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Hotels to move court on Centre's ban

July 09, 2003 12:22 IST

Major hotel chains have decided to take the Centre to court over its attempt to enforce the ban on charging more than the maximum retail price for packaged food.

Since selling packaged food is a big money-spinner, hotels are demanding that they be allowed to levy additional charges over and above the MRP for what they call "premium services and facilities".

Shyam Suri, secretary-general of the Federation of Hotels and Restaurants Association of India, which represents the hotel industry, told Business Standard, "The FHRAI is in the process of filing a writ petition in the Delhi High Court to the effect that hotels should be free to levy additional charges on packaged foods for their services and to challenge the government's interpretation of Rule 23(2)." The move follows the legal advice given by the New Delhi-based Bhasin & Co.

According to Rule 23(2) of the Standards of Weights and Measures Rule, 1977, "No retail dealer or other person, including manufacturer, packer and wholesale dealer, shall make any sale of any commodity in packaged form at a price exceeding the retail sale price thereof."

However, according to the government's interpretation, hotels and restaurants come under the category of "other person". Hotels had earlier been exempted, and could levy additional charges for services.

However, weights and measures officials in some states have insisted after inspection that hotels must sell packaged products at the MRP. They have also been fining hotels.

The FHRAI has 2,800 member-hotels, including leading chains like the Taj Group, the Oberoi, The Leela Group, Sarovar Plaza, ITC hotels and Le Meridien.

A senior executive at Indian Hotels Company, which runs the Taj Group, said: "We support FHRAI's move. Star hotels cannot sell packaged products at prices similar to retail establishments because we provide ambience and other services and preserve products. Customers have never complained because they are willing to pay for the services we provide."

An executive at Hotel Leelaventure said: "Without exception, the hotel industry is facing problems on this. We hope that with the FHRAI taking up the matter, the government will come up with different guidelines for the hospitality sector."

Reeba Zachariah in Mumbai