Calcutta High Court (Appellete Side)

Uber India Systems Private ... vs State Of West Bengal And Others on 21 September, 2022

                        In the High Court at Calcutta
                       Constitutional Writ Jurisdiction
                                Appellate Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                        WPA No.8986 of 2022

          Uber India Systems Private Limited and another
                                Vs.
                  State of West Bengal and others

                                 With

                        WPA No.9051 of 2022

                     Ashok Kumar Roy and others
                                  Vs.
                    State of West Bengal and others

    For the petitioners in
    WPA 8986 of 2022              :     Mr. Ratnanko Banerji,
                                        Mr. Deepan Kumar Sarkar,
                                        Ms. Nandini Khaitan,
                                        Ms. Shreya Singh,
                                        Mr. Pratik Shanu,
                                        Ms. Nikita Rathi

    For the petitioners in
    WPA 9051 of 2022              :     Mr. S.K. Kapur,
                                        Ms. V. Meharia,
                                        Mr. Soumalya Ganguli

    For the State                 :     Mr.   S.N. Mookherjee,
                                        Mr.   Amal Kumar Sen,
                                        Mr.   Jaladhi Das,
                                        Mr.   Lal Mohan Basu

    For the Union of India        :     Mr. Nilanjan Bhattacharjee

    Hearing concluded on          :     14.09.2022

    Judgment on                   :     21.09.2022
                                         2


     Sabyasachi Bhattacharyya, J:-



1.   WPA No.8986 of 2022 has been filed by Uber India Systems Private Limited

     and one of its Directors and WPA No.9051 of 2022 by some of the drivers of

     Uber.   Both the writ petitions challenge Notification No. 652-WT/3M-

     17/2021 dated March 03, 2022, whereby the State of West Bengal

     published guidelines for operation of aggregators. Uber is an 'On Demand

     Transportation Technology' Aggregator (ODTTA). In view of the identity of

     causes of action, both the writ petitions are taken up for consideration of

     interim orders together.

2.   Admittedly, Uber is a facilitator who provides a technology platform which

     enables drivers of commercial vehicles to connect with riders/passengers

     via the software/online application "Uber" available on smart-phones.

3.   The concept of aggregators was introduced in the Motor Vehicles Act, 1988

     (for short, "the 1988 Act") by virtue of the amendment of 2019. As per the

     amended provisions, Section 2(1A) defines "aggregator" as a digital

     intermediary or marketplace for a passenger to connect with a driver for the

     purpose of transportation.

4.   Section 93 of the said Act provides for an agent, canvasser or aggregator to

     obtain licence.

5.   The relevant provision is as follows:

     "Section 93. Agent or canvasser or aggregator to obtain licence.--

     (1) No person shall engage himself--
         ...................

(iii) as an aggregator, Unless he has obtained a licence from such authority and subject to such conditions as may be prescribed by the State Government:

Provided that while issuing the licence to an aggregator the State Government may follow such guidelines as may issued by the Central Government:

.............."

6. The learned Senior Advocates appearing for Uber and for its drivers argue

that Section 93 mandates aggregators to obtain a licence from such

authority and under such conditions, as would be "prescribed" by Rules by

the State Government. Again, Section 2(32) of the Act defines "prescribed"

to mean prescribed by Rules made under the Act.

7. It is submitted that the negative requirement under Section 93 of an

aggregator not being able to operate without a licence is activated only

when Rules are framed by the State Government under Sections 93, 96 and

212 of the Act. It is submitted that as no such Rules having been framed

with regard to the impugned guidelines as per the procedure prescribed in

law, the impugned guidelines are not binding on the aggregators.

8. It is submitted that the first proviso to Section 93(1) confers power on the

Central Government to issue guidelines for granting licence to an

aggregator, which the State Government, at its discretion, "may" follow

while issuing a licence. Hence, the Central guidelines, by themselves, are

not binding on the State Government or the petitioners.

9. It is argued that on November 27, 2020, the Central Government issued the

Motor Vehicles Aggregators Guidelines-2020, which is a guiding framework

to States for issuance of licence to aggregators. However, the same can be

adopted by a State only by way of prescribed Rules within the

contemplation of Section 212 of the Act.

10. It is submitted that Section 212 lays down the procedure for publication,

commencement and laying of Rules and Notification and provides for a

detailed procedure, including publication in the Official Gazette and

consultation with the stakeholders, which has not been complied with

before issuing the impugned guidelines.

11. Learned counsel for the petitioners rely on the provisions of Section 212 of

the Act, read with Section 23 of the General Clauses Act, 1897, to contend

that the State Government has to mandatorily comply with such steps.

Such steps include publication of draft rules in the Official Gazette inviting

objections and suggestions from persons likely to be affected by such Rules

and further publication of the draft Rules with suggested amendments after

considering the objections raised thereto. The procedure for previous

publication is also contemplated in Section 24 of the Bengal General

Clauses Act, 1899, it is submitted. Thereafter, either on or from the date of

publication in the Official Gazette or from a later date, the Rules can come

into force.

12. It is admitted by Uber that the impugned guidelines were ultimately

published in the Official Gazette on June 15, 2022, but without adhering to

the mechanism prescribed by law.

13. It is also argued that in case of an earlier Notification issued by the State

Government for licensing and the regulation of the conduct of the ODTTAs,

issued before the amendment to Section 93 by the 2019 amendment, which

is the subject matter of challenge in another pending writ petition bearing

WP No.23880(W) of 2016, the State Government had followed the procedure

prescribed under Section 212 of the Act, including previous publication in

the Official Gazette. Such procedure, however, has been flouted in the

present case.

14. Learned counsel place reliance on Gulf Goans Hotels Company Limited and

another Vs. Union of India and others [(2014) 10 SCC 673], in support of the

proposition that if the statute prescribes a mode of publication, such mode

has to be mandatorily followed.

15. By placing reliance on Vasu Dev Singh and others Vs. Union of India and

others [(2006) 12 SCC 753], it is argued that delegated legislation has to be

framed strictly in terms of and not in violation of any provision of the

enabling act. Several provisions of the impugned guidelines, it is argued,

are excessively harsh, oppressive, onerous, unreasonable and

discriminatory.

16. It is submitted that the ODTTA drivers would be required as per the

guidelines to undergo various additional onerous tests, training

programmes and satisfy various other requirements which other cab

drivers rendering same service would not have to undergo.

17. For the purpose of grant of interim orders, the petitioners submit that they

will not go into the nitty-gritties of such provisions.

18. The impugned guidelines, it is submitted, are unworkable, such as putting

the onus on aggregators to verify that all pending vehicle-related cases are

disposed of within a period of two months of issuance of the cases and also

requiring the aggregators to share confidential data with other aggregators

and uploading confidential algorithms on their websites. It is submitted

that the impugned guidelines are, therefore, unreasonable and

impracticable. Being delegated legislation, even if the rules had been

validly framed, the impugned guidelines could not enjoy the same degree of

immunity as a statute and the prejudicial effect of the guidelines on the

aggregators carrying on business is to be seen, it is contended. In this

context, the learned Senior Advocates rely on State of Kerala Vs. Unni and

another [(2007) 2 SCC 365]. The decisions passed by the Bombay High

Court and the Supreme Court in the cases of Savina R. Crasto Vs. Union of

India and others and of Uber India Systems Private Limited and another Vs.

Union of India and others are interlocutory and do not contain any final

pronouncement of law, it is argued. Moreover, status quo was granted by

the Supreme Court, it is submitted, which permits the petitioners to enjoy

licence without having to comply with the 2020 Guidelines. Learned

counsel also places reliance on Tulsipur Sugar Co. Ltd. Vs. The Notified Area

Committee, Tulsipur [(1980) 2 SCC 295] for the proposition that Rules can

only be framed through previous publication. It is argued that the present

case is one of delegated legislation and not conditional legislation since the

power to make Rules has not been delegated to the State Government.

19. The provisions of the Act, it is submitted, do not confer such power of

issuing declaration without resorting to delegated legislation in compliance

with Section 212 of the Act, for which, the learned Senior Advocate

appearing for Uber cites Vasu Dev Singh (supra). It is submitted that a

Karnataka High Court judgment relied upon by the State is of no

consequence, since the said High Court, in appeal, had directed that no

coercive action for violation of the Rules framed in Karnataka should be

taken.

20. Although the petitioners do not oppose being regulated by Rules, but such

regulation, it is argued, has to be in compliance with the procedure and

requirements as laid down in the Act.

21. It is contended on behalf of the petitioners that the Central Government

Rules differ substantially from entries of the impugned Guidelines of the

State of West Bengal.

22. There was no publication of the draft proposed Rules inviting objections

from all stakeholders, fixing of dates for hearing of objections and/or

revision in the draft proposed Rules after considering objections, in the

present case, it is argued. It is reiterated that a basic principle of law lying

settled is that if the manner of doing a particular Act is prescribed under

any statute, the Act must be done in that manner or not at all.

23. It is submitted that the Bombay High Court and the Supreme Court

judgments cited by the State are circumscribed by the status quo granted

by the Supreme Court. The said matters are still at large and in a fluid

stage pending final adjudication.

24. The drivers' stand is supported in Tulsipur Sugar Co. (supra) insofar as the

Rules can be framed only through the 'previous publication' route as was

provided in Section 39(3) of the UP Town Area Act, 1914 in that case.

25. The learned Senior Advocate for the drivers of Uber argues that in The

Municipal Corporation, Bhopal Vs. Misbahul Hasan and others [(1972) 1 SCC

696], the Supreme Court stipulated that the legislative procedure envisaged

by Section 234 was in consonance with notions of justice and fair play, as it

would enable persons likely to be affected to be informed so that they may

take steps open to them to have the wisdom of a proposal duly debated and

considered before it becomes law. Such mandatory process, it is argued,

has not been complied with in the present case.

26. Learned Advocate General appearing for the State of West Bengal

controverts the submissions of the petitioners and argues that the

requirement of a licence under Section 93(1) of the 1988 Act is mandatory

for a person to operate as an aggregator, subject to conditions laid down by

the State Government. Even if no Rules have been framed by the State

following the procedure prescribed under Section 212 of the Act, the

aggregators cannot claim to operate unregulated.

27. The learned Advocate General argues that the first proviso to Section 93(1)

provides that, while issuing licence to an aggregator, the State Government

may follow such guidelines as may be issued by the Central Government.

28. In the present case, the Central Government has already undertaken the

legislative exercise of framing the Central Government Guidelines dated

November 27, 2020, which have been adopted by the State through the

impugned notification. It is an example of conditional legislation and not a

delegated legislation, it is contended.

29. The State Government has merely followed, adopted and brought into force

the Central guidelines in the State of West Bengal on March 03, 2022

instead of creating new ones, in terms of the first proviso to Section 93.

Hence, the principles contemplated in Tulsipur Sugar Co. (supra) and Vasu

Dev Singh (supra) have been duly complied with, since the State

Government derives its power to adopt the Central Guidelines under

Section 93, first proviso itself. As such, Section 212 need not be complied

with.

30. The Central Government, it is argued, had undertaken a consultation

process prior to issuing the guidelines dated November 27, 2020, as would

be evident from the meeting held by the Union of India on March 05, 2021,

where Uber had also participated (pages 141-144 of the writ petition).

31. The State of West Bengal first issued directives regulating operational

activities of ODTTAs on November 30, 2021. Uber's letter to the State of

West Bengal dated March 10, 2022 seeking clarifications on the impugned

notification (also annexed to the writ petition) shows Uber's intensions to

comply with the impugned notification. There was no challenge to the

impugned notification in Uber's e-mail in such context.

32. As admitted in the writ petition, on April 06, 2022 there was a meeting

between the State of West Bengal and Uber to discuss concerns regarding

the impugned notification. The Bombay High Court had also held that

where no Rules are framed by a State, the Central Guidelines will have to

be followed, because a licence is mandatory. Instead of restraining Uber

from operating in the State of Maharashtra, the Bombay High Court ruled

in Savina R. Crasto Vs. Union of India and others [(2022) SCC OnLine Bom

490] that Uber would have to obtain a licence by complying with the

Central Guidelines.

33. The status quo order passed by the Supreme Court on April 21, 2022

would mean that no new steps must be taken. The order of the Bombay

High Court dated March 07, 2022 in Savina R. Crasto (supra) has not been

stayed, it is argued.

34. It is submitted by the learned Advocate General that the impugned

Guidelines are not impossible to comply with, which is evident from the fact

that the State of West Bengal has already received applications from, and

issued provisional licenses to, other aggregators including the Ola cabs,

which is another major competitor of Uber in the market. Hence, other

market competitors are willing to follow such guidelines.

35. It is further argued that the impugned notification is for the benefit and

safety of the consumers of the aggregators, including Uber. Clauses such

as Refresher Training Programmes, Remedial Training Programmes, Surge

Pricing, Driver and Vehicle Compliances, Aggregator App Compliances,

Safety Compliances, Ride Pooling and Non-discrimination are all for the

benefit of the consumers.

36. As held in Satish N. Vs. State of Karnataka, reported at ILR 2017 Kar 735,

yellow taxies and ODTTAs do not form a homogeneous class.

37. Learned Advocate General further distinguishes the judgments cited by the

petitioners by reiterating that this is a case of conditional, and not

delegated, legislation and that merely because the impugned notification is

difficult to implement, does not make it unreasonable and arbitrary.

38. Hence, it is argued on behalf of the State that the interim prayers made by

the petitioners be refused.

39. Upon consideration of the submissions of parties, it transpires from the

definition of "aggregator" in Section 2(1A) of the 1988 Act (as amended),

that the Uber, also an aggregator, is a "digital intermediary" or "market

place" facilitating the communication between the passengers and drivers

for the purpose of transportation.

40. The provisions of Section 93(1), if scrutinized closely, indicate that the same

is couched in a negative language, thus making the issuance of license

mandatory for operation by the agents, canvassers and aggregators.

41. It may be noted that, whereas sub-section (1) proper stipulates that both a

licence from the designated authority and conditions prescribed by the

State Government are mandatory for operation by the aggregators, the first

proviso stresses that "while issuing the licence to an aggregator", the State

Government may follow the Central Government guidelines.

42. The concepts of "conditions" and "guidelines" as appearing in the above

provision are clearly distinguishable in the light of the use of the said terms

in Section 93.

43. Whereas the conditions are prescribed by the Central Government,

guidelines issued by the Central Government and not "prescribed" as per

Rules, as envisaged in Section 212.

44. It is relevant to note that obtaining a licence and being subjected to

conditions prescribed by the State Government are two distinct, mandatory

components of the prerequisite for operating as an aggregator.

45. On the other hand, the State Government, as per the first proviso, in its

discretion, may follow the guidelines issued by the Central Government

"while issuing the licence to an aggregator".

46. Hence, the stages of adhering to the guidelines issued by the Central

Government and being subjected to the prescribed conditions of the State

Government are entirely different.

47. In a particular case, it may very well be that the aggregator has to obtain a

licence, in addition to being subjected to conditions prescribed under

Section 212 of the Act by the State Government. Additionally, the

aggregator may have to follow the guidelines of the Central Government, if

so required by the State Government, at the point of issuing the licence

itself.

48. By way of illustration, it may happen that an aggregator has to follow the

guidelines issued by the Central Government, as followed by the State

Government at the juncture of obtaining the licence itself and, in addition,

be subject to the conditions which are prescribed as per Section 212 read

with Section 23 of the General Clauses Act, by the State Government.

49. The petitioners in the present case have sought to mix up and put on the

same footing the concepts of the prescribed "conditions" as contemplated in

sub-section (1) proper of Section 93 and the "guidelines" of the Central

Government, which may be merely "followed" without being published in

the form of Rules as per the prescribed procedure.

50. For abundant caution, however, admittedly, the State Government in the

present case has published the impugned notification subsequently on

June 15, 2022 in the Official Gazette.

51. Hence, the State Government has gone one step further than merely

following the guidelines issued by the Central Government. In case of the

earlier conditions, referred to by Uber itself in its written notes of

arguments, the prior publication in the Gazette was in terms of Section

93(1) proper, and the conditions were "prescribed" by the State Government

by way of Rules.

52. However, in contradistinction with the same, the guidelines impugned in

the present writ petitions merely "follow" the Central Government

Guidelines which were, in turn, published only after following due process

of law and consultation with all stakeholders.

53. In fact, Uber did not initially challenge the veracity or legality of the

impugned notification when it sought clarification for the purpose of

complying with the guidelines stipulated therein.

54. The arguments as regards the guidelines being unworkable do not, ipso

facto, render them invalid or vitiated in law. Apart from the fact that the

impugned guidelines substantially follow the Central Government

guidelines, the minor deviations with the Central Government guidelines do

not consist of any major impediment in functionality.

55. That apart, as rightly argued by the State, the guidelines are entirely for the

benefit and safety of the consumers of the aggregators. Procedures like

Refresher Training Programmes, Remedial Training of Drivers, Surge

Pricing issues, Safety and Driver Compliances, non-discrimination, etc., are

entirely necessary, particularly in the context of recent instances of

untoward incidents of harassment of passengers at the behest of drivers

affiliated to aggregators.

56. The concept of ODTTA (Aggregators) is that of a digital market place or

facilitator, which means that the passenger depends entirely on the

recommendation of the aggregators with regard to the credibility and

credentials of the concerned driver allotted to the said passenger.

57. The entire process is monitored and payment is channelized via the "Uber"

application, which casts responsibility on the aggregator to ensure that the

passengers are insulated from unnecessary risks. It is common knowledge

that unregulated surge pricing has become rampant in recent times, just as

refusals and cancellations by drivers, which largely afflict the ODTTA cabs.

58. In any event, the relevant guidelines do not form an impossible code of

conduct, which would render the same impracticable.

59. Hence, on a prima facie consideration of the available materials and the

relevant legal provisions, I find no discrepancy or illegality whatsoever in

the issuance of the impugned guidelines by way of the Notification dated

March 3, 2022, subsequently published in the Official Gazette on June 15,

2022.

60. Hence, there is no scope of granting any of the interim reliefs, including

stay of operation of the impugned Guidelines, as prayed for by the

petitioners in both the writ petitions.

61. Hence, the interim prayers made in connection with the writ petitions are

hereby refused.