Law student from Lucknow wins lawsuit for being overcharged for payment through debit card

Law student from Lucknow wins lawsuit for being overcharged for payment through debit card

For Chanakya Sharma, a fourth-year student of Law studying at the Dr Ram Manohar Lohiya National Law University(RMNLU) in Lucknow, eating out at a restaurant in Goa at first proved to be troublesome but later fetched him Rs 15,000 as compensation. Chankaya won a case in the Goa Consumer Court against a restaurant there for charging him 2 per cent extra on the bill for which he had paid through debit card, an amount that is legally to be paid by the merchant and not the customer.

“According to the law, the Reserve Bank of India has issued several circulars to regulate Merchant Discount Rate (MDR). As per its latest circular, it is the duty of the commercial banks to ensure that no merchant (who is using the PoS machine issued by the bank for debit card/credit card) transfers the burden of MDR on to consumers. The MDR (usually 2 percent) payable to the bank is to be borne by the merchant,” says the law graduate, who belongs to Jaipur but is studying at Lucknow’s RMNL University.

Chankaya and a few of his college mates had gone for a moot court competition to Goa and later went to eat out at a popular restaurant on Colva Beach. Chanakya paid the restaurant bill through his debit card and noticed that the restaurant had charged him 2 per cent extra as a service charge for using his debit card to pay the bill. “At first it did not even occur to me that I have been charged extra, as it would not to anyone else. But then I realised that I had been overcharged,” says Chanakya, adding, “When I questioned the manager of the restaurant about it he said you guys don’t create trouble and we have done the right thing. They were adamant that I was wrong, which I knew for sure I wasn’t. But eventually they refused to give me back the money they had overcharged form me.”

With not much to do at that time, Chanakya came back to Lucknow and poured over the law books and all the Reserve Bank of India rulings regarding the use of debit card machines at merchant outlets. “I read up on whatever I could lay my hands on and I knew I had a legal case on my hands.”

Then the youngster, who is also a member of the Legal Cell in his college, decided to take the matter to the Consumer Court. “I had personally faced the unfair practice at the hands of a restaurant and I decided to proceed against him in larger interest of the consumers,” says Chanakya, who made three parties in the case. The restaurant was made the first party and the other two were the Goa Office and Head Office of the bank whose PoS machine was used at the restaurant. “The last two parties were arraigned as pro forma because as per RBI circulars it was their responsibility to ensure that the burden of MDR was not shifted by the merchant on to the consumers. So in November 2016, I filed a case before the Consumer Forum in Goa, so as to highlight the issue of MDR and the unfair trade practice being adopted by merchants in this regard. I had appeared in person and the matter was admitted in court,” informs Chanakya.

But since the case of was of Goa and hence filed there, it was not possible for Chanakya to be present for each hearing in the court. So he requested the principal of a law college in Goa to appoint two proxy representatives of Chanakya to represent him in court, which the college did. To prove his case, Chanakya submitted the original bill and the PoS receipt as proof which the court took into consideration and fined the restaurant Rs 15,000 plus Rs 10,000 to be paid as fine and compensation.

“The matter has been ruled in my favour. The opponent has been slapped with a compensation of Rs 15,000. In addition, they will also have to pay punitive damages to the extent of Rs 10,000 which is to be deposited in the Consumer Welfare Fund, Goa,” says Chanakya.

As per the court ruling, the restaurant, has been ordered to display a notice on the billing desk or any other conspicuous part of the restaurant stating, ‘Our customers are not liable to pay any fees for payment for our bills made through credit card/debit card.’ The bank too has withdrawn the PoS facility given to the merchant.

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