Karnataka HC upholds ban on surge pricing by Ola, Uber

In a blow to ride-hailing apps Uber and Ola, the Karnataka High Court on Thursday upheld the state's ruling on a cap on cab fares.

The Karnataka government had notified in April that cab-hailing firms should get a permit before operating in the state, to comply with Karnataka On-demand Transportation Technology Aggregators Rule, 2016.

US-based Uber Technologies Inc's India subsidiary Uber India Technologies Pvt. Ltd had challenged the rule and moved the court against the state government. Meanwhile, rival Ola, run by ANI Technologies Pvt. Ltd, got a licence in June to operate cabs in the state.

The court's order effectively puts an end to cab aggregators' surge pricing model. The state had stipulated a rate of Rs 19.50 per km, as the upper limit.

Justice Raghvendra S Chauhan held that the state government was well within its right to frame rules under the sections of the Motor Vehicles Act.

According to the rules upheld by the court, the licensee should have a minimum fleet of 100 taxis, all taxis should be fitted with panic buttons for safety reasons and have illuminated 'taxi' boards, drivers need not work beyond eight hours, and drivers should have a working knowledge of Kannada.

"We are yet to receive a copy of the judgment and will decide on the next steps after studying the same," an Uber India spokesperson said, replying to an email query sent by Techcircle.in.

An email query sent to Ola did not elicit a response at the time of publishing this report.

"As transport is a state subject under the Indian Constitution, the Karnataka HC judgment will apply in the state of Karnataka. In other states, the order will have persuasive value, especially if similar provisions exist in the relevant state rules," said Sharanya G Ranga of Advaya Legal.

The central government is also expected to come up with guidelines for cab aggregators soon.

In September, cab-hailing startups Ola and Uber as well as a number of bike-taxi startups sought clarity on regulations governing the sector and ease in licencing requirements at a meeting with central government officials.

A committee was set up after the Delhi High Court directed that a panel must examine all issues related to permits given to taxis and cab aggregators.