Food delivery major Zomato is facing a legal challenge over a mix-up in a vegetarian food order.
What Happened: A district consumer forum in Jodhpur has issued an order against Zomato and its partner, McDonald’s, imposing a monetary penalty and litigation costs for violating consumer protection rules.
The District Commission has fined both Zomato and McDonald’s jointly with a penalty of ₹1 lakh, emphasizing their breach of consumer protection regulations. Additionally, they’ve been told to pay ₹5,000 in litigation costs.
Zomato’s Contention: Zomato said in an exchange filing it is taking steps to appeal the decision. The company believes it has a strong case, having taken advice from external legal experts. The legal dispute relates to a case where non-vegetarian food was delivered instead of an order for vegetarian food.
Zomato argues that, according to its terms of service, it’s only a go-between for food sales. The responsibility for service issues and wrong orders falls on the restaurant partner, not the firm that handles the delivery. The company said the district commission didn’t consider this, leading to the joint fine on Zomato and McDonald’s under the Consumer Protection Act, 2019.
Get all the latest Share Market trends and news to set you up for the week ahead.
Zomato doesn’t expect this to impact its finances or operations.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.