Uber, Karnataka govt prepare for another round in court

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Bengaluru: Another round of legal bickering between Uber Inc. and the Karnataka government is likely to follow as the government prepares to fight Uber’s contention that the state does not have the authority to regulate ride hailing services under the provisions of the Motor Vehicles Act, 1988.

In a petition submitted to the Karnataka high court on 2 June, the San Francisco-headquartered company said, “It is submitted that by way of the impunged rules, the respondent state has sought to regulate the business and functioning of aggregators. It is pleaded that the respondent state lacks the mandate to do so under the provisions of the Motor Vehicles Act, 1988. which it has invoked in framing the impunged rules and the impunged rules far exceed the scope of the invoked provisions of the Motor Vehicles Act.”

A.S. Ponnanna, additional advocate general, Karnataka, however, maintained that the government is well within its rights to formulate the rules and regulate the aggregators.

“We will not back off. The state is competent to frame rules and this is not ultra vires (beyond powers) of the Motor Vehicles Act,” Ponnanna said. He, however, added that any rules formulated by the state cannot override the Motor Vehicles Act.

The government will contend that the likes of Ola and Uber solicit customers, a stance which has been long disputed by these companies which have time and again claimed that they are technology platforms connecting cab owners and consumers.

Ponnanna also emphasised on police verification of the drivers and the cars to ensure safety of passengers. “We cannot do away with police verification, but they (Uber) are calling it arbitrary. We want to ensure safety since these companies solicit customers, and police verification is meant to prevent crime,” he said.

Surge pricing will is also likely to feature prominently in the argument.

Ponnanna said the government is willing to address specific grievances of the companies. But both Uber and the transport department claim non-cooperation from the opposite party.

In October, India’s ministry of road transport issued guidelines for ride hailing services such as Uber and Ola (ANI Technologies Pvt. Ltd), identifying them as on-demand information technology-based transportation aggregators and not taxi companies, although it is up to the states to accept or reject this.

Following this, on 2 April, the state notified the Karnataka On-demand Transportation Technology Aggregators Rules 2016, which requires businesses to hold “effective licence issued to them under these rules”.

Since 2 April when the new rules were notified, close to 1,000 cabs were impounded and later released on payment of fines, government officials said.

In a temporary reprieve for ride hailing services, the Karnataka government on 2 June said it will stop coercive action, including impounding cabs affiliated to these services until 20 June for allegedly plying without relevant licences, though crackdown against surge pricing will continue.

The case will be next heard on 20 June.

The state transport department’s submission before the Karnataka high court came while the court was hearing a petition filed by drivers affiliated to Ola and Uber against the department’s statement that aggregators who are yet to obtain licences should immediately stop operations.

In a separate petition, Uber said, “Every day the respondent number 2 (the government) comes up with new requirements that border on the absurd, thereby making it impossible for the petitioner number 1 (Uber) to comply.”

Uber is likely to contest directives such as only driver licenses issued by the Karnataka government will be accepted, installation of a digital meter capable of generating printed receipts or a yellow taxi board, among others.

“We are in favour of regulations. They are a sign that the industry is being recognized. However, it is important that these regulations be progressive and not regressive. We in fact submitted our draft suggestions in February as well, but the final notification that got gazetted in April 2016 is very different from the draft regulations,” said Bhavik Rathod, general manager, south and west, Uber, in a statement.

“The draft regulations that came out in February were still forward-thinking, and in line with the central advisory. But the ones that got notified are very different. Our suggestions have not been taken, but the suggestions of the taxi industry have been taken into account, and the recent regulations are pretty much the same ones that came out in 1998 for the radio-taxi industry,” he added.