Karnataka HC Allows Ola, Uber, Rapido To Continue Auto Services

After directing the Karnataka government to hold talks with Uber and Ola over auto fares in the state, the Karnataka High Court (HC) on Friday (October 14) allowed the app-based auto aggregators to continue their operations until the state government fixes fares as per relevant law.

The interim order comes as a major relief to online ride-hailing platforms like Ola, Uber, and Rapido, which were deemed illegal by the Karnataka government last week. They were asked to discontinue their auto services in Bengaluru for overcharging customers.

Besides 5% GST, the Karnataka HC has also allowed the companies to charge 10% of the base fare as a convenience fee as against an earlier flat rate of INR 40 per ride, according to a Moneycontrol report. It is a temporary direction till the government comes up with a plan.

Earlier this week, Uber and Ola parent ANI Technologies had filed writ petitions in the HC challenging the state government’s claims. Though Bengaluru-based ride-hailing startup Rapido did not file a petition, the interim rules will apply to the aggregator as well for autos, the report said. 

The HC has given 15-days time to the state government, regulators, and cab aggregators to come up with a fair pricing mechanism. The court will hear the case next on November 7.

Earlier, the single-judge bench comprising Justice MGS Kamal had ordered the Karnataka government and the state’s transport department to hold talks with Ola and Uber on the auto fare issue.

The transport department had claimed that the cab-aggregator apps were violating the Karnataka On-Demand Transportation Technology Aggregators Rules, 2016 by running auto services.  

Both Ola and Uber obtained licences under the Transportation Technology Aggregators Rules, 2016, in the same year. Though the companies applied for the renewal of their licences in 2021, the process has been pending before transport authorities for approval.

As per the report, legal representatives of Ola and Uber argued before the court that the state government’s action is in stark contrast to the direction issued by the division bench of the HC in December 2016. The bench had then asked the government to not take any coercive action for violation of the rules.

Based on this argument, the HC issued directions to lift the ban on online cab aggregators. It must be noted that the aggregators continued to offer autos on their apps despite the ban, and didn’t stop the services.

“We welcome today’s court order, which recognises that auto drivers have the right to operate using aggregator platforms. It also recognizes that platforms like Uber can charge a booking fee, which allows them to cover their costs and continue to provide their services,” Uber said in a statement, adding that e-hailing autos are thriving in Bengaluru because of the value it brings to drivers and riders.

Commission caps threaten the viability of this vibrant sector, which will impact tens of thousands of auto drivers who rely on it for their livelihoods and will result in the shrinking of the fledgling category, the company said.

“We will continue to engage with the government to find ways of regulating the sector in a way that allows for riders, drivers and platforms to benefit from technology that has truly transformed urban mobility,” it added.

On the other hand, Ola refused to comment on the issue.

Meanwhile, a source at the state’s transport department told the publication that the authorities will conduct meetings with the companies and come up with draft rules at the earliest.