Food Delivery Giant Imposed Unauthorized Discounts, Restaurant Suffers Major Loss — What Are the Legal Remedies?

If you are stuck in such a situation, here is what to do.

A small eatery in the city of Janakpuri, "The Royal Kitchen," recently faced a significant financial setback after partnering with a major food delivery aggregator, "GoGo Eats." The restaurant's owner, Mr. Alok Sharma, discovered that GoGo Eats had unilaterally applied steep discounts and promotional offers to their menu items listed on the platform. This was done without any prior notification or consent from Mr. Sharma. As a direct result of these unauthorized promotions, The Royal Kitchen incurred a loss exceeding ₹1,50,000 within a short span of a few months.

Upon noticing the discrepancy and the resulting financial drain, Mr. Sharma immediately contacted GoGo Eats' partner support team. However, his attempts to resolve the issue were met with procedural delays, ambiguous responses, and a general lack of urgency. The platform's representatives failed to provide a concrete solution or a timeline for rectification, leading Mr. Sharma to believe that the delays were intentional and part of a strategy to evade responsibility. Frustrated by the lack of cooperation and the mounting losses, Mr. Sharma is now contemplating legal action to recover the damages and hold the platform accountable for its unfair business practices.

Advice in such cases

When a business partnership turns sour due to the unilateral and damaging actions of one party, it is crucial to act strategically. Here is some general advice:

• Document Everything: Preserve all communication with the platform, including emails, support ticket numbers, and chat transcripts. Keep detailed records of your sales data, showing the financial impact of the unauthorized discounts.
• Send a Formal Legal Notice: Before initiating court proceedings, it is advisable to have a lawyer draft and send a formal legal notice to the company. This notice should clearly state your grievances, the breach of contract, the financial loss incurred, and the remedial action you demand (e.g., reimbursement of losses) within a specified timeframe.
• Review Your Agreement: Carefully examine the terms and conditions of the agreement you signed with the food delivery platform. Pay close attention to clauses related to pricing, promotions, liability, and dispute resolution.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

Several Indian laws can be invoked in a situation like this:

• The Indian Contract Act, 1872: The core of the issue is a breach of contract. The agreement between the restaurant and the delivery platform governs their relationship. Applying discounts without consent is a clear violation of the agreed-upon terms, making the platform liable for any resulting losses under Section 73 of the Act.
• The Consumer Protection Act, 2019: While typically for individual consumers, the 2019 Act broadens the definition of a 'consumer'. A business, such as a restaurant, can file a complaint if the service was availed "exclusively for the purpose of earning his livelihood by means of self-employment." A small restaurant owner could argue that the platform's services are essential for their livelihood, thus allowing them to approach a Consumer Commission for "deficiency in service" and "unfair trade practices."
• The Competition Act, 2002: If the food delivery platform holds a 'dominant position' in the relevant market, imposing unfair conditions (like non-consensual discounts) can be considered an 'abuse of dominant position' under Section 4 of the Act. A complaint can be filed with the Competition Commission of India (CCI).
• Bharatiya Nyaya Sanhita, 2023 (BNS): In cases where there is a clear element of dishonest inducement and deception causing financial loss, one could explore filing a criminal complaint for cheating under Section 316 of the BNS. However, courts often view such commercial disputes as civil in nature unless strong evidence of criminal intent is present.

If you are the complainant

If you are the restaurant owner (the complainant) in this scenario, follow these steps:

• Gather and Organize Evidence: Collect the partnership agreement, all email and chat communications, screenshots of the unauthorized discounts on the app, and detailed financial statements showing the loss calculation.
• Issue a Legal Notice: The first formal step is to send a comprehensive legal notice through an advocate. This often prompts the other party to seek a settlement to avoid litigation.
• Choose the Right Forum: Based on your lawyer's advice, decide on the best legal forum. This could be a Commercial Court for a swift resolution of the commercial dispute, a Consumer Commission for deficiency in service, or the CCI for anti-competitive practices.
• File the Complaint/Suit: Your lawyer will draft and file the necessary legal documents to initiate proceedings in the chosen court or commission.
• Consider Joint Action: If you are aware of other restaurants facing the same issue, you can explore filing a joint complaint or a representative suit, which can strengthen your case and share the legal costs.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

As the victim of such unfair practices, your focus should be on mitigating further damage and seeking rightful compensation.

• Stop the Bleeding: Immediately take steps to pause your services on the platform to prevent further losses. Inform the platform in writing that you are doing so due to their unresolved breach of contract.
• Quantify Your Losses: Work with an accountant or on your own to create a clear and verifiable report of the exact financial damage caused by the unauthorized discounts. This will be the basis of your claim for damages.
• Seek Professional Help: Do not try to navigate this complex legal landscape alone. The platform will have a team of experienced lawyers. You need a legal expert on your side to ensure your rights are protected.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

Generally, the police are reluctant to register a First Information Report (FIR) in matters that appear to be purely commercial or contractual disputes. They will likely advise you to approach a civil court for resolution. Police intervention typically occurs only if there is clear evidence of a cognizable criminal offense like cheating (Section 316 BNS), criminal breach of trust, or forgery. While you can file a complaint with the police, be prepared for them to direct you towards a civil remedy. Pursuing a civil suit for damages is often the more direct and appropriate path. An order from a Magistrate under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita (BNSS) may be required to compel the police to register an FIR if they refuse initially.

FAQs people normally have

Here are answers to common questions in such situations:

• Can a business sue in a Consumer Court? Yes, under the Consumer Protection Act, 2019, a small business can file a complaint if the service is used for earning a livelihood through self-employment. The merits would be decided by the Commission.
• What is the difference between suing in a civil court and a consumer court? A civil court (specifically a Commercial Court) is ideal for complex breach of contract cases and claiming specific damages. Consumer Commissions are designed for faster, more summary proceedings focused on deficiency in service and unfair trade practices.
• Can we file a joint lawsuit with other affected restaurants? Yes. In a civil court, this can be done through a 'representative suit'. In the Consumer Commission, a 'joint complaint' can be filed by multiple consumers having the same interest.
• Is approaching the Competition Commission of India (CCI) a good option? It is a powerful option if you can establish that the platform is a 'dominant player' in the market and is abusing its power. This is a complex, evidence-heavy process but can result in significant penalties for the platform and policy-level changes.

What evidence is required?

To build a strong case, you will need the following evidence:

• The original agreement or contract signed with the food delivery platform.
• All email, text message, and support ticket communication with the platform's representatives.
• Screenshots from the app or website showing the unauthorized discounts applied to your menu.
• Detailed sales reports from before, during, and after the period the discounts were active.
• A financial statement or report, possibly certified by a chartered accountant, clearly calculating the total loss incurred.
• Any written communication where you explicitly state that you do not consent to the discounts.

How long will the investigation take?

This is not a police investigation but a legal proceeding. The timeline varies depending on the chosen forum:

• Legal Notice: The notice usually gives the other party 15 to 30 days to respond or comply.
• Consumer Commission: These are meant to be fast. The Act aims for disposal of cases within 3-5 months, but in practice, it can take anywhere from 6 months to 2 years, depending on the complexity and backlog.
• Commercial Court: The Commercial Courts Act, 2015, aims for speedy resolution. A suit could take anywhere from 1 to 3 years to reach a final decision.
• CCI: Proceedings before the CCI can be lengthy, often taking several years, as they involve detailed investigation and economic analysis.

Advocate Sudhir Rao, Supreme Court of India