K'taka HC Caps Service Charges For App-Based Auto Rides At 5%

SUMMARY

The single-judge HC bench, comprising Justice Suraj Govindaraj, dismissed petitions filed by online aggregators that challenged a previous government order capping service charges

Karnataka transport minister R Ramalinga Reddy welcomed the judgement and said that the state government will file a caveat in the HC in the matter

In late-2022, Karnataka government issued a notification that capped the service charge levied by ride-hailing platforms at 5% on the base fare

The Karnataka High Court (HC) has upheld the state government’s order that capped the service charge levied by ride-hailing platforms on auto rickshaw rides in Bengaluru at 5% of the base fare.

As per Economic Times, the single-judge HC bench, comprising Justice Suraj Govindaraj, dismissed the petitions filed by online aggregators that challenged a previous government order capping service charges. The Court ruled that the platforms were only entitled to collect a 5% service charge “over and above the base fare fixed”.

Meanwhile, Karnataka transport minister R Ramalinga Reddy welcomed the judgement, saying that the judgement will “benefit” thousands of citizens of Bengaluru who rely on autos for their daily commute.

Reddy further added that the May 27 judgement by the HC would facilitate smooth operation of app-based auto rides in the city. “I have also asked my department officials to file a caveat in the high court to uphold public interest,” he told ET.

For the uninitiated, filing a caveat would mean that the Court would not pass any order without hearing the government if petitioners (ride-hailing companies) challenge the HC order before a divisional bench.

At the heart of the matter is the notification issued by the state government in late-2022 which capped the service charge levied by ride-hailing platforms at 5% on the base fare.

Unhappy with the move, three major online app aggregators namely Rapido, Ola and Uber challenged the notification. The platforms even termed the move illegal, arbitrary and irrational.

The plea argued that the provisions of the Motor Vehicle Aggregator norms allowed them to charge a 20% commission as well as employ surge pricing during peak hours. The provisions in question were the aggregator guidelines issued in 2020, which were part of the amendments to the Motor Vehicles Act, 1988.

Eventually, in January last year, the HC stayed the notification and allowed the aggregators to operate temporarily while charging a 10% convenience fee.