No more surge: Karnataka HC upholds state Aggregator Rules in #Uber challenge

App-based taxi service Uber today suffered a blow as the Karnataka High Court upheld the constitutional validity of the Karnataka On-demand Transportation Technology Rules of 2016. Uber now has one month to obtain a licence and comply with the Rules..The court’s judgment effectively puts paid to Uber’s surge pricing concept, holding that the fares charged cannot exceed those prescribed by the state government..Pursuant to an advisory issued by the Union Ministry of Transport, the state government had notified the Rules on April 2 this year. Subsequently, the state had also passed a notification directing taxi aggregators to cease their operations until they obtain a license under the Rules. This prompted Uber to assail the Rules and the notification as being ultra vires Articles 14, 19(1)(g), 21 and 301 of the Constitution of India..However, Justice Raghavendra S Chauhan today held that the state government was well within its competence to frame these Rules under Sections 93, 95 and 96 of the Motor Vehicles Act. While holding that some of the provisions under the Rules were unconstitutional, Justice Chauhan said that the rest of the legislation would survive, as per the doctrine of severability..The Rules that were upheld include:.6(a), which requires the licensee to have a minimum fleet of 100 taxis,7(c), which requires all taxis to be fitted with a panic button,10(h), which requires the licensee to ensure that the antecedents of drivers check out and11 (1) (a), (b) and (c), which highlight the circumstances under which a licence may be suspended.Rule 7(e), which requires the aggregators’ vehicles to have an illuminated ‘Taxi’ board, and8(d), which requires drivers to have a working knowledge of Kannada..Moreover, the court held that a special permit under Section 88(8) was required to be obtained, a requirement Uber had challenged in its petition on the grounds that it already had an all-India permit under Section 88(9)..However, Justice Chauhan held that vehicles under Section 88(9) for a separate class from those that fall under Section 74 of the Act..Some of the rules were held to be unconstitutional. These include 10(o), which prevent drivers plying under one licensee from operating independently. Sub-clauses (c) and (v) of Rule 10 have also been declared unconstitutional; the provisions require the licensee to maintain records of all passengers, to be made available for inspection by the authority at any time..This, Justice Chauhan stated, gives the state an unbridled power of surveillance which amounts to a violation of the right to privacy. Rule 14, which requires the licensee to deposit a sum of Rs. 2 lakh for aggregators which have up to 1,000 taxis, has also been declared unconstitutional..The Rules will bring in a sea change in the manner taxi aggregators like Uber and competitors Ola operate in the state. Last month, Ola had obtained a licence under the Rules, while sources reveal that Uber has already applied for one..A host of Senior Advocates appeared for various parties in the connected matters. Sajan Poovayya represented Uber, CV Nagesh appeared for Ola, former Advocate General Ravivarma Kumar and SS Naganand appeared for Radio Taxi Association of India, and Udaya Holla argued for the Adarsha Taxi Union. Additional Advocate General AS Ponnanna represented the state government..Law firms J Sagar Associates and Keystone Partners (Uber) were also involved..Whether or not Uber plans to appeal the single bench’s judgment remains to be seen..The regulation of app-based taxi aggregators has been the subject of litigation in the High Courts of Delhi and Bombay too. And the consumer forums as well. A few months ago, a complaint was filed in the National Consumer Disputes Redressal Commission, seeking the recovery of Rs. 9239 crore, the amount reportedly collected by Uber and Ola over the past three years.