Both Uber and Ola are currently facing the ire of customers in India for random surge pricing. (Image source: Reuters/Representative)
The Karnataka high court on Friday allowed app-based auto aggregators Ola and Uber to continue their operations in the state until the Karnataka Government fixes fares as per relevant law giving a huge relief to the companies.
This interim order states that no-coercive action like the present blanket ban on plying autos should be taken against the aggregators. Moreover, the high court has allowed the companies to charge 10% of the base fare as a convenience fee along with 5 per cent of GST as a temporary rule before the authorities come up with a plan.
Earlier the companies were charging a flat rate of Rs 40 per ride as a convenience fee.
“Commission caps threaten the viability of this vibrant e-hailing sector, which will impact tens of thousands of auto drivers who rely on it for their livelihoods and will result in the shrinking of this fledgling category,” said Uber’s spokesperson in a statement on Friday.
This comes a day after Cab aggregator ANI Technologies Private Ltd, the parent company of Ola and Uber India, filed a petition with the Karnataka High Court challenging the state Government’s recent directive banning the apps' auto services.
While Rapido, which was also called operating illegally by the transport department, did not file a petition, the rules will apply to the aggregator as well for autos.
The Karnataka High Court has also given 15 days time to the state government, regulators, and cab aggregators to work out a fair pricing mechanism.
“We welcome today’s court order, which recognizes 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’s statement said.
Both Ola and Uber obtained licenses under the Transportation Technology Aggregators Rules, 2016, in 2016, and both applied for renewal of licences in 2021, which is pending before transport authorities for approval.
The court has adjourned the next hearing on November 7th.
Legal representatives of Ola and Uber argued that the action taken by the Karnataka Government is in stark contrary to the direction issued by the division bench of the High Court in December 2016 asking the government not to take any coercive action for violation of the rules while the appeals are awaiting adjudication on the validity of the rules.
Based on this argument the high court session led by Justice M.G.S. Kamal issued the directions to remove the ban.
The state’s transport department called Ola, Uber, and Rapido autos ‘illegal’ and issued a directive to the companies to apply for a separate three-wheeler license. However, despite the autorickshaw ban, Ola, Uber, and Rapido have continued services in the state.
The Karnataka High Court also said that autos will come under the definition of cabs and directed the transport authorities to come up with more detailed fee structuring and rules.
“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,” Uber’s statement said.
One of the sources in the transport department said that the authorities will conduct regular meetings with the companies and will come up with draft rules at the earliest.