Ola Gets Banned In Karnataka For 6 Months Due To Violation Of Bike Taxi Rules

SUMMARY

According to the order issued on March 18, Ola has been suspended for 6 months from operating in Bengaluru

This comes as a consequence of running bike taxis in violation of license conditions

Prior to the order, Bengaluru's transport agency found Ola's reply to charges "not satisfactory"

Cab aggregator Ola has been stopped from running cab operations in the state of Karnataka and the cab aggregator’s license has been suspended for a period of six months by the Karnataka government’s transport department.

The cab aggregator got into this trouble for allegedly violating the license conditions for running bike taxis and also violating government rules.

The Regional Transport Office has suspended the license given to Ani Technologies Pvt Ltd, the parent company of Ola and said that the company will not be able to run its aggregator service for any vehicles including cars, autos and bikes for the next six months. The current suspension order has been issued to Rapido as well.

In February, the state’s transport department had written to Ola and bike taxi startup Rapido to stop its bike taxi services immediately. At that time, Ola, TaxiForSure and Uber (OTU) Owners and Drivers Association had requested the transport department to look into the matter and take action against both the companies.

Ola Responds To The Notice

On February 15, 2019, the Transport Department had sent Ola a notice, asking the company to respond to the findings of the probe. Ola sent its reply on March 3, 2019. As the company’s reply was not satisfactory and did not provide any evidence which proved it did not violate norms, the Transport Department, as on March 18, 2019, has decided to suspend the license of Ola for a period of six months. Ola will have to submit the original copy of the license within three days of receiving a copy of this order.”Here is Ola’s response to the matter in full:

“Ola is a law-abiding company that has always worked with the Government to develop livelihoods, improve mobility, and enable a new technology industry. We are evaluating all options to find an amicable solution wherein hundreds of thousands of driver-partners in the state of Karnataka can continue to work and serve the mobility needs of our citizens.

We have been closely working with the authorities on this topic, responding to queries and making proactive representations to the ministry. Despite other companies continuing to operate illegally, we halted our bike taxi experiment weeks ago. Instead we sought the state’s cooperation to develop a legal framework for a pilot that will continue to take advantage of emerging opportunities in the mobility economy.

This notification is unfortunate, and we look forward to an opportunity to address these concerns directly with state officials to find a solution for our driver-partners and millions of Ola users in Karnataka.”

A Costly Misadventure

Ola has been aggressively pushing its two wheels strategy inspite of facing pushback from the regulators. In December, it invested $100 Mn (INR 712 Cr) in Bengaluru-based Vogo, which claims to be India’s fastest growing scooter sharing network. The investment is intended to fund the purchase of 100K scooters to boost Vogo’s current fleet.

In February, Ola had to contend with a seizure of its bikes when the secretary of the state transport authority, Narendra Holkar had reportedly directed officials to seize any such bikes if found and also penalise them. He had also added that the department had sought answers from the company as to why the services were introduced without the permission of the transport department.

Meanwhile Uber has been rapidly expanding its UberMOTO portfolio in India with its bike taxis operating in 11 cities in India and 12 cities in the South Asia region.

It is yet not clear whether Ola or Rapido will be appealing against the order in court but what is certain is that the commute hassle for Bengaluru residents is just going to increase and ride hailers may increasingly find themselves at the hands of auto drivers that are notoriously known to charge extra during peak or late hours.

(Additional reporting by Bhumika Khatri in New Delhi)