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Bombay HC Upholds Convenience Fees for Online Movie Tickets

The Bombay High Court (HC) recently ruled that booking movie tickets online is a matter of consumer choice, and any restriction against charging a convenience fee for such services violates the "legitimate rights" of theatre owners. The Court added, "If business owners are not permitted to determine the various facets of their business (in accordance with law), economic activity would come to a grinding halt." The verdict came as a major relief for cinema operator PVR and BookMyShow's parent company, Bigtree Entertainment, which had originally approached the judiciary in 2014 and 2013, respectively. Background BookMyShow and PVR's challenge stems from two Maharashtra Government Orders issued in 2013 and 2014, which forbade them from charging additional service fees during online computerised ticket sales. The orders also required theatre owners in Maharashtra to establish their own systems for online ticket sales within four weeks of the judgment, without recovering any additional service charge from consumers. The aggrieved parties subsequently challenged these orders. In addition, in 2014, the state government amended Section 2(b) of the Maharashtra Entertainment Duty (MED) Act, 1923, to include service charges for online ticket sales -- 'payments for admission. For context, the MED Act levies a duty on operators in the entertainment sector in Maharashtra. What transpired at the hearing BookMyShow and PVR's stance The petitioners argued that the orders infringed Article 19(1)(g) of the Constitution, which guarantees the right to practice any profession or carry on any occupation, trade, or business. They contended that the state was attempting to regulate private contracts and impose unreasonable restrictions on legitimate business activity. Naresh Thacker, counsel for the petitioners, also argued that the Maharashtra government lacked the power to issue such orders under either the MED Act or Article 162 of the Constitution, which prescribes the extent of the executive power of the state government. Differently, the counsel explained that the orders contravened Article 14 or the Right to Equality by promoting a disparity between Maharashtra and other states. The government orders also promote discrimination by allowing other online service providers like IRCTC and MakeMyTrip to levy convenience fees while imposing restrictions solely on movie theatre providers. The counterargument In contrast, the government's counsel argued that the orders were valid under Article 162 of the Constitution and Section 3(3)(e) of the MED Act, which prohibits cinema proprietors -- who must pay "payment for admission" to the state government -- from collecting any additional fees. Concerning the source of power for such orders, the counsel claimed the government derived it from Section 4(2)(b) of the MED Act. What did the Court rule? validity under the MED ACT The Court first analysed Section 7 of the MED Act, which empowers the State Government to make rules to ensure the payment of entertainment duty and to carry out the provisions of the Act. It ruled that the government lacked authority to prohibit the collection of a convenience fee during online bookings, as such fees fall outside the scope of the Act. The state also lacked authority under Section 10, which merely delegates powers and duties. The bench of Justices Jitendra Jain and M.S. Sonak opined that, considering the existence of Section 3(3)(e), there was no requirement for the government to issue any separate prohibition notices. Alternatively, while the convenience fee forms part of the "gross collection capacity" to calculate the amount of duty, it doesn't stipulate any restrictions on the collection of such a fee. Differently, the HC rejected the respondent's submission of the orders being issued under Section 2(b) and Section 4(2)(b) of the Act. The latter "only deals with the methods of collecting the entertainment duty", the Court explained. Furthermore, the Court noted that no provision under the Bombay Entertainments Duty Rules, 1958, mandates such restrictions. EXAMINATION UNDER aRTICLE 19(1)(G) The HC also observed that the State can bar the imposition of convenience fees only where there exists a Statute or Law governing price regulation or consideration, like under the Essential Commodities Act 1955, the Defence of India Act 1931, etc. However, the current matter lacks any statute empowering the state to do so, the Justices observed. Alternatively, in the absence of such a statute, the government orders in question do not meet the test of reasonableness outlined in Article 19(6), which permits restrictions on the freedom to conduct business only under specific conditions. Since the petitioners' business models were legitimate, the Court held that barring the collection of convenience fees amounted to an unreasonable restriction on their right to conduct business. It also noted that Indian price control laws are typically specific and reasonable, with such restrictions requiring clear legislative backing. applicability under Article 162 According to the Constitution, Article 162 can be invoked only where a relevant law exists to support executive action. However, the government lacked any such enactment or price control order governing this transaction that would empower it to regulate the consideration between theatre owners and their customers. Consequently, the government cannot rely on Article 162 to issue such government orders. The convenience fee conundrum BookMyShow's practice of charging convenience fees has faced scrutiny before. In 2022, the Competition Commission of India (CCI) launched an antitrust investigation following a complaint by rival platform Showtyme. Among other concerns, Showtyme alleged that BookMyShow charged consumers higher fees but incentivised theatres by sharing nearly 50% of the fee with them. BookMyShow defended the practice, arguing that the fee is transparent and based on factors like third-party charges, operational expenses, and infrastructure costs. It claimed consumers are fully aware of the charges before making purchases. This case drew comparisons with the scrutiny faced by U.S.-based Live Nation Ticketmaster for monopolistic practices. Despite this, consumer sentiment about such fees remains cynical. As per a 2023 survey by consumer community platform LocalCircles, 83% of the respondents pay such fees disapprovingly, while 5% purchase tickets at the physical counter instead. Further, eight of ten respondents surveyed in 2025 preferred that platforms refrain from levying such fees. Why this matters Moving forward, this judgment could set a precedent for other online ticket booking services like airlines and events, where service fees are charged as part of the consumer experience, explained Sweta Rajan, Partner at Economic Law Practice, who represented the petitioner in this case. "By way of this judgment, such services have a mechanism to say that since there is a service element, a fee can be charged", she explained. However, other booking platforms may go through similar tests while applying this verdict, Rajan added. Recalling the observation made in the Court hearing, she stated, "The Government may regulate any aspect of a particular industry if it has a public interest perspective, provided it is reasonable. Accordingly, this test of arbitrariness would have to be applied in each case or examination." Differently, since movie tickets and their prices, unlike rice or sugar, aren't essential commodities, there is no logical reason for the government to regulate these here, Rajan explained. Further, when speaking from a competition perspective, she opined that the absence of a price cap or regulation allows a level playing field. "Ultimately, these charges are commercial fees charged for specific services, so they foster healthier competition", Rajan concluded. Differently, the verdict is also significant considering the PVR-INOX merger, which raised concerns of monopoly and arbitrariness in ticket pricing. Notably, while CUTS filed a complaint against this merger, India's competition regulator promptly rejected it, following which, the National Company Law Appellate Tribunal (NCLAT) formally dismissed it.

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