law Awards, highlighting its expertise in high-value
acquisitions. The firm also earned rankings in
multiple areas from Benchmark Litigation, with
partner Bhushan Shah recognized as a “Litigation
Star” in Insolvency. Additionally, MHCO was
acknowledged in the ALB Asia IP Rankings for its
Intellectual Property practice, underscoring its
commitment to client-focused results and a centurylong
legacy in the legal field. Congratulations to
Bhushan Shah and the MHCO team for their
accomplishments!
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Ask Mansukhlal
Hiralal & Co. |
Breaking
down complex
legal issues for you |
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In this edition, we have Ms. Meeta Kadhi,
Associate Partner at Mansukhlal Hiralal& Co., addressing a common question in IP:
"What is the difference between a Trademark
and a Servicemark?”
Meeta Explains: In India, the core difference
between a Trademark and a Service Mark lies
in what they identify: a Trademark
distinguishes tangible goods or products,
while a Service Mark distinguishes intangible
services. Despite this functional distinction,
Indian intellectual property law, specifically
the Trade Marks Act, 1999, does not create
separate legal categories for them. Instead,
the definition of "trademark" is broad
enough to encompass both. This means that
both goods and services marks undergo the
identical registration process under the same
Act and are afforded the same legal
protections, with the primary operational
difference being the specific class (from the
Nice Classification system) under which they
are registered- classes 1-34 for goods and
35-45 for services.
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Shreya Dalal
Associate Partner |
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You can send your legal queries to ask@mhcolaw.com for expert advice in the next newsletter! |
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| We sincerely thank our clients, colleagues,
and partners for their ongoing support. Your
trust fuels our growth, and together, we look
forward to reaching new heights. |
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This newsletter has been published on 23 Jul 2025.
