State Cannot Ban Convenience Fees or Service Charges on Online Cinema Tickets: HC

The High Court of Bombay in the matter of PVR Limited has ruled that the Government of Maharashtra cannot put restrictions on the collection of service charges or convenience fees on the online booking of cinema tickets. PVR Limited, the petitioner, runs and manages multiplex cinemas in India, including Maharashtra.

The state government had issued Government orders (G.O.) directing that in the cinema theatres, while selling the tickets online, the Operator, Owner and also the Agent shall not levy extra service charges. Also, another G.O issued by the state directed that cinema theatres in the state shall set up their own online ticketing systems within four weeks. Even when using their own systems, they were not allowed to charge any additional service fees from viewers.

Bombay High Court’s Ruling

The Bombay High Court held that, “The Petitioner’s business model is not shown to be illegitimate; the charge being collected on such business, therefore, cannot be barred without enacting any law and merely by issung the impugned G.O.s. This would amount to imposing unreasonable restrictions on the right to carry on business without enacting any law. This is not a case where the duty on admission fee to the entertainment is being regulated, but what is sought to be achieved by the impugned G.O. s is to prohibit the Petitioners from collecting convenience fees which would be outside the realm of the ED Act.”

The court, while referring to Article 162 of the Constitution of India, stated that, “57. Article 162 of the Constitution of India provides that subject to the provisions of this Constitution the executive power of a State shall extend to the matters with respect to which the legislature of the State has power to make laws. Therefore, the pre-condition for invoking Article 162 of the Constitution is the existence of a law under which such directions can be issued. In the instant case before us, there is no enactment shown to us which empowers the State to regulate the consideration between the theatre owner and its customer. There is no price control order governing the transaction under consideration or price control order issued under a particular Act or law.”

The court also observed a submission made by one of the learned counsel appearing for the petitioner, who stated that other platforms such as IRCTC, MakeMyTrip, etc, also levy extra service charges and there are no restrictions on these platforms for levying such charges.

Therefore, the High Court ruled in favour of the cinema theaters in the state and held that the government order (G.O.) dated 4 April 2013 and 18 March 2014, which banned charging extra fees for online ticket booking, are unconstitutional. Therefore, the theatres can now charge extra service charges while selling movie tickets online.