Karnataka High Court
Ani Technologies Private Limited vs State Of Karnataka on 27 May, 2024
Author: Suraj Govindaraj
Bench: Suraj Govindaraj
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WP No. 24501 of 2022
C/W WP No. 24486 of 2022
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 27TH DAY OF MAY, 2024
BEFORE R
THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 24501 OF 2022 (MV)
C/W
WRIT PETITION NO. 24486 OF 2022 (MV)
IN W.P.NO.24501/2022
BETWEEN
UBER INDIA SYSTEMS PRIVATE LIMITED
A COMPANY INCORPORATED UNDER THE
PROVISIONS OF THE COMPANIES ACT, 1956,
HAVING REGISTERED OFFICE AT
REGUS BUSINESS PLATINUM CENTRE PVT.LTD.,
LEEL 13 PLATINUM TECHNO PARK,
PLOT NO.17/18, SEC-30A,
VASHI NAVI MUMBAI-400705.
REPRESENTED BY ITS AUTHORISED SIGNATORY
MR. SHARATH SHETTY,
SENIOR OPERARTIONS MANAGER, SOUTH INDIA
Digitally signed ALSO AT NO.77, SURVEY NO.124/2,
by N.A.L WIND TUNNEL ROAD,
NARAYANAPPA
LAKSHMAMMA MURGESH PALLYA, HAL POST,
Location: HIGH BENGALURU-560017.
COURT OF
KARNATAKA
...PETITIONER
(BY SRI: K.G. RAGHAVAN SR. ADVOCATE FOR
SRI. PRADEEP NAYAK., ADVOCATE;
SMT. ANUPAMA HEBBAR., ADVOCATE;
SMT. Y. SANKEERTHI VITTAL., ADVOCATE;
SRI. SIDDHARTH AIYANNA., ADVOCATE;
SMT. DHARSHNI S., ADVOCATE)
AND
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WP No. 24501 of 2022
C/W WP No. 24486 of 2022
1. STATE OF KARNATAKA
REPRESENTED BY THE SECRETARY,
DEPARTMENT OF TRANSPORT,
1ST FLOOR, 3RD GATE, M.S.BUILDING,
BENGALURU-560001.
2. CHAIRMAN, KARNATAKA STATE TRANSPORT AUTHORITY
1ST FLOOR, TTMC BUILDING,
K.H.ROAD, SHANTHINAGAR,
BENGALURU-560027.
3. COMMISSIONER TRANSPORT AND ROAD SAFETY
1ST FLOOR, TTMC BUILDING,
K.H.ROAD, SHANTINAGAR,
BENGALURU 560027.
4. ADDITIONAL TRANSPORT COMMISSIONER
AND SECRETARY
KARNATAKA STATE TRANSPORT AUTHORITY,
BENGALURU,
1ST FLOOR, TTMC BUILDING, K.H.ROAD,
SHANTINAGAR RTO BENGALURU-560027.
5. REGIONAL TRANSPORT AUTHORITY
BENGALURU URBAN,
JAYANAGAR SHOPPING COMPLEX,
BENGALURU-560011.
6. THE ADDITIONAL SECRETARY
THE REGIONAL TRANSPORT AUTHORITY
(AUTORICKSHAW PERMITS AND
STATE TRANSPORT CORPORATION)
1ST FLOOR, TTMC BUILDING, K.H.ROAD,
SHANTINAGAR, BENGALURU-560027.
7. BHARAT TRANSPORT ASSOCIATION GROUP
NO. 803, GAANA APARTMENT ROAD,
NEAR RNSIT COLLEGE,
CHANNASANDRA
RAJARAJESHWARI NAGAR,
BANGALORE-560098
REP BY ITS PRESIDENT
8. SRI. G. NARAYANA SWAMY
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WP No. 24501 of 2022
C/W WP No. 24486 of 2022
S/O GOVINDAPPA,
AGED ABOUT 49 YEARS,
PRESIDENT, KARNATAKA CHALAKARA OKKOOTA,
HAVING OFFICE AT NO. 409/7C
N. HURTHI BUILDING, TUMKUR ROAD,
2ND BLOCK PEENYA,
BANGALORE-560058.
...RESPONDENTS
(BY SRI. SHASHI KIRAN SHETTY., AG A/W
SRI. A. MAHESH CHOWDHARI., SPECIAL COUNSEL A/W
MS. RASHI SINGH., ADVOCATE;
MS. ADOORYA HARISH., ADVOCATE;
MS. KRISHIKA VAISHNAV., ADVOCATE FOR R1 TO R6;
SRI. AMRUTHESH N.P., ADVOCATE FOR R7;
SRI. S. NATARAJ SHARMA., ADVOCATE FOR R8)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR
DIRECTION, QUASHING THE IMPUGNED NOTIFICATION DTD.
25.11.2022 BEARING NO. TD 241 TDO 2022 ISSUED BY THE R-1
(ANNX-A) AND ETC.
IN W.P.NO.24486/2022
BETWEEN
ANI TECHNOLOGIES PRIVATE LIMITED
REGENT INSIGNIA, #414, 3RD FLOOR,
4TH BLOCK, 17TH MAIN, 100 FEET ROAD,
KORAMANGALA, BENGALURU,
KARNATAKA-560 034
THROUGH ITS AUTHORIZED REPRESENTATIVE
MS.SUKIRTI SINGH,
SENIOR LEGAL MANAGER,
REG.UNDER THE COMPANIES ACT, 1956
..PETITIONER
(BY SRI. ADITHYA SONDHI., SR. ADVOCATE FOR
SMT : CHETHANA K.N, ADVOCATE)
AND
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WP No. 24501 of 2022
C/W WP No. 24486 of 2022
1. STATE OF KARNATAKA
THROUGH ITS SECRETARY,
DEPARTMENT OF TRANSPORT,
VIDHANA SOUDHA,
BENGALURU-560 001.
2. THE COMMISSIONER
ROAD AND TRANSPORT DEPARTMENT AND
CHAIRMAN,
STATE TRANSPORT AUTHORITY,
KARNATAKA, 1ST FLOOR, TTMC,
BUILDING, A BLOCK,
SHANTINAGAR,
BENGALURU-560 027.
3. ADDITIONAL TRANSPORT
COMMISSIONER AND SECRETARY
1ST FLOOR, TTMC,
BUILDING, A BLOCK,
SHANTINAGAR,
BENGALURU-560 027.
4. KARNATAKA STATE TRANSPORT AUTHORITY
THROUGH ITS SECRETARY,
1ST FLOOR, TTMC,
BUILDING, A BLOCK,
SHANTINAGAR,
BENGALURU-560 027.
5. UNION OF INDIA
THROUGH PRINCIPAL SECRETARY,
THE MINISTRY OF ROAD,
TRANSPORT AND HIGHWAYS
TRANSPORT BHAWAN
1 PARLIAMENT STRET,
NEW DELHI-110 001.
...RESPONDENTS
(BY SRI. SHASHI KIRAN SHETTY AG A/W
SRI. A. MAHESH CHOWDHARI., SPECIAL COUNSEL A/W
MS. RASHI SINGH., ADVOCATE;
MS. ADOORYA HARISH., ADVOCATE;
MS. KRISHIKA VAISHNAV., ADVOCATE FOR R1 TO R4;
SRI. SHANTHI BHUSHAN., DSG A/W
SRI. UNNIKRISHNAN M., CGC FOR R5;
SRI. AMRUTHESH N.P., ADVOCATE FOR IA 2/22;
SRI. NATARAJA SHARMA., ADVOCATE FOR IA 1/23;
SRI. GOWRI SHANKAR., ADVOCAT FOR IA 2/23)
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WP No. 24501 of 2022
C/W WP No. 24486 of 2022
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN THE
NATURE OF CERTIORARI AND/OR ANY OTHER APPROPRIATE WRIT,
ORDER OR DIRECTION IN THE NATURE OF SETTING
ASIDE/QUASHING THE IMPUGNED NOTIFICATION DATED
25.11.2022 BEARING NUMBER TD 241 TDO 2022 (ANNEXURE-A)
ISSUED BY RESPONDENT - STATE AS BEING WHOLLY ILLEGAL,
ARBITRARY, MALA FIDE, IRRATIONAL AND THEREFORE, ULTRA
VIRES THE PROVISIONS OF THE MV ACT, RULES FRAMED
THEREUNDER AS ALSO THE MOTOR VEHICLE AGGREGATOR
GUIDELINES , 2020 AND ETC.
THESE WRIT PETITIONS COMING ON FOR ORDERS AND
HAVING BEEN RESERVED FOR ORDERS ON 11.12.2023, THIS DAY,
THE COURT PRONOUNCED THE FOLLOWING:
ORDER
1. M/s Uber India in W.P. No.25401/2022 is before this
court seeking the following reliefs:
a. Issue a writ of certiorari or any other appropriate writ,
order, or direction, quashing the Impugned Notification
dated 25.11.2022 bearing No.TD 241 TDO 2022 issued
by the Respondent No.1 (Annexure A);
b. Pass such other order or direction as this Hon'ble Court
may deem expedient, in the interest of justice and
equity.
2. M/s ANI Technologies Private Limited which operates
under the Trade Union OLA is before the court in WP
24486/2022 seeking for the following reliefs:
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a. Issue a writ in the nature of certiorari and/or any
other appropriate writ, order, or direction in the
nature of setting aside/ quashing the Impugned
Notification dated 25.11.2022 bearing No. TD 241
TDO 2022 (ANNEXURE- A) issued by Respondent-
State as being wholly illegal, arbitrary, mala fide,
irrational and therefore, ultra vires the provisions
of the MV Act, rules framed thereunder as also
the Motor Vehicle Aggregator Guidelines, 2020;
and
b. Issue a writ in the nature of mandamus, and/or
any other appropriate writ, order, or direction to
the Respondents to prescribe fares in relation
providing auto-rickshaws on aggregator platforms
in the State of Karnataka after properly
considering, qualitatively assessing the relevant
factors and more importantly, adhering to the
Motor Vehicle Aggregator Guidelines, 2020; and
c. Pass any other or further order(s) as this Hon'ble
Court may deem fit and proper in the facts and
circumstances of this case.
3. In both the above matters, the petitioners are
challenging the fare fixed by the state government
with respect to autorickshaws on-boarded on their
respective platforms, which are accessed by a mobile
application.
Submissions of Shri K G Raghavan Learned
Senior Counsel on behalf of Uber
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4. Sri. K.G. Raghavan learned Senior counsel instructed
by Sri. Pradeep Naik, learned counsel for Uber, the
petitioner in W.P. No.25401/2022, would submit that;
4.1. Uber is a technology-based aggregator that
facilitates transportation services whose
platform is known as the Uber App and has
been in operation in the country since 2013;
with respect to taxis, in the year 2018, it
started onboarding and operating
autorickshaws on the said platform through the
said app.
4.2. On 6.10.2022, respondent No.2-Chairman,
Karnataka State Transport Authority and
Respondent No.3-Commissioner for Transport
and Road Safety issued a notice to Uber
followed by an order on 11.10.2022 directing
Uber to stop aggregation of autorickshaws since
Uber did not have a valid license to aggregate
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autorickshaws, and further since Uber was in
breach of the fare notification dated 6.11.2021
where under fares were fixed for
autorickshaws.
4.3. Uber challenged both the notice and order in
W.P. No.20437/2022, wherein an interim order
of stay was granted on 14.10.2022 subject to
Uber following the fare notification dated
6.11.2021 with an addition of 10% and
applicable service taxes chargeable towards
service /convenience fee of Uber. His
submission is that this was only an interim
arrangement operational for 15 days until the
State government fixes the fare. The said
interim arrangement was made on the premise
that the State was open and willing to
formulate fare fixation within 10 to 12 days by
the respondents adhering to Motor Vehicle
Aggregator Guidelines 2020. However, the
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respondents, in variance to the said
understanding, issued the impugned notification
on 25.11.2022 under Section 67 of the Motor
Vehicles Act, 1988 ['M.V. Act' for short]
directing the Regional Transport Authorities
[RTA] to fix service fees as regards
autorickshaw cabs at 5% of the fare
transaction, there was no revision of the actual
fare itself.
4.4. The State has no power to regulate the service
fee, which falls under the sole business domain
and expertise of Uber. Insofar as the validity or
otherwise of the License of Uber is concerned, it
is contended that the same is a subject matter
of W.P. No.20437/2022, which is pending and
would be subject to the decision of the Division
Bench in W.A. No.4787/2016.
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4.5. The Scheme of Section 67 of the M.V.Act and
that under Section 93 of the M.V.Act is entirely
different. Section 93 deals with aggregators,
while Section 67 does not. The Central
Government has issued specific guidelines with
respect to aggregators, which would have to be
followed by all the state governments. In the
present case, the same is not followed.
4.6. The State government does not have the power
to fix service fees that are payable to the
aggregators. The service fee is not
contemplated under Section 67. Only Section
93 can regulate aggregators, and Section 93
does not contemplate the fixation of a service
fee/convenience fee. Thus, it is to be left to the
sole discretion of the aggregator. Thus he
submits that the service fee also cannot be
fixed under Section 93 of the M.V.Act.
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4.7. As an alternative to this argument, he submits
that if at all any fixing of the service fee or
otherwise has to be made under Section 93,
then the same would have to be so done in
compliance with Section 96, which required the
procedure under Section 212 of the M.V.Act to
be followed for formulating prescribed Rules.
4.8. In the alternative to this, he submits that the
impugned notification suffers from
Wednesbury's unreasonableness, and on this
ground also the petition is required to be
allowed and the impugned notification quashed.
4.9. While arguing on the aspect of service fee
fixation, his submission is that so long as the
service fee fixed is unreasonable or without
authority, the same is required to be quashed,
and he does not intend or call upon this Court
to fix the service fee.
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4.10. He refers to Subsection (12) of Section 2 of the
M.V. Act, which defines 'fares' which is
reproduced hereunder for easy reference:
(12) "fares" includes sums payable for a season
ticket or in respect of the hire of a contract carriage;
4.11. By referring to the said provision, he submits
that "fare" includes sums payable in respect of
the hire of a contract carriage. Thus, the fare
will not cover the service fee.
4.12. He refers to Sub-section (7) of Section 2 of the
M.V.Act, which defines 'contract carriage' which
is reproduced hereunder for easy reference:
(7) "contract carriage" means a motor vehicle
which carries a passenger or passengers for hire or
reward and is engaged under a contract, whether
expressed or implied, for the use of such vehicle as a
whole for the carriage of passengers mentioned
therein and entered into by a person with a holder of
a permit in relation to such vehicle or any person
authorised by him in this behalf on a fixed or an
agreed rate or sum--
(a) on a time basis, whether or not with reference to
any route or distance; or
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(b) from one point to another, and in either case,
without stopping to pick up or set down passengers
not included in the contract anywhere during the
journey, and includes--
(i) A maxicab; and
(ii) a motor cab notwithstanding that separate
fares are charged for its passengers;
4.13. By referring to the above, he submits that a
contract carriage means a motor vehicle which
carries passengers for hire or reward under a
contract, which is entered into by a person with
a permit holder in relation to such vehicle.
4.14. Uber not having a permit, the permit being
issued to the owner of the autorickshaw, the
principles of contract carriage would also not
apply to the transaction between Uber and the
passenger, and thus no regulation could be
made as regards any component/amount which
does not relate to contract carriage.
4.15. Uber only provides technology-enabled
services; it does not provide transportation
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services or vehicles, it only provides a platform
for a person who wishes to avail of service to
contact a person who wishes to provide such
service, viz., cab driver/owner of the cab, Uber
not being either the owner or the driver, cannot
be said to provide transportation service. There
is a clear distinction between an aggregator
under Subsection (1A) of Section 2 and Section
93 of the M.V. Act as compared to a transporter
or transport service contemplated under
Subsection (7) of Section 2, Section 66, 67, 73
and 74 of the M.V. Act.
4.16. The taxation and the applicability thereof are
also different in as much as 5% GST is payable
for transportation services. In contrast, Uber
services being a technology-enabled service,
Uber is making a payment of 18% GST on the
said service fee. He distinguishes the fare and
service fee on this basis and submits that, in so
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far as the fare is concerned 5% GST is payable,
in so far as service fee is concerned, the same
being a technology-enabled service, GST at
18% is payable by Uber which is the demand
made and accepted by the State. The State,
having accepted two distinct transactions which
are exigible to GST separately at different
rates, cannot now contend that the said
transaction is one and the same and/or claim
that the State can also regulate the service
fee/charges that are levied by Uber.
4.17. Based on the above, the submission is that the
fare under Section 67 of the MV Act and the
service fee for availing the aggregators'
services like that of Uber would not come under
this definition.
4.18. He relies on the decision of the Hon'ble Apex
Court in RBI v. Peerless General Finance &
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Investment Co. Ltd.1, more particularly para
31 and 32, which are reproduced hereunder for
easy reference;
31. Much argument was advanced on the
significance of the word "includes" and what an
inclusive definition implies. Both sides relied on
Dilworth case [Dilworth v. Commissioner of
Stamps, 1899 AC 99]. Both sides read out the well-
known passage in that case where it was stated:
(AC pp. 105-06)
"The word 'include' is very generally used in
interpretation clauses in order to enlarge the
meaning of words or phrases occurring in the body
of the statute; and when it is so used these words
or phrases must be construed as comprehending,
not only such things as they signify according to
their natural import, but also those things which
the interpretation clause declares that they shall
include. But the word 'include' is susceptible of
another construction, which may become
imperative, if the context of the Act is sufficient to
shew that it was not merely employed for the
purpose of adding to the natural significance of the
words or expressions defined. It may be equivalent
to 'mean and include', and in that case it may
afford an exhaustive explanation of the meaning
which, for the purposes of the Act, must invariably
be attached to these words or expressions."
Our attention was also invited to Ardeshir H.
Bhiwandiwala v. State of Bombay, CIT v. Taj Mahal
Hotel and S.K. Gupta v. K.P. Jain.
(1987) 1 SCC 424 : 1987 INSC 20
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32. We do not think it necessary to launch into a
discussion of either Dilworth case or any of the other
cases cited. All that is necessary for us to say is this:
Legislatures resort to inclusive definitions (1) to
enlarge the meaning of words or phrases so as to
take in the ordinary, popular and natural sense of
the words and also the sense which the statute
wishes to attribute to it, (2) to include meanings
about which there might be some dispute, or, (3) to
bring under one nomenclature all transactions
possessing certain similar features but going under
different names. Depending on the context, in the
process of enlarging, the definition may even
become exhaustive. We do not think that by using
the word "includes", in the definition in Section 2(e)
of the Act, the Parliament intended to so expand the
meaning of prize chit as to take in every scheme
involving subscribing and refunding of money. The
word "includes", the context shows, was intended
not to expand the meaning of "prize chit" but to
cover all transactions or arrangements of the nature
of prize chits but under different names. The
expression "prize chit" had nowhere been statutorily
defined before. The Bhabatosh Datta Study Group
and the Raj Study Group had identified the schemes
popularly called 'prize chits'. The Study Groups also
recognised that "prize chits" were also variously
called benefit/savings schemes and lucky draws and
that the basic common features of the schemes were
the giving of a prize and the ultimate refund of the
amount of subscriptions (vide para 6.3 of the report
of the Raj Study Group). It was recommended that
prize chits and the like by whatever name called
should be banned. Since prize chits were called
differently, "prize chits", 'benefit/savings schemes",
"lucky draws", etc. it became necessary for the
Parliament to resort to an inclusive definition so as to
bring in all transactions or arrangements containing
these two elements. We do not think that in defining
the expression "prize chit", the Parliament intended
to depart from the meaning which the expression
had come to acquire in the world of finance, the
meaning which the Datta and the Raj Study Groups
had given it. That this is the only permissible
interpretation will also be further evident from the
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text of the chit and the context as we shall presently
see.
4.19. He relies on the decision of the Hon'ble Apex
Court in Godfrey Phillips India Ltd. v. State
of U.P.2, more particularly para 73,74 and 82,
which are reproduced hereunder for easy
reference;
73. Having rejected the second premise contended
for by Mr Salve, the next question is whether the
language of Entry 62 List II would resolve the issue.
The juxtaposition of the different taxes within Entry
62 itself is in our view of particular significance. The
entry speaks of "taxes on luxuries including taxes on
entertainments, amusements, betting and
gambling". The word "including" must be given some
meaning. In ordinary parlance it indicates that what
follows the word "including" comprises or is
contained in or is a part of the whole of the word
preceding. The nature of the included items would
not only partake of the character of the whole, but
may be construed as clarificatory of the whole.
74. It has also been held that the word "includes"
may in certain contexts be a word of limitation
(South Gujarat Roofing Tiles Manufacturers Assn. v.
State of Gujarat [(1976) 4 SCC 601 : 1977 SCC
(L&S) 15] ). In the context of Entry 62 of List II this
would not mean that the word "luxuries" would be
restricted to entertainments, amusements, betting
and gambling but would only emphasise the attribute
which is common to the group. If luxuries is
understood as meaning something which is purely
for enjoyment and beyond the necessities of life,
(2005) 2 SCC 515 : 2005 INSC 44
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there can be no doubt that entertainments,
amusements, betting and gambling would come
within such understanding. Additionally,
entertainments, amusements, betting and gambling
are all activities. "Luxuries" is also capable of
meaning an activity and has primarily and
traditionally been defined as such. It is only
derivatively and recently used to connote an article
of luxury. One can assume that the coupling of these
taxes under one entry was not fortuitous but
because of these common characteristics.
82. Furthermore, where articles have been made the
object of taxation, either directly or indirectly, the
entries in the legislative lists have specifically said so
or the impost is such that the subject-matter of tax
follows by necessary implication. In List II itself, the
State Legislature has been given the right to levy
taxes on the entry of goods under Entry 53, on
"carriage of goods and passengers" under Entry 56,
on "vehicles" under Entry 57 and on "animals and
boats" under Entry 58. There is no instance in any of
the legislative lists of a tax being leviable only with
reference to an attribute. An attribute as an object of
taxation without reference to the object it qualifies
would lead to legislative mayhem, blur the careful
demarcation between taxation entries and upset the
elaborate scheme embodied in the Constitution for
the collection and distribution of revenue between
the Union and the States. For example, would a
luxury vehicle be subjected to tax under Entry 62 or
Entry 57 of List II? In the latter case, the levy would
be subject to provisions of Entry 35 of List III and
hence capable of being overridden by Parliament. If
it is referable to Entry 62, there would be no such
concurrent power in Parliament.
4.20. He relies on the decision of the Hon'ble Apex
Court in Karnataka Power Transmission
Corpn. Limited and Anr. v. Ashok Iron
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Works (P) Ltd.3, more particularly para 14 to
17 and 21, which are reproduced hereunder for
easy reference;
14. The learned counsel also submitted that the
word "includes" must be read as "means". In this
regard, the learned counsel placed reliance upon two
decisions of this Court, namely; (1) South Gujarat
Roofing Tiles Manufacturers Assn. v. State of Gujarat
and (2) RBI v. Peerless General Finance and
Investment Co. Ltd. [(1987) 1 SCC 424]
15. Lord Watson in Dilworth v. Stamps Commr.
made the following classic statement: (AC pp. 105-
06)
"... The word 'include' is very generally used in
interpretation clauses in order to enlarge the
meaning of words or phrases occurring in the body of
the statute; and when it is so used these words or
phrases must be construed as comprehending, not
only such things as they signify according to their
natural import, but also those things which the
interpretation clause declares that they shall include.
But the word 'include' is susceptible of another
construction, which may become imperative, if the
context of the Act is sufficient to shew that it was not
merely employed for the purpose of adding to the
natural significance of the words or expressions
defined. It may be equivalent to 'mean and include',
and in that case it may afford an exhaustive
explanation of the meaning which, for the purposes
of the Act, must invariably be attached to these
words or expressions."
16.Dilworth and few other decisions came up for
consideration in Peerless General Finance and
(2009) 3 SCC 240 : 2009 INSC 131
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Investment Co. Ltd. [(1987) 1 SCC 424] and this
Court summarised the legal position that (Peerless
case SCC pp. 449-50, para 32) inclusive definition by
the legislature is used:
"32. ... (1) to enlarge the meaning of words or
phrases so as to take in the ordinary, popular and
natural sense of the words and also the sense which
the statute wishes to attribute to it; (2) to include
meanings about which there might be some dispute;
or (3) to bring under one nomenclature all
transactions possessing certain similar features but
going under different names."
17. It goes without saying that interpretation of a
word or expression must depend on the text and the
context. The resort to the word "includes" by the
legislature often shows the intention of the
legislature that it wanted to give extensive and
enlarged meaning to such expression. Sometimes,
however, the context may suggest that word
"includes" may have been designed to mean
"means". The setting, context and object of an
enactment may provide sufficient guidance for
interpretation of the word "includes" for the purposes
of such enactment.
21. Section 2(1)(m), is beyond all questions an
interpretation clause, and must have been intended
by the legislature to be taken into account in
construing the expression "person" as it occurs in
Section 2(1)(d). While defining "person" in Section
2(1)(m), the legislature never intended to exclude a
juristic person like company. As a matter of fact, the
four categories by way of enumeration mentioned
therein is indicative, Categories (i), (ii) and (iv)
being unincorporate and Category (iii) corporate, of
its intention to include body corporate as well as
body unincorporate. The definition of "person" in
Section 2(1)(m) is inclusive and not exhaustive. It
does not appear to us to admit of any doubt that
company is a person within the meaning of Section
2(1)(d) read with Section 2(1)(m) and we hold
accordingly.
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4.21. He relies on the decision of the Hon'ble Apex
Court in South Gujarat Roofing Tiles
Manufacturers Assn. v. State of Gujarat4,
more particularly para 5, which is reproduced
hereunder for easy reference;
5. The contention of MrTarkunde for the appellants is
that the articles mentioned in the explanation were
intended to be exhaustive of the objects covered by
Entry 22. According to MrTarkunde if the legislature
wanted to bring within the entry all possible articles
of pottery then there was hardly any point in
mentioning only a few of them by way of
explanation. To this Mr Patel's reply is that it is well-
known that where the legislature wants to exhaust
the significance of the term defined, it uses the word
"means" or the expression "means and includes",
and that if the intention was to make the list
exhaustive, the legislature would not have used the
word "includes" only. We do not think there could be
any inflexible rule that the word 'include' should be
read always as a word of extension without reference
to the context. Take for instance Entry 19 in the
schedule which also has an explanation containing
the word "includes". Entry 19 is as follows:
"Employment in any tobacco processing
establishment, not covered under Entry 3.
Explanation.--For the purpose of this entry, the
expression 'processing' includes packing or
unpacking, breaking up, sieving, threshing,
mixing, grading, drying, curing or otherwise
treating the tobacco (including tobacco leaves
and stems) in any manner."
(1976) 4 SCC 601 : 1976 INSC 254
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Entry 3 to which Entry 19 refers reads:
"Employment in any tobacco (including bidi
making) manufactory."
It is clear from the explanation to Entry 19 that
there could be no other way or manner of
"processing" besides what is stated as included
in that expression. Though "include" is generally
used in interpretation clauses as a word of
enlargement, in some cases the context might
suggest a different intention. Pottery is an
expression of very wide import, embracing all
objects made of clay and hardened by heat. If it
had been the legislature's intention to bring
within the entry all possible articles of pottery, it
was quite unnecessary to add an explanation.
We have found that the explanation could not
possibly have been introduced to extend the
meaning of potteries industry or the articles
listed therein added ex abundanticautela. It
seems to us therefore that the legislature did
not intend everything that the potteries industry
turns out to be covered by the entry. What then
could be the purpose of the explanation. The
explanation says that, for the purpose of Entry
22, potteries industry "includes" manufacture of
the nine articles of pottery named therein. It
seems to us that the word "includes" has been
used here in the sense of 'means'; this is the
only construction that the word can bear in the
context. In that sense it is not a word of
extension, but limitation; it is exhaustive of the
meaning which must be given to potteries
industry for the purpose of Entry 22. The use of
the word "includes" in the restrictive sense is
not unknown. The observation of Lord Watson
in Dilworth v. Commissioner of Stamps which is
usually referred to on the use of "include" as a
word of extension, is followed by these lines:
"But the word 'include' is susceptible of another
construction, which may become imperative, if
the context of the Act is sufficient to show that
it was not merely employed for the purpose of
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adding to the natural significance of the words
or expressions defined. It may be equivalent to
'mean and include', and in that case it may
afford an exhaustive explanation of the meaning
which, for the purposes of the Act, must
invariably be attached to these words or
expressions."
It must therefore be held that the manufacture
of Mangalore pattern roofing tiles is outside the
purview of Entry 22.
4.22. He relies on the decision of the Hon'ble Apex
Court in State of Bombay v. Hospital
Mazdoor Sabha5, more particularly para 12,
which is reproduced hereunder for easy
reference;
12. It is clear, however, that though Section 2(j)
uses words of very wide denotation, a line would
have to be drawn in a fair and just manner so as to
exclude some callings, services or undertakings. If all
the words used are given their widest meaning, all
services and all callings would come within the
purview of the definition; even service rendered by a
servant purely in a personal or domestic matter or
even in a casual way would fall within the definition.
It is not and cannot be suggested that in its wide
sweep the word "service" is intended to include
service howsoever rendered in whatsoever capacity
and for whatsoever reason. We must, therefore,
consider where the line should be drawn and what
limitations can and should be reasonably implied in
interpreting the wide words used in Section 2(j); and
1960 SCC OnLine SC 44 : 1960 INSC 15
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that no doubt is a somewhat difficult problem to
decide.
4.23. By relying on all the above Judgments, he
submits that the word 'fare' would include sums
payable in respect of hire of a contract carriage,
this being inclusive definition,
commission/service charges not being
mentioned under Subsection (12) of Section 2
the fare fixed under Section 67 cannot include
commission/service charges leviable by Uber.
He once again submits that the usage of the
word 'includes' would be a limited definition and
would apply only to the items expressly stated
to have been included. The commission/service
charges not being included is therefore
excluded is the submission.
4.24. Section 67 of the M.V. Act does not apply to
aggregators. Aggregators constituting a
separate class under the M.V. Act are governed
by a distinct chapter under the MV Act, namely
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Chapter-V, which contains specific provisions
relating to aggregators pursuant to the 2019
amendment to the MV Act.
4.25. The definition of fare under Sub-section (12) of
Section 2 has not undergone any change post
the introduction of aggregators into the MV Act.
There is no amendment to Subsection (12) of
Section 2; it is only Section 93, which would be
applicable since an aggregator was not
contemplated when the MV Act was formulated.
Thus, in essence, he submits that the state
government does not have any power to
regulate, restrict, fix, or otherwise make any
provision with respect to service fees payable to
the aggregators under Section 67 of the MV
Act. Alternatively, he submits that the
impugned notification suffers from non-
application of mind.
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4.26. He relies on the decision of the Hon'ble Apex
Court in RBI v. Peerless General Finance &
Investment Co. Ltd.6, more particularly para
33, which is reproduced hereunder for easy
reference;
33. Interpretation must depend on the text and the
context. They are the bases of interpretation. One
may well say if the text is the texture, context is
what gives the colour. Neither can be ignored. Both
are important. That interpretation is best which
makes the textual interpretation match the
contextual. A statute is best interpreted when we
know why it was enacted. With this knowledge, the
statute must be read, first as a whole and then
section by section, clause by clause, phrase by
phrase and word by word. If a statute is looked at, in
the context of its enactment, with the glasses of the
statute-maker, provided by such context, its
scheme, the sections, clauses, phrases and words
may take colour and appear different than when the
statute is looked at without the glasses provided by
the context. With these glasses we must look at the
Act as a whole and discover what each section, each
clause, each phrase and each word is meant and
designed to say as to fit into the scheme of the
entire Act. No part of a statute and no word of a
statute can be construed in isolation. Statutes have
to be construed so that every word has a place and
everything is in its place. It is by looking at the
definition as a whole in the setting of the entire Act
and by reference to what preceded the enactment
and the reasons for it that the Court construed the
expression "Prize Chit" in Srinivasa [(1980) 4 SCC
(1987) 1 SCC 424 : 1987 INSC 20
- 28 -
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507 : (1981) 1 SCR 801 : 51 Com Cas 464] and we
find no reason to depart from the Court's
construction.
4.27. He relies on the decision of the Hon'ble Apex
Court in Doypack Systems (P) Ltd. v. Union
of India7, more particularly para 58 and 59,
which are reproduced hereunder for easy
reference;
58. The words in the statute must, prima facie, be
given their ordinary meanings. Where the
grammatical construction is clear and manifest and
without doubt, that construction ought to prevail
unless there are some strong and obvious reasons to
the contrary. Nothing has been shown to warrant
that literal construction should not be given effect to.
See Chandavarkar S.R. Rao v. Ashalata [(1986) 4
SCC 447, 476] approving 44 Halsbury's Laws of
England, 4th Edn., para 856 at page 552, Nokes v.
Doncaster Amalgamated Collieries Limited [1940 AC
1014, 1022] . It must be emphasised that
interpretation must be in consonance with the
Directive Principles of State Policy in Article 39 (b)
and (c) of the Constitution.
59. It has to be reiterated that the object of
interpretation of a statute is to discover the intention
of the Parliament as expressed in the Act. The
dominant purpose in construing a statute is to
ascertain the intention of the legislature as
expressed in the statute, considering it as a whole
and in its context. That intention, and therefore the
(1988) 2 SCC 299 : 1988 INSC 42
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meaning of the statute, is primarily to be sought in
the words used in the statute itself, which must, if
they are plain and unambiguous, be applied as they
stand. In the present case, the words used represent
the real intention of the Parliament as we have found
not only from the clear words used but also from the
very purpose of the vesting of the shares. If we bear
in mind the fact that these shares were acquired
from out of the investments made by these two
companies and furthermore that the assets of the
company as such minus the shares were negative
and further the Act in question was passed to give
effect to the principles enunciated in clauses (b) and
(c) of Article 39 of the Constitution, we are left with
no doubt that the shares vested in the Central
Government by operation of Sections 3 and 4 of the
Act. See in this connection the observations of
Halsbury's Laws of England, 4th edn. Volume 44,
paragraph 856 at page 522 and the cases noted
therein.
4.28. He relies on the decision of the Hon'ble Apex
Court in Shri Hariprasad Shivshanker
Shukla v. A.D. Divelkar and Ors8, more
particularly para 11, which is reproduced
hereunder for easy reference;
11. There is no doubt that when the Act itself
provides a dictionary for the words used, we must
look into that dictionary first for an interpretation of
the words used in the statute. We are not concerned
with any presumed intention of the legislature; our
task is to get at the intention as expressed in the
statute. Therefore, we propose first to examine the
language of the definition and see if the ordinary,
AIR 1957 SC 121: 1956 INSC 72
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accepted notion of retrenchment fits in, squarely
and fairly, with the language used. What is the
ordinary, accepted notion of retrenchment in an
industry? We have had occasion to consider this
question in Pipraich Sugar Mills Ltd. v. Pipraich
Sugar Mills Mazdoor Union [ Civil Appeal No. 247 of
1954 decided on October 23, 1956] where we
observed: "But retrenchment connotes in its
ordinary acceptation that the business itself is being
continued but that a portion of the staff or the
labour force is discharged as surplusage and the
termination of services of all the workmen as a
result of the closure of the business cannot
therefore be properly described as retrenchment". It
is true that these observations were made in
connection with a case where the retrenchment took
place in 1951, and we specially left open the
question of the correct interpretation of the
definition of 'retrenchment' in Section 2(oo) of the
Act. But the observations do explain the meaning of
retrenchment in its ordinary acceptation. Let us now
see how far that meaning fits in with the language
used. We have referred earlier to the four essential
requirements of the definition, and the question is,
does the ordinary meaning of retrenchment fulfill
those requirements? In our opinion it does. When a
portion of the staff or labour force is discharged as
surplus age in a continuing business, there are (a)
termination of the service of a workman; (b) by the
employer; (c) for any reason whatsoever; and (d)
otherwise than as a punishment inflicted by way of
disciplinary action. It has been argued that by
excluding bona fide closure of business as one of
the reasons for termination of the service of
workmen by the employer, we are cutting down the
amplitude of the expression 'for any reason
whatsoever' and reading into the definition words
which do not occur there. We agree that the
adoption of the ordinary meaning gives to the
expression 'for any reason whatsoever' a somewhat
narrower scope; one may say that it gets a colour
from the context in which the expression occurs;
but we do not agree that it amounts to importing
new words in the definition. What after all is the
meaning of the expression 'for any reason
whatsoever'? When a portion of the staff or labour
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force is discharged as surplusage in a running or
continuing business, the termination of service
which follows may be due to a variety of reasons;
e.g., for economy, rationalisation in industry,
installation of a new labour-saving machinery, etc.
The legislature in using the expression 'for any
reason whatsoever' says in effect: "It does not
matter why you are discharging the surplus; if the
other requirements of the definition are fulfilled,
then it is retrenchment". In the absence of any
compelling words to indicate that the intention was
even to include a bona fide closure of the whole
business, it would, we think, be divorcing the
expression altogether from its context to give it
such a wide meaning as is contended for by learned
counsel for the respondents. What is being defined
is retrenchment, and that is the context of the
definition. It is true that an artificial definition may
include a meaning different from or in excess of the
ordinary acceptation of the word which is the
subject of definition; but there must then be
compelling words to show that such a meaning
different from or in excess of the ordinary meaning
is intended. Where, within the framework of the
ordinary acceptation of the word, every single
requirement of the definition clause is fulfilled, it
would be wrong to take the definition as destroying
the essential meaning of the word defined.
4.29. By relying on the above Judgments, his
submission is that the interpretation and or
meaning given to the text of a statute has to be
contextual in nature. Without the context being
appreciated, the text would not have any
meaning. Though amendments have been
made to the M.V.Act to include the concept of
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aggregators and several provisions made in the
amendment included in the year 2019, there is
no amendment made to the definition of 'Fare'
under Subsection (12) of Section 2 of the
M.V.Act. Thus, fare having been retained to
mean and include sums payable in respect of
the hire of a contract carriage, it is deemed that
the commission/service charges are excluded
from the definition of fare.
4.30. When the interim order was passed in WP
No.20437/2022, the State had categorically
stated that its primary concern is fixing the fare
under Section 67 of the M.V. Act and the
service fee collected by Aggregators like Uber,
which is subject to the contract between
aggregators and permit holders. Thus, the
State cannot regulate any aspect of the service
fee.
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4.31. By relying on Section 93 of the MV Act, he
submits that the same is also not a complete
code for the regulation of aggregators, even
Section 93 does not confer power on the State
to provide or fix service fees, the State can only
include conditions relating to a period for which
a license is to be granted, fee payable for
license, deposit of security, providing for
insurance, circumstances in which license may
be suspended or revoked, and such other
conditions as maybe necessary. The impugned
notification having been issued under Section
67, the State cannot now take any shelter
under Section 93 since the procedure under
Section 93 has not been complied with.
4.32. He relies on the decision of the Hon'ble Apex
court in Mohinder Singh Gill v. Chief
Election Commissioner9, New Delhi, more
9 (1978) 1 SCC 405 : 1977 INSC 227
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particularly para 8, which is reproduced
hereunder for easy reference;
8. The second equally relevant matter is that
when a statutory functionary makes an order based
on certain grounds, its validity must be judged by
the reasons so mentioned and cannot be
supplemented by fresh reasons in the shape of
affidavit or otherwise. Otherwise, an order bad in the
beginning may, by the time it comes to court on
account of a challenge, get validated by additional
grounds later brought out. We may here draw
attention to the observations of Bose, J. in
Gordhandas Bhanji:
"Public orders, publicly made, in exercise of a
statutory authority cannot be construed in the light
of explanations subsequently given by the officer
making the order of what he meant, or of what was
in his mind, or what he intended to do. Public
orders made by public authorities are meant to
have public effect and are intended to affect the
actings and conduct of those to whom they are
addressed and must be construed objectively with
reference to the language used in the order itself."
Orders are not like old wine becoming better as
they grow older.
4.33. By relying on Mohinder Singh Gill's case, he
submits that the reasons for passing an order
by the Authority, be it judicial, quasi-judicial or
administrative, have to be apparent on the face
of the order itself. The consideration made by
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the Authority of various factors is required to be
borne out from the order. In the present case,
no such reasoning is found in the order, the
objection statement is filed, and arguments are
advanced by the State. The explanation now
offered cannot be accepted nor read into the
order is the submission.
4.34. The procedure prescribed under Section 93
contemplates compliance with the rigors of
Section 212, which requires the laying of rules
before the legislature. This procedure not
having been followed, the impugned notification
does not satisfy the requirement of Section
212, and for this reason also, Section 93 cannot
be invoked by the State in answer to the claim
of Wednesbury's unreasonableness.
4.35. Services are provided under 2 stages, First is a
contract between Uber and the autorickshaw
- 36 -
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driver/permit holder, and Second is a contract
between the autorickshaw driver and the
passenger. His submission is that there is no
contract between Uber and the passenger, nor
is there a tripartite contract between Uber, the
autorickshaw Driver/permit holder and the
passenger. Thus, there being no privity of
contract between Uber and the passenger as
regards services provided by the autorickshaw
driver/permit holder to the passenger, the
service fee is charged by Uber as regards Uber
enabling the passenger to book its ride with the
auto-rickshaw driver/permit holder.
4.36. Service fees are required to be charged since
Uber provides various value-added services to
passengers, including
4.36.1. safety features, that is, background
checks of the drivers and riders,
4.36.2. drivers/partners insurance,
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4.36.3. in-app leveraging of technology,
4.36.4. making available the details of the driver
with name, photo, License number, etc.
to the passenger,
4.36.5. all the trips being GPS tracked,
riders/passengers can share details of
the individual trip to their near and dear
ones with up to five persons,
4.36.6. two-way phone anonymisation with the
details of the riders and drivers are
marked to maintain privacy,
4.36.7. safety tool kits,
4.36.8. 24/7 helpline,
4.36.9. emergency button, safety campaigns,
24/7 support, etc.
4.37. All these require investment and expenditure to
be incurred by Uber, and these aspects have
not been taken into consideration by the state
while fixing the service fee vide the impugned
notification.
4.38. By referring to para 17 of the additional
affidavit dated 20.07.2023, he submits that
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Uber incurs an expenditure of ₹24.19 per trip,
the said calculations having been made as per
the internal unaudited business profit and loss
Statement. These amounts have not been
taken into account while fixing the service fees,
hence the impugned notification suffers from
Wednesbury's unreasonableness inasmuch as
the relevant factors have not been taken into
consideration by the State.
4.39. His submission is also that while fixing the said
service fee, it was the duty of the State to have
taken into consideration all the aforesaid
aspects, whether Uber gave the said details or
not since the State is required to exercise its
power in a reasonable and non-arbitrary
fashion. Conversely, he submits that without a
demand being made there was no requirement
for Uber to furnish any details.
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4.40. There is no reason which has been provided to
fix the maximum limit of service fee at 5%,
which is abysmally low and is therefore
arbitrary, capricious, and biased, smacking of
Wednesbury's unreasonableness.
4.41. He relies on the decision of the Hon'ble Apex
Court in Shri Sitaram Sugar Co. Ltd. v.
Union of India10, more particularly para 27,
45 to 47, which are reproduced hereunder for
easy reference;
27. The petitioners contend that although the
government has the discretion to fix different prices
for different areas or for different factories, or for
different kinds of sugar, such wide discretion has to
be reasonably exercised. It is, of course, a well-
accepted principle that any discretion conferred on
the executive has to be reasonably exercised.
Nevertheless, it is a discretion which the court will not
curtail unless the exercise of it is impeachable on well
accepted grounds such as 'ultra vires' or
'unreasonableness'.
45. Price fixation is in the nature of a legislative
action even when it is based on objective criteria
founded on relevant material. No rule of natural
justice is applicable to any such order. It is
10 (1990) 3 SCC 223 at page 243 : 1990 INSC 82
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nevertheless imperative that the action of the
authority should be inspired by reason: Saraswati
Industrial Syndicate Ltd. The government cannot fix
any arbitrary price. It cannot fix prices on extraneous
considerations: Renusagar.
46. Any arbitrary action, whether in the nature of a
legislative or administrative or quasi-judicial exercise
of power, is liable to attract the prohibition of Article
14 of the Constitution. As stated in E.P. Royappa v.
State of Tamil Nadu [(1974) 4 SCC 3: 1974 SCC
(L&S) 165: (1974) 2 SCR 348] "equality and
arbitrariness are sworn enemies; one belongs to the
rule of law in a republic while the other, to the whim
and caprice of an absolute monarch". Unguided and
unrestricted power is affected by the vice of
discrimination: Maneka Gandhi v. Union of India. The
principle of equality enshrined in Article 14 must
guide every State action, whether it be legislative,
executive, or quasi-judicial: Ramana Dayaram Shetty
v. International Airport Authority of India; Ajay Hasia
v. Khalid Mujib Sehravardi and D.S. Nakara v. Union
of India.
47. Power delegated by statute is limited by its terms
and subordinate to its objects. The delegate must act
in good faith, reasonably, intra vires the power
granted, and on relevant consideration of material
facts. All his decisions, whether characterised as
legislative or administrative or quasi-judicial, must be
in harmony with the Constitution and other laws of
the land. They must be "reasonably related to the
purposes of the enabling legislation". See Leila
Mourning v. Family Publications Service [411 US 356:
36 L ed 2d 318]. If they are manifestly unjust or
oppressive or outrageous or directed to an
unauthorised end or do not tend in some degree to
the accomplishment of the objects of delegation,
court might well say, "Parliament never intended to
give authority to make such rules; they are
unreasonable and ultra vires": per Lord Russel of
Killowen, C.J. in Kruse v. Johnson.
- 41 -
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4.42. By relying on the above statement, he submits
that 5% commission/service charges have not
been fixed in good faith, which is not
reasonable or intra vires the power granted.
Fare having been fixed under Section 67, it is
by way of a separate notification that 5%
commission/service charges have been fixed
over and above the fare which is not
permissible.
4.43. He relies on the decision of the Hon'ble Apex
Court in Union of India v. Cynamide India
Ltd.11, more particularly para 31, which is
reproduced hereunder for easy reference;
31. We mentioned that the price fixed by the
Government may be questioned on the ground that
the considerations stipulated by the order as relevant
were not taken into account. It may also be
questioned on any ground on which a subordinate
legislation may be questioned, such as, being
contrary to constitutional or other statutory
provisions. It may be questioned on the ground of a
denial of the right guaranteed by Article 14, if it is
(1987) 2 SCC 720 : 1987 INSC 100
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arbitrary, that is, if either the guidelines prescribed
for the determination are arbitrary or if, even though
the guidelines are not arbitrary, the guidelines are
worked in an arbitrary fashion. There is no question
before us that Para 3 prescribes any arbitrary
guideline. It was, however, submitted that the
guidelines were not adhered to and that facts and
figures were arbitrarily assumed. We do not propose
to delve into the question whether there has been
any such arbitrary assumption of facts and figures.
We think that if there is any grievance on that score,
the proper thing for the manufacturers to do is bring
it to the notice of the Government in their
applications for review. The learned counsel argued
that they were unable to bring these facts to the
notice of the Government as they were not furnished
the basis on which the prices were fixed. On the other
hand, it has been pointed out in the counter-affidavits
filed on behalf of the Government that all necessary
and required information was furnished in the course
of the hearing of the review applications and there
was no justification for the grievance that particulars
were not furnished. We are satisfied that the
procedure followed by the Government in furnishing
the requisite particulars at the time of the hearing of
the review applications is sufficient compliance with
the demands of fair play in the case of the class of
persons claiming to be affected by the fixation of
maximum price under the Drugs (Prices Control)
Order. As already stated by us, manufacturers of bulk
drugs who claim to be affected by the Drugs (Prices
Control) Order, belong to a class of persons who are
well and fully informed of every intricate detail and
particular which is required to be taken into account
in determining the price. In most cases, they are the
sole manufacturers of the bulk drug and even if they
are not the sole manufacturers, they belong to the
very select few who manufacture the bulk drug. It is
impossible to conceive that they cannot sit across the
table and discuss item by item with the reviewing
authority unless they are furnished in advance full
details and particulars. The affidavits filed on behalf
of the Union of India show that the procedure which
is adopted in hearing the review applications is to
discuss across the table the various items that have
been taken into account. We do not consider that
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there is anything unfair in the procedure adopted by
the Government. If necessary it is always open to the
manufacturers to seek a short adjournment of the
hearing of the review application to enable them to
muster more facts and figures on their side. Indeed
we find that the hearing given to the manufacturers is
often protected. As we said we do not propose to
examine this question as we do not want to constitute
ourselves into a court of appeal over the Government
in the matter of price fixation.
4.44. Based on the above, he submits that there are
no guidelines prescribed or followed for fixing
the commission/service charges. 5%
commission/service charges have been fixed in
an arbitrary manner. There is nothing on
record to indicate as to why the State has
chosen to fix 5% and not any other percentage
like 7.5%, 10% or otherwise. The reasons for
fixing a particular percentage are not
forthcoming from the impugned
notification/order.
4.45. He relies on the decision of the Hon'ble Apex
Court in Tata Cellular v. Union of India12,
(1994) 6 SCC 651 : 1994 INSC 283
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more particularly para 77 to 80, which are
reproduced hereunder for easy reference;
77. The duty of the court is to confine itself to the
question of legality. Its concern should be:
1. Whether a decision-making authority exceeded its
powers?
2. Committed an error of law,
3. committed a breach of the rules of natural justice,
4. reached a decision which no reasonable tribunal
would have reached or,
5. abused its powers.
Therefore, it is not for the court to determine
whether a particular policy or particular decision
taken in the fulfilment of that policy is fair. It is only
concerned with the manner in which those decisions
have been taken. The extent of the duty to act fairly
will vary from case to case. Shortly put, the grounds
upon which an administrative action is subject to
control by judicial review can be classified as under:
(i) Illegality : This means the decision-maker must
understand correctly the law that regulates his
decision-making power and must give effect to it.
(ii) Irrationality, namely, Wednesbury
unreasonableness.
(iii) Procedural impropriety.
The above are only the broad grounds but it does not
rule out addition of further grounds in course of
time. As a matter of fact, in R. v. Secretary of State
- 45 -
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for the Home Department, ex Brind [(1991) 1 AC
696] , Lord Diplock refers specifically to one
development, namely, the possible recognition of the
principle of proportionality. In all these cases the test
to be adopted is that the court should, "consider
whether something has gone wrong of a nature and
degree which requires its intervention".
78. What is this charming principle of Wednesbury
unreasonableness? Is it a magical formula? In R. v.
Askew [(1768) 4 Burr 2186 : 98 ER 139] , Lord
Mansfield considered the question whether
mandamus should be granted against the College of
Physicians. He expressed the relevant principles in
two eloquent sentences. They gained greater value
two centuries later:
"It is true, that the judgment and discretion of
determining upon this skill, ability, learning and
sufficiency to exercise and practise this profession is
trusted to the College of Physicians and this Court
will not take it from them, nor interrupt them in the
due and proper exercise of it. But their conduct in
the exercise of this trust thus committed to them
ought to be fair, candid and unprejudiced; not
arbitrary, capricious, or biased; much less, warped
by resentment, or personal dislike."
79. To quote again, Michael Supperstone and James
Goudie; in their work Judicial Review (1992 Edn.) it
is observed at pp. 119 to 121 as under:
"The assertion of a claim to examine the
reasonableness been done by a public authority
inevitably led to differences of judicial opinion as to
the circumstances in which the court should
intervene. These differences of opinion were resolved
in two landmark cases which confined the
circumstances for intervention to narrow limits. In
Kruse v. Johnson [(1898) 2 QB 91 : (1895-9) All ER
Rep 105] a specially constituted divisional court had
to consider the validity of a bye-law made by a local
authority. In the leading judgment of Lord Russell of
Killowen, C.J., the approach to be adopted by the
- 46 -
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court was set out. Such bye-laws ought to be
'benevolently' interpreted, and credit ought to be
given to those who have to administer them that
they would be reasonably administered. They could
be held invalid if unreasonable : Where for instance
bye-laws were found to be partial and unequal in
their operation as between different classes, if they
were manifestly unjust, if they disclosed bad faith, or
if they involved such oppressive or gratuitous
interference with the rights of citizens as could find
no justification in the minds of reasonable men. Lord
Russell emphasised that a bye-law is not
unreasonable just because particular judges might
think it went further than was prudent or necessary
or convenient.
In 1947 the Court of Appeal confirmed a similar
approach for the review of executive discretion
generally in Associated Provincial Picture Houses Ltd.
v. WednesburyCorpn [(1948) 1 KB 223 : (1947) 2 All
ER 680] . This case was concerned with a complaint
by the owners of a cinema in Wednesbury that it was
unreasonable of the local authority to License
performances on Sunday only subject to a condition
that 'no children under the age of 15 years shall be
admitted to any entertainment whether accompanied
by an adult or not'. In an extempore judgment, Lord
Greene, M.R. drew attention to the fact that the
word 'unreasonable' had often been used in a sense
which comprehended different grounds of review. (At
p. 229, where it was said that the dismissal of a
teacher for having red hair (cited by Warrington, L.J.
in Short v. Poole Corpn. [(1926) 1 Ch 66, 91 : 1925
All ER Rep 74] , as an example of a 'frivolous and
foolish reason') was, in another sense, taking into
consideration extraneous matters, and might be so
unreasonable that it could almost be described as
being done in bad faith; see also R. v. Tower
Hamlets London Borough Council, ex p Chetnik
Developments Ltd. [1988 AC 858, 873 : (1988) 2
WLR 654 : (1988) 1 All ER 961] (Chapter 4, p. 73,
supra). He summarised the principles as follows:
'The Court is entitled to investigate the action
of the local authority with a view to seeing whether
- 47 -
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or not they have taken into account matters which
they ought not to have taken into account, or,
conversely, have refused to take into account or
neglected to take into account matter which they
ought to take into account. Once that question is
answered in favour of the local authority, it may still
be possible to say that, although the local authority
had kept within the four corners of the matters which
they ought to consider, they have nevertheless come
to a conclusion so unreasonable that no reasonable
authority could ever have come to it. In such a case,
again, I think the court can interfere. The power of
the court to interfere in each case is not as an
appellate authority to override a decision of the local
authority, but as a judicial authority which is
concerned, and concerned only, to see whether the
local authority has contravened the law by acting in
excess of the power which Parliament has confided in
them.'
This summary by Lord Greene has been applied in
countless subsequent cases.
"The modern statement of the principle is
found in a passage in the speech of Lord Diplock in
Council of Civil Service Unions v. Minister for Civil
Service
'By "irrationality" I mean what can now be
succinctly referred to as "Wednesbury
unreasonableness". (Associated Provincial Picture
Houses Ltd. v. Wednesbury Corpn. [(1948) 1 KB 223
: (1947) 2 All ER 680] ) It applies to a decision which
is so outrageous in its defiance of logic or of
accepted moral standards that no sensible person
who had applied his mind to the question to be
decided could have arrived at.' "
80. At this stage, The Supreme Court Practice, 1993,
Vol. 1, pp. 849-850, may be quoted:
"4. Wednesbury principle.-- A decision of a public
authority will be liable to be quashed or otherwise
dealt with by an appropriate order in judicial review
- 48 -
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proceedings where the court concludes that the
decision is such that no authority properly directing
itself on the relevant law and acting reasonably could
have reached it. (Associated Provincial Picture
Houses Ltd. v. Wednesbury Corpn. [(1948) 1 KB 223
: (1947) 2 All ER 680] , per Lord Greene, M.R.)"
4.46. Based on the above decision, he submits that
the commission/service charges of 5% fixed are
completely arbitrary, and no reasonable person
could have arrived at such a fee. The state has
not taken into account the relevant factors
regarding Uber's expenses. Though initially the
impugned notification had been issued without
taking into account the relevant factors, this
Court vide interim order dated 14.10.2022 had
directed the aggregators to submit their
representation with accompanying documents,
which were so submitted despite which the
State has continued to commit the same
mistake and even on the second occasion these
documents, data and submissions have not
been taken into account by the State. On
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enquiry as to whether the supporting
documents relating to the claim made in the
additional affidavit of Uber incurring an
expenditure of ₹24.19 per trip were submitted,
his submission is that since the state did not
ask for it, they were not submitted, he hastens
to add that it was the duty of the state to have
made necessary enquiries in relation thereto,
even if Uber had not provided the documents,
state ought to have taken into consideration the
expenses incurred and the profit required to be
made by Uber.
4.47. The State has not taken relevant factors into
account and has taken irrelevant factors into
account. The central guidelines issued by the
Government of India have not been taken into
account while fixing the fares on 6.11.2021.
The State had considered the commission paid
by auto rickshaw drivers to aggregators at
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20%, implying that the State had already
accounted for 20% as service fee/commission,
whereas by the impugned notification, the
same is capped at 5%, which is contrary to
economic realities, have not been taken into
consideration.
4.48. The principles of laissez-faire ought to have
been applied. Uber ought to have been
permitted to levy service fees as it deems fit
since it was for the service availer/customer to
decide whether he intends to avail of such
services by paying the service fee charged by
Uber.
4.49. The state has also not taken into consideration
the expenses that Uber has incurred for the
development of the software, setting up its
distribution system, hiring employees, etc. The
state has combined autorickshaws, which are
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run on the Uber platform, with those that run
independently, but neither of them can be
equated.
4.50. The State has apparently taken into
consideration the fare fixed by RTA, Mangalore,
without placing on record any basis as to why
the same was relevant in Bangalore. All costs,
including operational cost, forming part of the
service rendered being recoverable by Uber, the
State could not have contended that
operational cost is to be borne by Uber and the
same cannot be recovered from passengers.
4.51. The fare collected by the autorickshaw Driver
cannot be said to be the income of the
aggregator inasmuch as the aggregator only
derives the benefit of the service fee, and the
fare would fall to the account of the
autorickshaw Driver/permit holder.
- 52 -
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4.52. On the basis of such Wednesbury
unreasonableness, he submits that the action of
the State is an attempt to deliberately throttle
Uber's business. The state is biased against
Uber since adverse statements have been made
in the statement of objections regarding Uber's
approach to this court on several occasions.
4.53. The state is seeking to address overcharging by
autorickshaws by imposing restrictions on Uber
when there is no such overcharging on Uber's
platform. Overcharging, if any, is done by
independent auto rickshaw service providers
who act outside Uber's platform.
4.54. He relies on the decision of the Hon'ble Apex
Court in 63 Moons Technologies Ltd. v.
Union of India13, more particularly para 100
(2019) 18 SCC 401 : 2019 INSC 597
- 53 -
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to 102, which are reproduced hereunder for
easy reference;
100. Valiant attempts have been made by
counsel in the High Court as well as counsel in this
Court to support the order on grounds which are
outside the order, stating that such grounds make it
clear that in any case, the government order has
been made in public interest. The celebrated passage
in Mohinder Singh Gill [Mohinder Singh Gill v. Chief
Election Commr., (1978) 1 SCC 405] states that :
(SCC p. 417, para 8)
"8. The second equally relevant matter is that
when a statutory functionary makes an order based
on certain grounds, its validity must be judged by
the reasons so mentioned and cannot be
supplemented by fresh reasons in the shape of
affidavit or otherwise. Otherwise, an order bad in
the beginning may, by the time it comes to court
on account of a challenge, get validated by
additional grounds later brought out. We may here
draw attention to the observations of Bose, J.
in Gordhandas Bhanji [Commr. of
Police v. Gordhandas Bhanji, 1951 SCC 1088 : AIR
1952 SC 16 : 1952 SCR 135] : (SCR p. 140 : AIR
p. 18, para 9)
'9. ... public orders, publicly made, in exercise of
a statutory authority cannot be construed in the
light of explanations subsequently given by the
officer making the order of what he meant, or of
what was in his mind, or what he intended to do.
Public orders made by public authorities are meant
to have public effect and are intended to affect the
actings and conduct of those to whom they are
addressed and must be construed objectively with
reference to the language used in the order itself.'
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Orders are not like old wine becoming better as
they grow older."
We are of the view that it is the Central
Government that has to be "satisfied" that its order
is in public interest and such "satisfaction" must,
therefore, be of the Central Government itself and
must, therefore, appear from the order itself. All
these valiant attempts made to sustain such order
must be rejected.
101. However, the learned Senior Advocates on
behalf of the respondents have cited All India
Railway Recruitment Board v. K. Shyam Kumar [All
India Railway Recruitment Board v. K. Shyam
Kumar, (2010) 6 SCC 614 : (2010) 2 SCC (L&S)
293] , which, according to them, renders the
judgment in Mohinder Singh Gill [Mohinder Singh
Gill v. Chief Election Commr., (1978) 1 SCC 405]
inapplicable where larger public interest is involved.
In this judgment, Mohinder Singh Gill [Mohinder
Singh Gill v. Chief Election Commr., (1978) 1 SCC
405] was distinguished thus : (K. Shyam Kumar
case [All India Railway Recruitment Board v. K.
Shyam Kumar, (2010) 6 SCC 614 : (2010) 2 SCC
(L&S) 293] , SCC p. 631, paras 44-45)
"44. We are also of the view that the High Court
has committed a grave error in taking the view [K.
Shyam Kumar v. All Railway Recruitment Boards,
2005 SCC OnLine AP 201 : (2005) 4 ALD 411] that
the order of the Board could be judged only on the
basis of the reasons stated in the impugned order
based on the report of Vigilance and not on the
subsequent materials furnished by CBI. Possibly,
the High Court had in mind the Constitution Bench
judgment of this Court in Mohinder Singh
Gill v. Chief Election Commr. [Mohinder Singh
Gill v. Chief Election Commr., (1978) 1 SCC 405]
45. We are of the view that the decision-maker
can always rely upon subsequent materials to
support the decision already taken when larger
public interest is involved. This Court in Madhyamic
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NC: 2024:KHC:17771
Shiksha Mandal, M.P. v. Abhilash Shiksha Prasar
Samiti [Madhyamic Shiksha Mandal,
M.P. v. Abhilash Shiksha Prasar Samiti, (1998) 9
SCC 236] found no irregularity in placing reliance
on a subsequent report to sustain the cancellation
of the examination conducted where there were
serious allegations of mass copying. The principle
laid down in Mohinder Singh Gill case [Mohinder
Singh Gill v. Chief Election Commr., (1978) 1 SCC
405] is not applicable where larger public interest
is involved and in such situations, additional
grounds can be looked into to examine the validity
of an order. The finding recorded by the High Court
that the report of CBI cannot be looked into to
examine the validity of the order dated 4-6-2004,
cannot be sustained."
102. It will be seen that there is no broad
proposition that the case of Mohinder Singh
Gill [Mohinder Singh Gill v. Chief Election Commr.,
(1978) 1 SCC 405] will not apply where larger public
interest is involved. It is only subsequent materials
i.e. materials in the form of facts that have taken
place after the order in question is passed, that can
be looked at in the larger public interest, in order to
support an administrative order. To the same effect
is the judgment in PRP Exports v. State of T.N. [PRP
Exports v. State of T.N., (2014) 13 SCC 692] , SCC
para 8. It is nobody's case that there are any
materials or facts subsequent to the passing of the
final order of the Central Government that have
impacted the public interest, and which, therefore,
need to be looked at. On facts, therefore, the two
judgments cited on behalf of the respondents have
no application. Thus, it is clear that no reasonable
body of persons properly instructed in law could
possibly hold, on the facts of this case, that
compulsory amalgamation between FTIL and NSEL
would be in public interest.
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4.55. By relying on the above judgment, he submits
that subsequent events or documents cannot
be relied upon to substantiate or support the
impugned decision unless it is required in the
public interest. In the present case, firstly,
there is no subsequent event or report that has
been placed on record. It is only subsequent
reasoning that has been furnished by the State,
and the said reasoning cannot be treated as
being in the public interest when the matter is
entirely commercial in nature.
4.56. He relies on the decision of the Hon'ble Apex
Court in Mohd. Yasin v. Town Area
Committee14, more particularly para 9 and 12,
which are reproduced hereunder for easy
reference;
9. The learned counsel, however, contends--and we
think with considerable force and cogency--that
(1952) 1 SCC 205 : 1952 INSC 11
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although, in form, there is no prohibition against
carrying on any wholesale business by anybody, in
effect and in substance the bye-laws have brought
about a total stoppage of the wholesale dealers'
business in a commercial sense. The wholesale
dealers, who will have to pay the prescribed fee to
the contractor appointed by auction, will necessarily
have to charge the growers of vegetables and fruits
something over and above the prescribed fee so as
to keep a margin of profit for themselves but in such
circumstances no grower of vegetables and fruits will
have his produce sold to or auctioned by the
wholesale dealers at a higher rate of commission but
all of them will flock to the contractor who will only
charge them the prescribed commission. On the
other hand, if the wholesale dealers charge the
growers of vegetables and fruits only the commission
prescribed by the bye-laws they will have to make
over the whole of it to the contractor without keeping
any profit themselves. In other words, the wholesale
dealers will be converted into mere tax collectors for
the contractor or the respondent Committee without
any remuneration from either of them. In effect,
therefore, the bye-laws, it is said, have brought
about a total prohibition of the business of the
wholesale dealers in a commercial sense and from a
practical point of view. We are not of opinion that
this contention is unsound or untenable.
12. Under Article 19(1)(g) the citizen has the right
to carry on any occupation, trade or business which
right under that clause is apparently to be
unfettered. The only restriction to this unfettered
right is the authority of the State to make a law
relating to the carrying on of such occupation, trade
or business as mentioned in clause (6) of that Article
as amended by the Constitution (First Amendment)
Act, 1951. If, therefore, the License fee cannot be
justified on the basis of any valid law no question of
its reasonableness can arise, for an illegal impost
must at all times be an unreasonable restriction and
will necessarily infringe the right of the citizen to
carry on his occupation, trade or business under
Article 19(1)(g) and such infringement can properly
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be made the subject-matter of a challenge under
Article 32 of the Constitution.
4.57. Uber provides the service to facilitate the
booking of a taxi by providing a platform for
both the customer/passenger and permit
holder/driver to interact with each other. Uber
is entitled to make profits from this. If the fare
for a regular auto ride and that for a ride hailed
on the App made available by Uber is the same,
then there would be no difference. The permit
holder/driver, though entitled to the benefit of
the App, would be required to make payment of
commission/service charges from and out of
the fare fixed, thereby depriving the driver of
his earnings if the model propounded by the
State is accepted. For that reason, he submits
that commission/service charges have to be
over and above the fare fixed for a particular
ride so that the said commission/service
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charges are paid by the customer/passenger
who avails such service.
4.58. The service fee which is demanded by Uber
comes within the purview of the Fundamental
Right to carry on trade or business under Article
19 (1)(g) of the Constitution of India, and the
same cannot be restricted in the manner
sought to be done.
4.59. He relies on the decision of the Hon'ble Apex
Court in O.N.G.C. v. Assn. of Natural Gas
Consuming Industries of Gujarat15, more
particularly para 31 and 35, which are
reproduced hereunder for easy reference,
31. The notion that the cost plus basis can be the
only criterion for fixation of prices in the case of
public enterprises stems basically from a concept
that such enterprises should function either on a no
profit -- no loss basis or on a minimum profit basis.
This is not a correct approach. In the case of vital
commodities or services, while private concerns must
be allowed a minimal return on capital invested,
1990 Supp SCC 397: 1990 INSC 187
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public undertakings or utilities may even have to run
at losses, if need be and even a minimal return may
not be assured. In the case of less vital, but still
basic, commodities, they may be required to cater to
needs with a minimal profit margin for themselves.
But given a favourable area of operation,
"commercial profits" need not be either anathema or
forbidden fruit even to public sector enterprises.
35. In the light of the foregoing discussion, we are of
opinion that it would not be right to insist that the
ONGC should fix oil (sic natural gas) prices only on
cost plus basis. Indeed, its policy of pricing should be
based on the several factors peculiar to the industry
and its current situation and so long as such a policy
is not irrational or whimsical, the court may not
interfere.
4.60. Relying on the above, he submits that when
even a Public Sector Undertaking is entitled to
make profits, Uber, being a private entity, would
also be entitled to make profits from and out of
the services offered by Uber, Uber not being in
the business of charity.
4.61. He relies on the decision of this Court in All
India Gaming Federation vs State of
Karnataka & Ors.16, more particularly para
2022 SCC online Kar 435
- 61 -
NC: 2024:KHC:17771
XIX(d), which is reproduced hereunder for easy
reference;
XIX.(d) The online gaming activities played with
stake or not do not fall within the ambit of Entry 34
of the State List i.e., 'Betting and gambling', if they
predominantly involve skill, judgment or knowledge.
They partake the character of business activities and
therefore, they have protection under Article
19(1(g). Apparently, the games of skill played online
or offline with or without stakes, are susceptible to
reasonable restrictions under Article 19(6). The
Amendment Act brings in a blanket prohibition with
regard to playing games of skill. The version &
counter version as to the nature & reasonableness of
the restrictions need to be examined in the light of
norms laid down by the Apex Court. In a challenge
laid to the validity of any legislation on the ground of
violation of Fundamental Rights inter alia guaranteed
under Article 19(1), on a prima facie case of such
violation being made out, the onus would shift to the
State to demonstrate that the legislation in question
comes within the permissible limits of the most
relevant out of clauses(2) to(6). When exercise of
Fundamental Right is absolutely prohibited, the
burden of proving that such a total prohibition on the
exercise of right alone would ensure the
maintenance of general public interest, lies heavily
upon the State. While adjudging a case of
infringement of fundamental rights, what is
determinative is not the intent of the legislature but
the effect of the legislation. Legislative action that is
too disproportionate or excessive, may suffer
invalidation on the ground of 'manifest arbitrariness'
under Article 14 as discussed infra. Judge Aharon
Barak of Supreme Court of Israel in his book
'PROPORTIONALITY : CONSTITUTIONAL RIGHTS
AND THEIR LIMITATIONS', succinctly puts the
doctrine of proportionality:"It requires that a rights-
limiting measure should be pursuing a proper
purpose, through means that are suitable and
necessary for achieving that purpose and that there
is a proper balance between the importance of
- 62 -
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achieving that purpose and the harm caused by
limiting the right".
4.62. Based on the above judgment, he submits that
the act of the State in limiting the
commission/service charges to 5% payable to
the aggregator is not proportionate to Uber's
expenses and efforts. Uber engaging a large
number of workers maintaining the software
and providing a platform cannot be limited in
charging commission/service charges.
4.63. He relies on the decision of the Hon'ble Apex
Court in Mohd. Faruk v. State of M.P.17, more
particularly para 8, which is reproduced
hereunder for easy reference;
8. The power to issue Bye-laws indisputably includes
the power to cancel or withdraw the Bye-laws, but
the validity of the exercise of the power to issue and
to cancel or withdraw the Bye-laws must be
adjudged in the light of its impact upon the
fundamental rights of persons affected thereby.
When the validity of a law placing restriction upon
(1969) 1 SCC 853: 1969 INSC 97
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the exercise of fundamental rights in Article 19(1) is
challenged, the onus of proving to the satisfaction of
the Court that the restriction is reasonable lies upon
the State. A law requiring that an act which is
inherently dangerous, noxious or injurious to public
interest, health or safety or is likely to prove a
nuisance to the community, shall be done under a
permit or License of an executive authority, it is not
per se unreasonable and no person may claim a
License or permit to do that act as of right. Where
the law providing for grant of a License or a permit
confers a discretion upon an administrative authority
regulated by rules or principles expressed or implied,
and exercisable in consonance with rules of natural
justice, it will be presumed to impose a reasonable
restriction. Where, however, power is entrusted to
an administrative agency to grant or withhold a
permit or License in its uncontrolled discretion, the
law ex facie infringes the fundamental right under
Article 19(1). Imposition of restriction on the
exercise of a fundamental right may be in the form
of control or prohibition, but when the exercise of a
fundamental right is prohibited, the burden of
proving that a total ban on the exercise of the right
alone may ensure the maintenance of the general
public interest lies heavily upon the State.
4.64. His submission is that Uber does not require a
separate license to aggregate autorickshaws
since the license already issued is aggregator-
specific and vehicle-agnostic. Autorickshaw
would also come under the purview of a
Motorcab/taxi under the Karnataka On-demand
Transportation Technology Aggregators Rules,
2016 [in short KODTTA Rules], and as such,
- 64 -
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would come within the definition of motor cab
under Subsection (25) of Section 2 of the M.V.
Act. However, he submits that if this court were
to be of the opinion that a separate License for
autorickshaw cabs is to be obtained, such a
License would be obtained, which he further
submits would be a subject matter of the other
Writ Petition in W.P. No.20349/2022 and not
within the scope of the present petition.
4.65. He relies on the decision of this court in
Veeramani & Anr. Vs. The Regional
Transport Authority, Bangalore & Ors18,
more particularly para 4, which is reproduced
hereunder for easy reference;
4. The definition of "contract carriage" as found in
sub-sec. (3) of Section 2 of the Act, reads as follows:
"Contract carriage" means a motor vehicle which
carries a passenger or passengers for hire or reward
(1980) ILR Kar 1112
- 65 -
NC: 2024:KHC:17771
under a contract expressed or implied for the use of
the vehicle as a whole at or for a fixed or agreed rate
or sum-
(i) on a time basis whether or not with reference to
any route or distance, or
(ii) from one point to another, and in either case
without stopping to Pick up or set down along the
line of route passengers not included in the contract;
and includes a motor cab notwithstanding that the
passengers may pay separate fares;" (emphasis is
supplied).
Thus, from the aforesaid definition of 'contract
carriage' it is clear that it includes a motor cab. Sub-
section (15) of Section 2 of the Act, defines 'motor
cab' as follows:
"motor cab" means any motor vehicle constructed,
adapted or used to carry riot more than six
passengers excluding the driver, for hire or reward;"
From the aforesaid definition of 'motor cab it is clear
that an autorickshaws falls within the definition of
"motor cab", inasmuch as in the autorickshaws less
than six passengers excluding the driver are carried
either for hire or reward. The Karnataka Contract
Carriages (Acquisition) Act, 1976 excludes the motor
cab from the definition of contract carriages for the
purpose of that Act as per Section 3(9) of that Act.
Thus, it is clear that even after the coming into force
of the Karnataka Contract Carriages (Acquisition)
Act, 1976, one can have the permit for running a
motor cab, which falls within the category of contract
carriage. Therefore, it is necessary to find out
whether the reservation made in the impugned
resolution of the R.T.A. in respect of the permits
falling in the category of contract carriage permits is
supported by any of the provisions contained in the
Act, as it stood either on the date of the resolution or
after the coming into force of the Motor Vehicles
(Amendment) Act, 1978 (Central Act, 47 of 1978).
- 66 -
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4.66. He relies on the decision of this Court in
Divisional Manager, National Insurance Co.
Ltd. v. Prakash19, more particularly para 7 and
8, which are reproduced hereunder for easy
reference;
7. To examine this argument, one has to necessarily
look into the definition of 'transport vehicle', as is
found in sub-section (47) of section 2 of the Act
reading that it means a public service vehicle and a
goods carriage, an educational institution bus or a
private service vehicle. A 'public service vehicle' is
defined in sub-section (35) of section 2 of the Act
and it means "any motor vehicle used or adapted to
be used for carriage of passengers for hire or
reward, and includes a maxicab, a motor-cab,
contract carriage, and stage carriage". A 'contract
carriage' is defined in sub-section (7) of section 2 of
the Act, which means "a motor vehicle which carries
a passenger or passengers for hire or reward and is
engaged under a contract, whether expressed or
implied, for the use of such vehicle as a whole for
the carriage of number of passengers mentioned
therein and entered into by a person with a holder of
a permit in relation to such vehicle or any person
authorised by him in this behalf on a fixed or an
agreed rate or sum, and expressly includes a
motorcab". A motorcab, in turn, is defined in sub-
section (25) of section 2 of the Act, which means any
motor vehicle constructed or adapted for carrying
not more than six passengers excluding the driver
for hire or reward.
2011 SCC OnLineKar3873
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8. However, even according to learned counsel for
the appellant, the vehicle is one which is constructed
to carry three passengers with driver and, therefore,
it necessarily fits into the definition of 'motorcab'. If
a person is authorised to drive a transport vehicle, it
inevitably amounts that the License also permits the
holder of the License to drive a motorcab like the
auto cab; that the licensee is also authorised to drive
a motorcab apart from the variety of other vehicles
as noticed above.
4.67. He relies on the decision of the Hon'ble Bombay
High Court in Sunmitra Auto Rickshaw
Sahakari Sangh Ltd. v. Director of
Transport20, more particularly para 3, which is
reproduced hereunder for easy reference;
3. There are certain vehicles expressly excluded with
which we are not here concerned. It is thus clear
that a motor cab is a motor vehicle except for the
fact that it is constructed, adapted or used to carry
not more than six passengers for hire or reward. The
limitation laid down in the permit granted to
petitioner No. 2 is that he shall not carry more than
two passengers. If he were permitted even to carry
more than two passengers upto six passengers the
vehicle will still be classed as a motor cab. Therefore
the limitation of passengers to two only would bring
the vehicle all the more within the definition of motor
cab. In our opinion, an auto-rickshaw clearly falls
within the definition of motor cab under the Motor
Vehicles Act.
1966 SCC OnLineBom 61
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4.68. By relying on all the above judgments, he
submits that when an autorickshaw is also a
motor cab and therefore, the License which has
been issued to Uber, which is pending renewal
in respect of motor cab, would include not only
four-wheeler taxi but also three-wheeler
autorickshaw.
4.69. The validity of the KODTTA Rules having been
challenged before the Division Bench in W.A.
No.4787/2016, it is the Division Bench which is
required to decide on the requirement or
otherwise of the License.
4.70. As regards the various issues raised by the
intervenors, his submission is that they are
beyond the scope of the present writ petition.
Guideline (7) of the Central Guidelines is not
mandatory, and as such, there is no
requirement for any compliance on the part of
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Uber. The State itself having contended that the
guidelines are not mandatory, and hence it is
not required for Uber to follow the Central
guidelines.
4.71. He relies on the decision of the Hon'ble Apex
Court in Uber India Technology Private
Limited & Ors. vs. Government of NCT
Delhi & Anr.21, more particularly para 9, which
is reproduced hereunder for easy reference;
9. Having heard learned counsel for parties, this
Court is of the view that a total prohibition or a
blanket ban on the right to carry on any trade,
business or profession should be imposed in the
rarest of rare or in exceptional circumstances. In the
first instance, an endeavour should be made by the
State to allow everyone to carry on trade, business
or profession without any restriction. However, if
that is not possible, then the same should be allowed
subject to reasonable restrictions. It is settled law
that restrictions must not be arbitrary or of excessive
nature so as to go beyond the requirement and
interest of the general public. It is only in rare and
exceptional circumstances that a blanket ban or a
prohibition should be imposed on an individual's right
to carry on trade, business or profession.
2015 SCC Online 10241
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4.72. His submission is that Uber neither owns nor
operates vehicles in which transportation
services are provided and does not employ or
control the drivers/permit holders; therefore, it
is not involved in providing transportation
services. The contract carriage/transportation
services are exclusively between the customer
and the drivers/permit holders.
4.73. Uber acts only as a limited collection agent on
behalf of drivers/permit holders for online
payments since all payments made online are
collected by Uber on behalf of the
drivers/permit holders and credited to them in
accordance with the law. Though no written
contract is entered into between the
drivers/permit holders and
passengers/customers, his submission is that
they are the only parties to the contract
regarding providing transportation services.
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Uber is in no manner connected to or part of
such a contract. This, he contends, is similar to
a contract that the passenger would have with
the drivers/permit holders of an auto-rickshaw,
if he were to hail the autorickshaw in the street
without the intervention of Uber. Uber is in no
manner concerned with the service of offering a
contract of carriage for hire or reward, and hire
charges in respect of that can be fare in terms
of Section 67 of the M.V Act and not the
charges of Uber.
4.74. He, however, submits that there is a contract
between Uber and the drivers/permit holders
where only a request for transportation services
in terms of leads are provided to such
drivers/permit holders. It is up to the
drivers/permit holders to accept the lead or
not. The drivers/permit holders would have
access to the software deployed by Uber on
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account of the drivers/permit holders being on-
boarded onto Uber's platform.
4.75. The passenger is liable to pay the fare for the
transportation service to the drivers/permit
holders.
4.76. The service fee is liable to be paid by the
passenger/customer to Uber, this being in
terms of the bilateral contract between Uber
and the passenger/customer. The passenger
would also be entitled to several other value-
added services, as indicated above.
4.77. There is no tripartite agreement between Uber,
drivers/permit holders and the
passenger/customer. There is no obligation on
Uber to provide transportation services, nor
does it provide, represent, or imply that it
provides or is involved in transportation
services. In fact, drivers/permit holders and
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passengers/customers have agreed to the
driver terms and rider terms, respectively, by
clicking on the agree button in the Uber App. It
is for the driver and or the rider to accept the
said terms or not. It is always possible for
either of them to refuse the terms of the Uber
App.
4.78. Since Uber is not involved in transportation
service and there is no tripartite agreement,
there being a separate agreement between
Uber and drivers/permit holders on the one
hand and Uber and passengers/customers on
the other, Uber is only an aggregator in terms
of Subsection (1A) of Section 2 read with
Section 93 of the M.V. Act.
4.79. Uber follows a similar methodology in 70
countries and about 100 cities within India.
Since the Uber App is used in all 70 countries,
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as also 100 cities in India, it is submitted that
Uber is unable to give a mathematically exact
granular breakup of the costs for each hire of
an autorickshaw cab facilitated by the Uber App
in the State of Karnataka. On enquiry as to
whether it is the same application/platform
which is used in those 70 countries and 100
cities in India, he submits that though it is the
same application/platform, there are some
variations in the app depending on the location
of operations.
4.80. Uber, though attempted to quantify the cost,
was unable to do so, but it estimates that the
cost incurred on a particular short trip of 2 km
is Rs.32.2 and for a longer trip of 7 km, it is
Rs.34.3.On enquiry as to what are the heads of
accounts, he refers to para 17 of the affidavit of
Mr.Sharath Shetty, the authorized signatory of
Uber dated 20.07.2023 and the table appended
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thereto. The said table is reproduced hereunder
for easy reference:
Cost components (FY 21-22) Cost to
Uber (Per
trip INR)
Support service 4.7
Credit/ Debit card payment fee 0.75
Insurance fee 0.36
Technology/ Network cost 3.63
SMS Service/ WhatsApp for OTP, 1.13
needed for Matching and for
safety etc.
Maps for routing and Optimising 1.22
Rider cost by having the fastest
and the least traffic routing
Driver onboarding cost 2.86
(including background
verification)
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Employee cost 3.77
Global engineering and produce 1.32
cost
Marketing cost 2.2
Losses that the Petitioner bears 2.25
to protect service providers (i.e.,
the drivers/permit holders) from
passengers who do not settle
trip fare partially or completely
Total cost 24.19
4.81. On enquiry as to on what basis these amounts
have been apportioned for each of the above
heads of account, he submits that it is an
estimate by Uber based on experience and
there is no particular data set which is available
to indicate each such apportionment. The said
figures have been worked out as per the
unaudited profit and loss account.
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4.82. Again, based on the very same affidavit, his
contention is that Uber requires at least 23%, if
not 27%, of the fare for each trip as a service
fee to provide the services. These details were
not provided to the State since the State did
not ask for them, but estimated costs have
been provided in various meetings.
4.83. The State government not having framed any
Rules and Regulations in terms of Section 93 of
the M.V.Act, Uber is seeking for any License for
autorickshaws. Without such regulations being
made under Section 93, the same cannot be
implemented. However, Uber has applied for a
License under the KODTTA Rules, which was
initially granted for a period of five years on
31.12.2016, renewal application filed on
24.12.2021 is still pending consideration.
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4.84. He relies on the decision of the Hon'ble Apex
Courtin A.C. Jose v. Sivan Pillai22, more
particularly para 38, which is reproduced
hereunder for easy reference;
38. Lastly, it was argued by the counsel for the
respondents that the appellant would be estopped
from challenging the mechanical process because he
did not oppose the introduction of this process
although he was present in the meeting personally or
through his agent. This argument is wholly untenable
because when we are considering a constitutional or
statutory provision there can be no estoppel against
a statute and whether or not the appellant agreed or
participated in the meeting which was held before
introduction of the voting machines, if such a process
is not permissible or authorised by law he cannot be
estopped from challenging the same.
4.85. He relies on the decision of the Hon'ble Apex
Court in State of U.P. v. U.P. Rajya Khanij
Vikas Nigam Sangharsh Samiti23, more
particularly para 42 to 44, which are
reproduced hereunder for easy reference;
42. There is yet one more reason. In the High
Court, the Corporation filed an application stating
(1984) 2 SCC 656 at page 672: 1984 INSC 52
(2008) 12 SCC 675 : 2008 INSC 573
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therein that regarding absorption of employees,
statutory rules had been framed by the State
Government in exercise of power under the proviso
to Article 309 of the Constitution. A prayer was,
therefore, made to allow the application to bring
statutory rules on record and to consider them. The
Court, however, rejected the prayer. In our opinion,
the High Court was not right in rejecting such prayer.
If there were statutory rules and such rules provide
for absorption of employees on certain grounds and
on fulfilment of some conditions laid down in those
rules, it was the duty of the High Court to consider
those rules and to decide whether under the
statutory rules, such absorption could be ordered.
43. After all, the High Court was considering the
prayer of the petitioners to grant a writ in the nature
of mandamus. It was, therefore, expected of the
High Court to keep in view the relevant provisions of
law. The High Court mainly relied upon an assurance
said to have been given by the Secretary on behalf
of the Corporation that excess employees would be
absorbed either in the government departments or in
other public sector undertakings. From the record it
appears that it was the case of the Secretary of the
Corporation that no such assurance was given by
him to the Court. But even if he had given such
assurance, it was of no consequence since in the
teeth of statutory rules, such assurance had no legal
efficacy. Moreover, an application was made on
affidavit by the Secretary of the Corporation
clarifying the position and praying for modification of
the earlier order passed by the High Court in which
such statement on behalf of the Corporation
appeared. The High Court, however, rejected even
that application. In our considered opinion, even on
that ground, the High Court ought not to have issued
final directions.
44. It is settled law that there can be no estoppel
against a statute. If the field was occupied by
statutory rules, the employees could get right only
under those rules. The High Court was equally bound
to consider those rules and to come to the conclusion
whether under the statutory rules, the retrenched
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employees were entitled to absorption either in
government department or in any other public sector
undertaking. Statement, assurance or even
undertaking of any officer or a counsel of the
respondent Corporation or of the Government
Pleader of the State is irrelevant. The High Court, in
our view, ought to have considered the prayer of the
Corporation and decided the question if it wanted to
dispose of the matter on merits in spite of availability
of alternative remedy to the employees.
4.86. In the alternative to the above, he submits that
even though Uber participated in the meetings
with the Authorities and provided the details for
the fixation of suitable commission/service
charges, Uber can always challenge the
commission/service charges fixed on grounds
available to it. Participation by Uber in the
consultative process would not debar Uber from
challenging the same. There can be no
estoppel against the statute merely on account
of participating in the meeting.
4.87. Based on all the above his submission is that
the Writ Petition filed by Uber is required to be
allowed and reliefs sought for be granted.
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Submissions of Shri Aditya Sondhi Learned
Senior Counsel on behalf of Ola.
5. Sri. Aditya Sondhi learned Senior counsel appearing
for the petitioner-M/s ANI Technologies Private
Limited in W.P. No.24486/2022, which provides
aggregation services under the name and style 'OLA'
submits that:
5.1. Initially, the State had, by an undated order
received by OLA on 12.10.2022, directed OLA
to stop the operation of autorickshaw services
on the ground that autorickshaws would not
come within the scope of taxi, which has been
challenged in W.P. No.20349/2022.
5.2. In this regard, his submission is that
Autorickshaw would also fall within the
definition of 'motor cab'; as such, the artificial
distinction now sought to be made by the
respondent-State is contrary to the applicable
law. In this regard, he also relies upon the
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decision of this court in the case of Veeramani
v. Regional Transport Authority,
Bangalore24, more particularly para in 3 and 4,
which are reproduced hereunder for easy
reference:
3. The contentions of Sri H.B. Datar, the learned
Counsel appearing for the petitioners, are: (i) that
'autorickshaw' falls within the definition of 'motor
cab' which falls within the category of 'contract
carriages' as defined in the Motor Vehicles Act, 1939
(hereinafter referred to as the Act,) and a motor cab
is excluded from the purview of the Karnataka
Contract Carriages (Acquisition) Act, 1976, as such
there was no bar whatsoever for granting permits to
the petitioners and intervening respondents; (ii) that
there was no provision contained in the Act, on the
date of passing of the impugned Resolution enabling
the R.T.A. to reserve the permits in question to
certain class and category of persons as shown in
the impugned resolution and that even the
Amendment Act 47 of 1978 which provides for
certain percentage of reservation of stage carriage
and public carrier permits to certain class and
category of persons, does provide for reservation of
permits relating to motor cabs falling within the
category of contract carriages to the persons
belonging to Scheduled Caste and Scheduled Tribes
and also to the other categories mentioned in the
impugned resolution.
4. The definition of "Contract carriage" as found in
sub-sec. (3) of Sec. 2 of the Act, reads as follows:
"contract carriages" means a motor vehicle
which, carries a passenger or passengers for
24 1980 SCC OnLineKar 130
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Lire or reward under a contract expressed or
implied for the use of the vehicle as a whole at
or for a fixed or agreed rate or sum--
(i) on a time basis whether or not with
reference to any route or distance, or
(ii) from one point to another, and in either case
without stopping to pick up or set down along
the line of route passengers not included in the
contract; and includes a motor cab not with
standing that the passengers may pay
separate fares;"
(emphasis is supplied)
Thus, from the aforesaid definition of 'cantract
carriage', it is clear that it includes a motor cab. Sub-
Sec. (15) of Sec. 2 of the Act, defines 'motor cab' as
follows:
'motor cab' means any motor vehicle constructed,
adapted or used to carry not more than six
passengers excluding the driver, for hire or reward."
From the aforesaid definition of 'motor cab', it is
clear that an autorickshaw falls within the definition
of 'motor cab', in as much as in the autorikshaw less
than six passengers excluding the driver are carried
either for hire of reward. The Karnataka Contract
Carriages (Acquisition) Act, 1976 excludes the motor
cab from the definition of contract carriages for the
purpose of that Act as per Sec. 3(g) of that Act.
Thus, it is clear that even after the coming into force
of the Karnataka Contract Carriages (Acquisition)
Act, 1976, one can have the permit for running a
motor cab which falls within the category of contract
carriages, Therefore, it is necessary to find out
whether the reservation made in the impugned
resolution of the R.T.A. in respect of the permits
falling in the category of contract carriages permits is
supported by any of the provisions contained in the
Act, as it stood either on the date of the resolution or
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after the coming into force of the Motor Vehicles
(Amendment) Act, 1978 (Central Act, 47 of 1978).
5.3. He also relies on the Judgment of Hon'ble
Bombay High Court in Sunmitra Auto
Rickshaw Sahakari Sangh Ltd. v. Director
of Transport25, more particularly para 2 and 3,
which are reproduced hereunder for easy
reference:
2. Three points have been raised by Mr. Adik on
behalf of the petitioners. The first is that auto-
rickshaws are not "motor cabs" within the meaning
of the definition in s. 2(15) of the Motor Vehicles Act.
"Motor cab" is defined in that section to mean "any
motor vehicle constructed, adapted or used to carry
not more than six passengers excluding the driver,
for hire or reward". The auto-rickshaw of petitioner
No. 2 has been granted a permit which limits the
number of passengers to be carried to two only. He,
therefore, says that his auto-rickshaw will not fall
within the definition of "motor cab" in s. 2(15). The
proper ambit of the definition of "motor cab" may be
clarified if one considers the definition of "motor
vehicle" in s. 2(18) of which "motor cab" is only a
species. "Motor vehicle" is defined to mean
"...any mechanically propelled vehicle adapted for
use upon roads whether the power of propulsion is
transmitted thereto from an external or internal
source and includes a chassis to which a body has
not been attached and a trailer...;"
25 1966 SCC OnLine Bom 61
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3. There are certain vehicles expressly excluded with
which we are not here concerned. It is thus clear
that a motor cab is a motor vehicle except for the
fact that it is constructed, adapted or used to carry
not more than six passengers for hire or reward. The
limitation laid down in the permit granted to
petitioner No. 2 is that he shall not carry more than
two passengers. If he were permitted even to carry
more than two passengers up to six passengers the
vehicle will still be classed as a motor cab. Therefore
the limitation of passengers to two only would bring
the vehicle all the more within the definition of motor
cab. In our opinion, an auto-rickshaw clearly falls
within the definition of motor cab under the Motor
Vehicles Act.
5.4. The reasoning in Veeramani's case (supra) has
been approved and relied upon in the interim
order dated 14.10.2022 in W.P. No.20349/2022.
Whether an autorickshaw falls within the
definition of a motor cab or not is no longer res
integra, and the artificial difference and
distinction sought to be made out is contrary to
the applicable law.
5.5. It is after accepting that an autorickshaw would
also come within the definition of a motor cab
that, vide order dated 14.10.2022, this Court
directed OLA to follow the rates fixed by the
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State in terms of the notification dated
6.11.2021 along with an additional 10%
commission with applicable taxes. The
respondent-State accepting the said order, vide
the impugned notification dated 25.11.2022,
fixed the amount which an aggregator can
charge, thereby accepting that the
autorickshaw would also be covered under a
License issued for a motor cab to OLA, thereby
accepting the legality of the auto-rickshaw
operations carried out by OLA. The impugned
notification dated 25.11.2022 is a malafide
exercise of power, attempting to restrict the
commission at 5%, though this Court vide order
dated 14.10.2022 had capped the commission
at 10%.
5.6. This restriction is sought to be imposed under
Section 67 of the M.V. Act, which only deals
with fixing fares and freight for contract
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carriages and does not deal with service
charges that an aggregator could levy.
5.7. Any condition or restriction cannot be imposed
under Section 67; that can only be done under
Section 93 r/w Section 96(2)(xxviii) of the M.V
Act by framing appropriate Rules and placing
them before the legislature. The powers under
Sections 67 and 93 are qualitatively different.
Under Section 67, the State Government may
issue notifications, but under Section 93, Rules
have to be framed, which would have to be
done in terms of Sub-Section (32) of Section 2,
which relates to prescribed by Rules.
5.8. The contention of OLA is not that the State does
not have legislative competence; it is only that
the impugned notification could not have been
issued under Section 67 but should have been
issued in terms of Section 93 of the M.V. Act by
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framing appropriate Rules. His further
submission is that the procedure prescribed
under Section 212, in respect of Rules, ought to
have been followed which has not been
followed. The power and authority would have
to be exercised in the manner prescribed or not
at all. Any such exercise of power or authority
contrary to the applicable law would be non-
est. In this regard, he relies upon the Judgment
of the Hon'ble Apex Court in Captain Sube
Singh v. Lt. Governor of Delhi26, more
particularly para 28 to 30, which are
reproduced hereunder for easy reference:.
28. The contention of the respondents that by
reason of the aforesaid condition of permit the
concessional passes issued by DTC would
automatically become enforceable and binding
upon private operators who were issued stage
carriage permits, does not appear to be sustainable.
29. In Anjum M.H. Ghaswala a Constitution Bench of
this Court reaffirmed the general rule that when a
statute vests certain power in an authority to be
exercised in a particular manner then the said
26 (2004) 6 SCC 440 : 2004 INSC 329
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authority has to exercise it only in the manner
provided in the statute itself. (See also in this
connection Dhanajaya Reddy v. State of Karnataka.
The statute in question requires the authority to act
in accordance with the rules for variation of the
conditions attached to the permit. In our view, it is
not permissible to the State Government to purport
to alter these conditions by issuing a notification
under Section 67(1)(d) read with sub-clause (i)
thereof.
30. The contention of the respondents is that the
power to enforce the binding nature of the
concessional passes issued by DTC on the private
stage carriage operators can be spelled from the
provisions of Section 67(1)(d) of the Act. In our
view, such a power cannot be subsumed under the
powers of the State Government to fix fares and
freights for stage carriages having regard to the
desirability of preventing uneconomic competition
among holders of permits. Permit condition 13
merely stipulates that the permit-holder shall ensure
that concessional passes issued to various sections
authorised for these buses shall be honoured. The
authorisation has to come from STA. In other words,
only concessional passes which are authorised by
STA would be binding on the operators. We see no
power in Section 67(1)(d) of the Act or otherwise by
which a concessional pass issued by DTC could be
made binding upon private stage carriage operators,
particularly when there was no such condition
imposed in the permit issued. Hence, we are of the
view that paragraph 3(b) of the impugned
notification is clearly ultra vires the powers of the
State Government under Section 67 of the Act and,
therefore, liable to be quashed and set aside
5.9. The powers under Section 67 and 93 are
qualitatively different; under Section 67, the
State government can issue notification, while
under Section 93, the power insofar as
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aggregator can only be exercised by way of
Rules. By referring to Section 93 of the Act, he
submits that the phrase 'such conditions as
may be prescribed' will have to be read in
conjunction with Subsection (32) of Section 2,
which means prescribed by Rules made under
the Act, that is, by following all and necessary
procedures. In this regard, he relies upon the
decision of the Hon'ble Supreme Court in Uber
India Systems (P) Ltd. v. Union of India27,
more particularly para 2, which is reproduced
hereunder for easy reference:
2. The petitioners claim to be aggregators within the
meaning of Section 2(1-A) of the Motor Vehicles Act,
1988 ("the Act"), as amended by Act 32 of 2019. An
"aggregator" is defined to mean a digital
intermediary or marketplace for a passenger to
connect with a driver for the purpose of
transportation. Section 93 was amended by the
amending Act so as to encompass the business of
aggregators. Sub-section (1) of Section 93, inter
alia, stipulates that no person shall engage himself
as an aggregator unless he has obtained a License
from such authority and subject to such conditions
as may be prescribed by the State Government. As
in the case of other statutes, Section 2(32) defines
27 (2024) 1 SCC 438 : SLP(C) 5705/2022
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the expression "prescribed" to mean prescribed by
rules made under the Act. The State Government is
conferred with a rule-making power, inter alia, by
Section 96(1) in terms of which it may make rules
for the purpose of carrying into effect the provisions
of Chapter.
5.10. By relying on the above, he submits that
Section 67 is an Omnibus power. His
submission is also that there is an
acknowledgement on the part of the State that
Section 67 of the Act is applicable to
aggregators. He substantiates by stating that
reliance has been placed by the State on
Subsection (7) of Section 2, read with Section
67 and not under Section 93. The State does
not have any power to regulate an aggregator
or the fees receivable by an aggregator under
Section 67 of the M.V Act. On that basis, he
submits that the undertaking given by the
learned Advocate General in WP No.
20349/2022 is an acknowledgement by the
State that it does not have power under Section
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67 and that by itself is sufficient to quash the
impugned notification dated 25/11/2022.
5.11. Under Section 67, the interface of the State is
with the permit holder sans the aggregator
since the services provided by the aggregator
do not form part of Section 67. The interface
under Section 93, as contemplated under the
statute, is between the State and the
aggregator, and it is thus required that the
powers under Section 93 have to be exercised
in terms of clause (xxviii) of Subsection (2) of
Section 96. Unless and until the above is done,
the State has no power to regulate an
aggregator, much less under Section 67. Thus
the impugned notification under Section 67
fixing the service fee is without any power or
jurisdiction.
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5.12. The action of the State is contrary to the
arguments which have been advanced; the
State has fixed the fare under Section 67, as
also a commission of 5% on the said fare under
Section 67. In terms of clause (2) of Rule 9 of
the KODTTA Rules, the fare, including any other
charges, could not be higher than the fare fixed
by the government from time to time, which
contemplates only one fare and not a fare and
commission separately. Thus, the stand of the
State is contrary to clause (2) of Rules 9 is an
absurdity.
5.13. The KODTTA Rules have been challenged and
the same is pending before the Division Bench
of this court. The said Rules were formulated
before the introduction of Section 93, in which
recognition is granted to transport technology
aggregators, the Rules having been formulated
in the year 2016, recognition having been
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granted in the year 2019 the KODTTA Rules
would not apply. The central government issued
Motor Vehicle Aggregator Guidelines in the year
2020; thus, it is the Guidelines of the Central
government which will apply since it has been
issued after the statutory recognition in
furtherance of the 2019 amendment and not
the KODDTTA Rules framed in the year 2016.
As such, he submits that the State cannot refer
to or rely upon the KODDTTA Rules.
5.14. He contends that the State is not an expert in
the tariff fixation of aggregators, which is a new
business. The State itself has stated in
paragraphs 19, 30, 31, 32 and 35 of the
statement of objection that the aggregators
failed to provide necessary information/make
disclosures, and therefore, the State has acted
on the basis of the information available. This
submission itself is sufficient to establish that
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the exercise of the State suffers from
arbitrariness, irrationality and non-application
of mind, is excessive and disproportionate
based on a pre-conceived notion in order to
make auto-rickshaw operations unviable. Any
Authority has to fix the price in accordance with
the statutory provision. The State has not
complied with statutory provisions, nor has it
applied its mind properly, nor has it taken into
consideration the relevant criteria. As such, the
said price fixation is arbitrary. In this regard, he
relies upon the decision in Karnataka
Industrial Areas Development Board v.
Prakash Dal Mill28, more particularly para 19
and 20, which are reproduced hereunder for
easy reference;
19. We have considered the submissions made by
the learned counsel. It is true that under Clause
7(b), the Board reserved to itself the right to fix the
final price of the demised premises as soon as it may
be convenient to it and communicate the same to
28 (2011) 6 SCC 714 : 2011 INSC 273
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the lessee concerned. Upon communication of the
price, the lessee is required to pay the balance of the
value of the site. Determination of the price by the
Board is binding on the lessee. In our opinion, the
aforesaid clause would not permit the Board to
arbitrarily or irrationally fix the final price of the site
without any rational basis. The power of price
fixation under Clause 7 being statutory in nature
would have to be exercised, in accordance with the
statutory provisions, it cannot be permitted to be
exercised arbitrarily. Undoubtedly, as observed by
this Court in PremjiBhaiParmarcase , the courts
would not reopen the concluded contracts.
20. Ms.Suri had placed reliance on the observations
made by this Court in SCC para 10 of the judgment,
which are as follows:
"10. Pricing policy is an executive policy. If the
Authority was set up for making available dwelling
units at reasonable price to persons belonging to
different income groups it would not be precluded
from devising its own price formula for different
income groups. If in so doing it uniformly collects
something more than cost price from those with
cushion to benefit those who are less fortunate it
cannot be accused of discrimination. In this country
where weaker and poorer sections are unable to
enjoy the basic necessities, namely, food, shelter
and clothing, a body like the Authority undertaking
a comprehensive policy of providing shelter to those
who cannot afford to have the same in the
competitive albeit harsh market of demand and
supply nor can afford it on their own meagre
emoluments or income, a little more from those who
can afford for the benefit of those who need
succour, can by no stretch of imagination attract
Article 14. People in the MIG can be charged more
than the actual cost price so as to give benefit to
allottees of flats in LIG, Janata and CPS. And yet
record shows that those better off got flats
comparatively cheaper to such flats in open market.
It is a well-recognised policy underlying tax law that
the State has a wide discretion in selecting the
persons or objects it will tax and that the statute is
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not open to attack on the ground that it taxes some
persons or objects and not others. It is only when
within the range of its selection the law operates
unequally, and this cannot be justified on the basis
of a valid classification, that there would be a
violation of Article 14. Can it be said that
classification income-wise-cum-scheme-wise is
unreasonable? The answer is a firm no. Even the
petitioners could not point out unequal treatment in
same class. However, a feeble attempt was made to
urge that allottees of flats in MIG scheme at
Munirka which project came up at or about the
same time were not subjected to surcharge. This
will be presently examined but aside from that,
contention is that why within a particular period,
namely, November 1976 to January 1977 the policy
of levying surcharge was resorted to and that in
MIG schemes pertaining to period prior to
November 1976 and later April 1977 no surcharge
was levied. If a certain pricing policy was adopted
for a certain period and was uniformly applied to
projects coming up during that period, it cannot be
the foundation for a submission why such policy was
not adopted earlier or abandoned later."
In our opinion, these observations would not be
applicable in the facts of this case. The appellants
are required to fix the price within the stipulated
parameters contained in the statute and the Board
Regulations.
5.15. The decision of the Hon'ble Apex court in
Reliance Infrastructure Ltd. v. State of
Maharashtra29, more particularly para 37 and
38, which are reproduced hereunder for easy
reference;
29 (2019) 3 SCC 352 : 2019 INSC 63
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37. Tariff fixation is a complex exercise involving a
careful balance between numerous considerations.
The "shall be guided" prescription under Section 61
requires the appropriate Commission to bear those
considerations in mind. Deducing past performance
on the basis of historical data, balancing diverse
policy objectives and evaluating the comparative
weight to be ascribed to the interests of stakeholders
is a scientific exercise which is carried out by the
Commission. The nature of judicial review that is
exercisable in a given subject area depends in a
significant measure on the nature of the area and
the body which is entrusted with the task of framing
subordinate legislation. In A.P. Transco v. Sai
Renewable Power (P) Ltd. a two-Judge Bench of this
Court held thus :
"36. Fixation of tariff is, primarily, a function to be
performed by the statutory authority in furtherance to
the provisions of the relevant laws. We have already
noticed that fixation of tariff is a statutory function as
specified under the provisions of the Reform Act,
1998; the Electricity Regulatory Commissions Act,
1998 and the Electricity Act, 2003. These functions
are required to be performed by the expert bodies to
whom the job is assigned under the law...
38. ... The functions assigned to the Regulatory
Commission are wide enough to specifically impose an
obligation on the Regulatory Commission to determine
the tariff. The specialised performance of functions
that are assigned to Regulatory Commission can
hardly be assumed by any other authority and
particularly, the courts in exercise of their judicial
discretion. The Tribunal constituted under the
provisions of the Electricity Act, 2003, again being a
specialised body, is expected to examine such issues,
but this Court in exercise of its powers under Article
136 of the Constitution would not sit as an appellate
authority over the formation of opinion and
determination of tariff by the specialised bodies. ...
40. ... This Court has consistently taken the view that
it would not be proper for the Court to examine the
fixation of tariff rates or its revision as these matters
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are policy matters outside the purview of judicial
intervention. The only explanation for judicial
intervention in tariff fixation/revision is where the
person aggrieved can show that the tariff fixation was
illegal, arbitrary or ultra vires the Act. It would be
termed as illegal if statutorily prescribed procedure is
not followed or it is so perverse and arbitrary that it
hurts the judicial "conscience" of the court making it
necessary for the court to intervene. Even in these
cases the scope of jurisdiction is a very limited one.
38. MERC is an expert body which is entrusted with
the duty and function to frame regulations, including
the terms and conditions for the determination of
tariff. The Court, while exercising its power of judicial
review, can step in where a case of manifest
unreasonableness or arbitrariness is made out.
Similarly, where the delegate of the legislature has
failed to follow statutory procedures or to take into
account factors which it is mandated by the statute
to consider or has founded its determination of tariffs
on extraneous considerations, the Court in the
exercise of its power of judicial review will ensure
that the statute is not breached. However, it is no
part of the function of the Court to substitute its own
determination for a determination which was made
by an expert body after due consideration of material
circumstances.
5.16. The decision of the Hon'ble Apex court in
Mohd.Faruk v. State of M.P.(supra17), more
particularly para 8 and 10, which are
reproduced hereunder for easy reference;
8. The power to issue Bye-laws indisputably includes
the power to cancel or withdraw the Bye-laws, but
the validity of the exercise of the power to issue and
to cancel or withdraw the Bye-laws must be
adjudged in the light of its impact upon the
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fundamental rights of persons affected thereby.
When the validity of a law placing restriction upon
the exercise of fundamental rights in Article 19(1) is
challenged, the onus of proving to the satisfaction of
the Court that the restriction is reasonable lies upon
the State. A law requiring that an act which is
inherently dangerous, noxious or injurious to public
interest, health or safety or is likely to prove a
nuisance to the community, shall be done under a
permit or License of an executive authority, it is not
per se unreasonable and no person may claim a
License or permit to do that act as of right. Where
the law providing for grant of a License or a permit
confers a discretion upon an administrative authority
regulated by rules or principles expressed or implied,
and exercisable in consonance with rules of natural
justice, it will be presumed to impose a reasonable
restriction. Where, however, power is entrusted to
an administrative agency to grant or withhold a
permit or License in its uncontrolled discretion, the
law ex facie infringes the fundamental right under
Article 19(1). Imposition of restriction on the
exercise of a fundamental right may be in the form
of control or prohibition, but when the exercise of a
fundamental right is prohibited, the burden of
proving that a total ban on the exercise of the right
alone may ensure the maintenance of the general
public interest lies heavily upon the State.
10. The impugned notification, though technically
within the competence of the State Government,
directly infringes the fundamental right of the
petitioner guaranteed by Article 19(1)(g) and may be
upheld only if it be established that it seeks to
impose reasonable restrictions in the interests of the
general public and a less drastic restriction will not
ensure the interest of the general public. The Court
must in considering the validity of the impugned law
imposing a prohibition on the carrying on of a
business or profession, attempt an evaluation of its
direct and immediate impact upon the fundamental
rights of the citizens affected thereby and the larger
public interest sought to be ensured in the light of
the object sought to be achieved, the necessity to
restrict the citizen's freedom, the inherent pernicious
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nature of the act prohibited or its capacity or
tendency to be harmful to the general public, the
possibility of achieving the object by imposing a less
drastic restraint, and in the absence of exceptional
situations such as the prevalence of a state of
emergency national or local -- or the necessity to
maintain essential supplies, or the necessity to stop
activities inherently dangerous, the existence of a
machinery to satisfy the administrative authority that
no case for imposing the restriction is made out or
that a less drastic restriction may ensure the object
intended to be achieved.
5.17. The State had earlier exercised powers under
Section 67 and fixed the fare for taxis operating
through the aggregator platform in terms of the
KODTTA Rules. Such fare having been fixed at
that time, the State did not take up any
contention that it lacked empirical data or
information from the aggregators. It is only
now as an afterthought that such a contention
has been taken up to justify the arbitrary and
irrational directions issued with respect to
autorickshaws.
5.18. He, however submits that pursuant to the
interim order dated 14.10.2022 passed by this
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court, the petitioner furnished all necessary
details/information as requested by its
representation dated 28.10.2022, and
therefore, it cannot be contended that there is
a lack of disclosure or availability of data. The
State has never ever asked for any particular
data; it is for the first time that in the present
matter, in the Statement of objection at para 19
and 34, certain specific items of data have been
pointed out, which the State could have done
earlier.
5.19. The State was required to follow and be guided
by the Motor Vehicles Aggregator Guidelines
2020; if it felt that it lacked empirical data, the
central Government, having conducted a study
and having issued the guidelines, following the
said guidelines would have put the State in
compliance with the requirements. Though the
Hon'ble Apex court in SLP No.5075/2020 has
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observed that the guidelines are persuasive
character and are not mandatory, his
submission is that those guidelines cannot be
utterly disregarded but would have to be taken
into consideration. In this regard, he refers to
and relies upon the decision of the Hon'ble
Apex Court in Roppen Transportation
Services Pvt. Ltd vs. Union of India30, more
particularly para 9 thereof, which is reproduced
hereunder for easy reference:
9. Government of Maharashtra has not formulated
any rules in relation to aggregators for the purpose
of enforcing the provisions of Chapter V, more
particularly, Section 93(1). The first proviso to
Section 93 stipulates that while issuing a License to
an aggregator, the State Government may follow
such guidelines as may be issued by the Central
Government. The Guidelines which have been issued
by the Central Government have a persuasive value.
They are not mandatory. When the State
Government formulates rules in pursuance of its
power under Section 96, it may also bear in mind the
Guidelines which have been framed by the Union
Government in 2020. Both in terms of the first
proviso to Section 93(1) and the plain terms of the
Guidelines, it is evident that while these Guidelines
have to be borne in mind, the ultimate decision is to
be arrived at by the State Government while
considering whether to grant a License and in regard
30 SLP 3006 of 2023 : 2023 INSC 102
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to the formulation of rules in pursuance of the
general rule making power under Section 96.
5.20. He also relies upon the Judgment of the Hon'ble
Apex Court in Preeti Srivastava (Dr.) v. State
of M.P.31, more particularly para 105 and 116
thereof, which are reproduced hereunder for
easy reference:
105. The next question that falls for consideration
that even assuming that Article 335 cannot be
pressed into service while considering the question of
admission of eligible and qualified candidates for
enabling them to pursue courses of postgraduate
medical studies can the guidelines laid down by the
Medical Council of India pursuant to the regulations
made under Section 33 of the Indian Medical Council
Act, even though persuasive in nature and not
mandatory, be totally bypassed or ignored by the
State authorities concerned with shortlisting of
candidates for admission to limited seats available in
medical institutions imparting postgraduate medical
education? The answer obviously would be in the
negative. The guidelines laid down by the Medical
Council of India though persuasive have to be kept in
view while deciding as to whether the concession or
facility to be given to such reserved category of
candidates should remain within the permissible
limits so as not to amount to arbitrary and
unreasonable grant of concessions wiping out the
concept of merit in its entirety. Consequently, it
cannot be said that even though shortlisting of
eligible candidates is permissible to the State
authorities, while doing so, the State authorities can
completely give a go-by to the concept of merit and
can go to the extent of totally dispensing with the
31 (1999) 7 SCC 120 : 1999 INSC 316
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qualifying marks for SC, ST and OBC candidates and
can shortlist them for being considered for admission
to reserved categories of seats for them in
postgraduate studies by reducing the qualifying
marks to even zero. That was rightly frowned upon
by this Court in Sadhana Devi case [(1997) 3 SCC
90] as that would not amount to shortlisting but on
the contrary would amount to completely longlisting
of such reserved category candidates for the
vacancies which are reserved for them and on which
they would not be entitled to be admitted if they did
not qualify according to even reduced benchmarks or
qualifying marks fixed for them. As seen earlier,
keeping in view the ratio of the Constitution Bench of
this Court in M.R. Balaji case [AIR 1963 SC 649 :
1963 Supp (1) SCR 439, 466-467] it must be held
that along with the permissible reservation of 50% of
seats for the reserved category of candidates in
institutions imparting postgraduate studies,
simultaneously, if further concessions by way of
facilities are to be given for such reserved category
of candidates so as to enable them to effectively
occupy the seats reserved for them, such
concessions by way of dilution of qualifying marks to
be obtained at the entrance test for the purpose of
shortlisting, can also not go beyond the permissible
limits of 50% of the qualifying marks uniformly fixed
for other candidates belonging to the general
category and who appear at the same competitive
test along with the reserved category of candidates.
It is found from the records of these cases that
qualifying marks at the entrance test for the general
category of candidates are fixed at 50%. In fact such
is the general standard of qualifying marks
suggested by the Medical Council of India even at
the stage of entrance examination to the MBBS
course which is at the grass-root level of medical
education after a student has completed his
secondary education. Thus it would be proper to
proceed on the basis that minimum qualifying marks
for clearing the entrance test by way of shortlisting
for getting admitted to postgraduate medical courses
uniformly for all candidates who appear at such
examination should be 50% but so far as the
reserved category of candidates are concerned who
are otherwise eligible for competing for seats in the
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postgraduate medical courses, 50% reduction at the
highest of the general benchmarks by way of
permissible concession would enable the State
authorities to reduce the qualifying marks for passing
such entrance examination up to 50% of 50% i.e.
25%. In other words, if qualifying marks for passing
the entrance examination for being admitted to
postgraduate medical courses is 50% for a general
category candidate, then such qualifying marks by
way of concession can be reduced for the reserved
category candidates to 25% which would be the
maximum permissible limit of reduction or deviation
from the general benchmarks. Meaning thereby, that
a reserved category candidate even if gets 25% of
the marks at such a common entrance test he can be
considered for being admitted to the reserved
vacancy for which he is otherwise eligible. But below
25% of benchmarks for the reserved category of
candidates, no further dilution can be permitted. In
other words, concession or facility for the reserved
category of candidates can remain permissible under
Article 15(4) up to only 50% of benchmarks
prescribed for the general category candidates. The
State cannot reduce the qualifying marks for a
reserved category candidate below 25% nor can it go
up to zero as tried to be suggested by Shri P.P. Rao,
learned Senior Counsel for the State of Madhya
Pradesh as that would not amount to the process of
shortlisting but would in fact amount to longlisting or
comprehensive listing of such reserved category of
candidates as seen earlier. Any such attempt to
further dilute the qualifying marks or benchmarks for
the reserved category of candidates below 25% of
the general passing marks would be violative of the
provisions of Article 15(4) as laid down by the
Constitution Bench in M.R. Balaji case [AIR 1963 SC
649 : 1963 Supp (1) SCR 439, 466-467] and would
also remain unreasonable and would be hit by Article
14 of the Constitution of India. Within this sliding
scale of percentages between 25% and 50% passing
marks appropriate benchmarks for passing the
entrance test examination can be suitably fixed for
SC/ST and OBC candidates as the exigencies of the
situation may require. But in no case the qualifying
marks for any of these reserved categories of
students can go below 25% of the general passing
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marks. Any reserved category candidate who gets
less than 25% of marks at the entrance examination
or less than the prescribed reduced percentage of
marks for the category concerned between 50% and
25% of passing marks cannot be called for
counselling and has to be ruled out of consideration
and in that process if any seat reserved for the
reserved categories concerned remains unfilled by
candidates belonging to that category it must go to
the general category and can be filled in by the
general category candidate who has already obtained
50% or more marks at the entrance examination but
who could not be accommodated because of lesser
percentage of marks obtained by him qua other
general category candidates in the limited number of
seats available to them in a given institution in
postgraduate studies.
116. In the light of the aforesaid discussion, the
following conclusions emerge:
(1) It is permissible to the State authorities which
are running and/or controlling the medical
institutions in the States concerned to shortlist the
eligible and qualified MBBS doctors for being
considered for admission to postgraduate medical
courses in these institutions. For the purpose of such
shortlisting full play is available to the State
authorities to exercise legislative or executive power
as the field is not occupied till date by any legislation
of Parliament on this aspect in exercise of its
legislative powers under Entry 25 of List III of the
Constitution of India and this topic is also not
covered by any legislation under Entry 66 of List I of
the Constitution.
(2) The Indian Medical Council Act and the
regulations framed thereunder do not cover the
question of shortlisting of admission of eligible and
duly qualified MBBS doctors who seek admission to
different medical institutions imparting postgraduate
education run or controlled by the States concerned.
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(3) The regulations and guidelines given by the
Medical Council of India in this connection, though
persuasive and not having any binding force, cannot
be totally ignored by the State authorities but must
be broadly kept in view while undertaking the
exercise of shortlisting of eligible candidates for
being admitted to postgraduate medical courses.
(4) While shortlisting candidates having basic
qualifications of MBBS for being considered for
admission to a limited number of vacancies in
postgraduate courses available at the medical
institutions in the States, it is permissible for the
State authorities to have common entrance tests and
to prescribe minimum qualifying marks for passing
such tests to enable the examinees who pass such
test to be called for counselling. That would be in
addition to the basic qualification by way of MBBS
Degree. The performance of the candidate concerned
during the time he or she undertook the study at
MBBS level for ultimately getting the MBBS Degree
also would be a relevant consideration for the State
authorities to be kept in view.
(5) It is equally permissible for the State authorities
while undertaking the aforesaid exercise of
shortlisting to fix 50% minimum qualifying marks at
the entrance test for the general category of
candidates and to dilute and prescribe lesser
percentage of passing marks for the reserved
category of candidates as the exigencies of situation
may require in a given year but in no case the
minimum qualifying marks as reduced for the
reserved category of candidates can go below 25%
of passing marks for such reserved category of
candidates. In other words, a play is available to the
State authorities to prescribe different minimum
passing marks for SC/ST and OBC eligible candidates
between 50% and 25% as the prevailing situation at
a given point of time may require. In such categories
for SC, ST and OBC candidates different diluted
passing marks can be prescribed, but this exercise
has to be within the permissible limits of less than
50% and up to minimum 25% passing marks for
each of such reserved categories. No eligible
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candidate belonging to the reserved category who
does not obtain minimum per cent of passing marks
as diluted for such category of candidates by the
State authorities can be considered to be eligible for
undertaking postgraduate medical courses in a given
year for which he has offered his candidature and if
any seat reserved for such categories of candidates
remain unfilled due to non-availability of such eligible
reserved category candidates to fill up such seat,
then the said seat would go to general category
candidates and will be available in the order of merit
in the light of marks obtained by such wait-listed
general category candidates having obtained the
requisite passing marks who otherwise could not get
admitted due to non-availability of general category
seats earlier. The ratio of various decisions of this
Court considered hereinabove will have to be
implemented in the light of the aforesaid conclusions
to which I have reached. The aforesaid practice has
to be followed and should hold the field from year to
year so long as Parliament does not pass any
legislation for regulating admission to postgraduate
medical courses either by separate legislation or by
appropriately amending the Indian Medical Council
Act by empowering the Medical Council of India to
prescribe such regulations.
5.21. The State could not have ignored the Central
guidelines when a specific submission was
made by the State and the direction issued by
this court vide order dated 14.10.2023 in W.P.
No. 24486/2022 at para 19 thereof which is
reproduced here under for easy reference:
19. However, in view of the submission made by
learned Advocate General, that the State
Government is open and willing to formulate fare
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fixation, this Court is of the view that the Guidelines
referred to above will also be adhered to during the
process of fare fixation. However, since the said
process would take a period of ten to fifteen days as
submitted, in the interregnum, considering the
submissions made by the petitioners as well as the
learned Advocate General, this Court is of the
considered view that the petitioners/aggregators be
put on terms.
5.22. Learned Advocate General has stated that the
State government is open and willing to
formulate fare fixation, and this Court has
opined that the guidelines referred to would
also be adhered to; it was but required for the
State to take into consideration the guidelines
and then properly fix the fares, and same not
having been done the impugned notification is
contrary to the directions issued by this court.
Thus, he submits that the impugned notification
is in derogation of the statutory scheme,
commitment made to this court and
noncompliance with the directions issued by
this court, and hence the price fixation is
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arbitrary since even according to the State, the
empirical data was not available with the State.
5.23. The interim order dated 14.10.2022 prescribed
a 10% commission as an interim arrangement
made so as to enable the State to comply with
the applicable law, despite which the State has
not so complied, has issued an impugned
notification fixing the commission at 5% of the
fare, which is less than what was prescribed by
this court. The same not having been done in
terms of Section 93 is unsustainable, and
therefore, it is required that the direction be
issued to the State to comply with Section 93.
5.24. Hiring auto-rickshaws on the app of OLA would
mean that the auto rickshaws would be
available at the doorstep of the
passenger/customer for pick-up, which would
require payment to be made to the driver for
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travelling to the doorstep sometimes that
location being in remote areas, pick up cost
have not been taken into consideration by the
State. On enquiry if Ola pays the drivers
onboarded on its platform regarding the above
and if any documents have been produced in
relation thereto, his submission is that no
documents have been produced.
5.25. The first proviso to Section 93 mandates that
while issuing a License to the aggregator, the
State government should follow guidelines as
may be issued by the Central government. This
Court having already expressed its opinion that
guidelines will have to be taken into
consideration, he submits that the word 'may'
has to be treated as 'shall', and if the guidelines
are not taken into consideration, the entire
action on the part of the State will suffer from
legal infirmity. In this regard, he refers to para
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28 of the order dated 14.10.2023 in W.P.
No.24486/2022, which is reproduced
hereunder for easy reference:
28. It is clear and forthcoming that the scheme of
operation of Section 67 of the MV Act is entirely
different from what is contemplated under Section
93 of the MV Act. The notification dated 25.11.2022
having been issued without taking into consideration
that the power of the State Government was
required to be exercised as contemplated under
Section 93 of the MV Act and the Motor Vehicle
Aggregator Guidelines - 2020 issued by the Central
Government, I am of prima facie view that said
notification dated 25.11.2022 is required to be
stayed pending consideration of these writ petitions.
5.26. And para 19 of the order dated 14.10.2023 in
W.P. No.20349/2022, which is reproduced
hereunder for easy reference:
19. However, in view of the submission made by
learned Advocate General, that the State
Government is open and willing to formulate fare
fixation, this Court is of the view that the Guidelines
referred to above will also be adhered to during the
process of fare fixation. However since the said
process would take a period of ten to fifteen days as
submitted, in the interregnum, considering the
submissions made by the petitioners as well as the
learned Advocate General, this Court is of the
considered view that the petitioners/aggregators be
put on terms.
(emphasis supplied)
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5.27. By referring to clause (13) of the Central
Government aggregator guidelines, 2020, he
submits that the driver is entitled to 80% of the
fare applicable on each ride, which would mean
that even the Central Government has
contemplated that 20% of the fare would have
to be paid to the aggregator as commission. He
submits that this is required because the
average fare for an autorickshaw is 60% of the
four-wheeler taxi, and in order to provide
service under the OLA platform, Ola would
require 20% of the fare as the service fee. The
guidelines of 2020 recognised surge pricing,
which is based on market forces of demand and
supply during periods of congestion and high
demand, the surge price having received
acceptance the world over, and the fare fixation
under Section 67 not having taken into account
the peak factor for surge price, would only
indicate the arbitrariness of the said price
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fixation. The concept of fare in respect to the
service provided on the aggregator platform
has to be understood in the background of the
2019 amendment to the M.V. Act and the
guidelines, 2020.
5.28. The facilities provided by OLA are at a huge
cost of research and development, app
maintenance, and overheads. OLA, being an
internet-based common operator/aggregator, is
a separate class of service provider. Subsection
(12) of Section 2 would not apply to such a
service provider. In this regard, he relies upon
the Judgment of the Hon'ble Apex Court in
Printers (Mysore) Ltd. v. CTO32, more
particularly para 18 thereof, which is
reproduced hereunder for easy reference:
18. Now coming back to the amendment of the
definition of "goods" in Section 2(d) of the Central
Sales Tax Act, the said amendment, brought in with
32 (1994) 2 SCC 434 at page 444 : 1994 INSC 51
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a view to bring the said definition in accord with the
amendments brought in by the Constitution Sixth
(Amendment) Act (referred to hereinbefore) was
actuated by the very same concern, viz., to exempt
the sale of newspapers from the levy of Central Sales
Tax. The amendment was not intended to create a
burden which was not there but to remove the
burden, if any already existing on the newspapers --
a policy evidenced by the enactment of the Taxes on
Newspapers (Sales and Advertisements) Repeal Act,
1951. This concern must have to be borne in mind
while understanding and interpreting the expression
"goods" occurring in the second half of Section
8(3)(b). Now, the expression "goods" occurs on four
occasions in Section 8(3)(b). On first three
occasions, there is no doubt, it has to be understood
in the sense it is defined in clause (d) of Section 2.
Indeed, when Section 8(1)(b) speaks of goods, it is
really referring to goods referred to in the first half of
Section 8(3)(b), i.e., on first three occasions. It is
only when Section 8(3)(b) uses the expression
"goods" in the second half of the clause, i.e., on the
fourth occasion that it does not and cannot be
understood in the sense it is defined in Section 2(d).
In other words, the "goods" referred in the first half
of clause (b) in Section 8(3) refers to what may
generally be referred to as raw material (in cases
where they were purchased by a dealer for use in the
manufacture of goods for sale) while the said word
"goods" occurring for the fourth time (i.e., in the
latter half) cannot obviously refer to raw material. It
refers to manufactured "goods", i.e., goods
manufactured by such purchasing dealer -- in this
case, newspapers. If we attach the defined meaning
to "goods" in the second half of Section 8(3)(b), it
would place the newspapers in a more unfavourable
position than they were prior to the amendment of
the definition in Section 2(d). It should also be
remembered that Section 2 which defines certain
expressions occurring in the Act opens with the
words: "In this Act, unless the context otherwise
requires". This shows that wherever the word
"goods" occurs in the enactment, it is not mandatory
that one should mechanically attribute to the said
expression the meaning assigned to it in clause (d).
Ordinarily, that is so. But where the context does not
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permit or where the context requires otherwise, the
meaning assigned to it in the said definition need not
be applied. If we keep the above consideration in
mind, it would be evident that the expression
"goods" occurring in the second half of Section
8(3)(b) cannot be taken to exclude newspapers from
its purview. The context does not permit it. It could
never have been included by Parliament. Before the
said amendment, the position was -- the State could
not levy tax on intra-State sale of newspapers; the
Parliament could but it did not and Entry 92-A of List
I bars the Parliament from imposing tax on inter-
State sale of newspapers; as a result of the above
provisions, while the newspapers were not paying
any tax on their sale, they were enjoying the benefit
of Section 8(3)(b) read with Section 8(1)(b) and
paying tax only @ 4% on non-declared goods which
they required for printing and publishing newspapers.
Their position could not be worse after the
amendment which would be the case if we accept the
contention of the Revenue. If the contention of the
Revenue is accepted, the newspapers would now
become liable to pay tax @ 10% on non-declared
goods as prescribed in Section 8(2). This would be
the necessary consequence of the acceptance of
Revenue's submission inasmuch as the newspapers
would be deprived of the benefit of Section 8(3)(b)
read with Section 8(1)(b). We do not think that such
was the intention behind the amendment of definition
of the expression "goods" by the 1958 (Amendment)
Act. Even apart from the opening words in Section 2
referred to above, it is well settled that where the
context does not permit or where it would lead to
absurd or unintended result, the definition of an
expression need not be mechanically applied.
5.29. The fare in terms of M.V. Act and the fare in
terms of the guidelines have not been
adequately appreciated. It is the fare in terms
of guidelines which has to be considered, which
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is defined as 'total charges debited by the
aggregator to the rider pursuant to the latter
booking a ride through the aggregator's app
and completion of such ride'. This, he submits,
is at the total discretion of the service provider,
and the State has no role to play.
5.30. Lastly, he submits that OLA has been
discriminated against inasmuch as the
violations of two other app-based service
providers, namely Namma Yatri and RAPIDO,
have not been covered under the notification.
5.31. Namma Yatri is run by a private entity, which
has developed its own pricing/payment
mechanism in violation of the fare notification
dated 6.11.2021 and the order dated
14.10.2023. The said service provider is
charging separate amounts under driver pick-up
charges, customer tips, optional driver
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requests, etc, which is not covered under the
fare fixation under Section 67.
5.32. Similarly, RAPIDO service is charging by the
name of Auto Plus more than the fare
prescribed by this court and/or impugned
notification, and no action has been taken
against them. Only OLA has been targeted.
5.33. On these grounds, he submits that the Writ
Petition No.24486/2022 is required to be
allowed and relief sought to be granted.
Submissions of Sri. Prabhuling K.Navadagi, and
thereafter by his successor, Sri. Shashi Kiran
Shetty, the learned Advocate Generals on behalf
of the State.
6. On behalf of the State, initially, arguments were
advanced by the then-learned Advocate General Sri.
Prabhuling K.Navadagi, and thereafter by his
successor, Sri. Shashi Kiran Shetty, the learned
Advocate Generals submitted that;
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6.1. The aggregators are plying autorickshaws in
breach of license Rules in terms of the KODTTA
Rules; hence, on 11.10.2022, an order was
issued directing aggregators to stop plying
autorickshaws on their platform without
obtaining any license and at a price higher than
that fixed by the State government without
providing any details of the operating
autorickshaws to the concerned authorities, the
same having been challenged in W.P.
No.20349/2022 and 20437/2022 the petitioners
therein were permitted to charge 10% towards
the services rendered by them over and above
the fare fixed, and directed that no coercive
steps would be taken against them by the
respondents.
6.2. The petitioners therein could apply for a new
license or renew their license in accordance
with the law. His submission is that the said
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order continues to be in force and has not been
challenged.
6.3. In pursuance of the order of this court, the
State had invited the petitioners for discussion,
taking into account that an app was already
being used in the State of Karnataka for the
purpose of Taxi, and there is no additional cost
incurred in respect of the said app and services
covered under the said app by the mere
addition of autorickshaws to the said platform.
Many of the heads of account under which Uber
and Ola have sought higher amounts are not
those that are exclusive to autorickshaws, nor
are they exclusive to Bangalore or India, since
these applications and the features thereof are
used across the world. In terms of the
impugned notification, the service charges were
fixed at 5% above the fare for an autorickshaw,
excluding GST.
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6.4. The petitioners not having obtained the license
for autorickshaws, no action has been taken in
terms of the directions/protection afforded by
this court vide order dated 14.10.2022, though
it was entitled to do so, since even as of today,
there is no particular license granted to the
petitioners to provide service in respect of
autorickshaw, without obtaining such license
and without providing details of autorickshaws
as required in terms of license, the petitioner
cannot challenge the policy decision of the
State.
6.5. In terms of the KODTTA Rules, which are
notified by the State to regulate and ensure
greater integrity of process and operation of
on-demand technology aggregator platforms,
which came to be challenged in WP No.
30191/2016, 30917/2016 and 31673/2016, the
constitutional validity of the KODTTA Rules were
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upheld except in respect of Rule 5(3), 6(A),
10(O), 10(c), 10(v), 11(1e) and Rule 14, which
came to be challenged in W.A. No.4787/2016,
4789/2016 and 47109/2018, wherein it has
been noted that the appellants therein had
agreed that they shall not charge surge prices
from the commuters vide order dated
7.12.2016. Subsequently, on 13.12.2016, it
was directed that the petitioners therein would
obtain a license, which would be the subject
matter of the writ appeal, and the authorities
would not take any coercive action for violation
of the KODTTA rules.
6.6. The application for a grant of license for a four
wheeler Taxi was made by Uber on 18.04.2016,
attaching the list of four-wheeler vehicles, and
the same was granted. Similarly, Ola filed an
application on 28.06.2021 enclosing its list of
four-wheelers, which was granted. Neither Uber
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nor Ola had enclosed the list of autorickshaws
at that time. Thus, the said license does not
cover autorickshaws. They, however, submit
that a list of all the four-wheelers onboarded on
the platforms of Uber and Ola has not been
furnished.
6.7. Their submission is also that autorickshaws are
distinct from four-wheelers, being three-
wheelers and they being a separate class, a
separate license is required to be obtained in
respect of an autorickshaw as regards an
aggregator. The requirement of providing a list
of vehicles is mandatory for obtaining a license,
the License would be restricted only to the list
of vehicles provided and would not extend
beyond that list, this being in terms of form-3
of Central Guidelines, 2020, which, according to
the petitioners is applicable, which requires a
separate license to be granted and obtained by
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the aggregators. Thus, their submission is that
a single license is not sufficient to run various
categories of vehicles.
6.8. No application to date has been filed for a
license in respect to autorickshaws enclosing
the list of autorickshaws; thus, no license has
been granted by the State with respect to
autorickshaws. Insofar as the power of the
State government under Section 67, their
submission is that Section 67 confers power on
the State government to control road transport
by issuing necessary directions regarding fixing
fares, freight for stage carriages, contract
carriages and goods carriages. The fixing of
fare can only be made under Section 67, and
such fare would include any and all charges
that the transportation vehicles can collect from
its passengers/customers. In this regard, they
placed reliance on the decision of the Hon'ble
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Apex court in Sree Gajanana Motor Transport
Co. Ltd. v. State of Karnataka33, more
particularly para 5 to 7 thereof, which are
reproduced hereunder for easy reference:
5. Learned Counsel for the appellant contends that
the power of the Government to issue directions
relating to "freights" does not include imposition of
charges for carrying postal goods as conditions of
permits which the Regional Transport Authority
grants in exercise of its quasi-judicial powers. The
attack on the validity of the government direction is
thus twofold : firstly, that it falls outside the scope of
Section 43(1) of the Act as charges for carrying mail
are not "freight" on goods carried; and, secondly,
that no directions could be given to a quasi-judicial
authority as to how it should perform its functions.
6. So far as the first argument is concerned, we do
not find much substance in it. The term "charge" is a
broad one. As used here, it is not a technical term
and has not been denied by the Act. It has,
therefore, its ordinary dictionary meaning. It means
any amount which may be demanded as a price for
the rendering of some service or as price of some
goods. The argument of the learned Counsel for the
appellant that the Act uses the term "freight" to
indicate the charge made on carriage of goods,
whereas the term "fare" is used for the charge made
for carrying passengers, itself rests on the
assumption that the term charge is a wide one. It
includes both freights and fares. It is true that the
term "fare" is used in relation to charges made for
carriage of passengers and the term freight is used
for charges made for the carriage of goods.
Nevertheless, both are charges. It may be that stage
carriages are meant for the carriage of passengers.
But, as is a matter of common knowledge, they also
33 (1977) 1 SCC 37 : 1976 INSC 229
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carry the luggage of passengers. In other words,
they also carry some goods incidentally. The
mailbags in which the postal goods are sent are only
a type of goods which are not so bulky as to require
trucks or special vans. It is possible to carry them in
stage carriages together with the luggage of the
passengers. In any case, this is a condition which is
probably imposed only in those areas where mail
vans of the State are not found to be necessary or
economical to run. In the villages in the interior of
some rural areas, there may not be so much mail to
carry as to justify sending a mail van. Therefore,
power is given to the Regional Transport Authority to
attach the condition that postal goods should be
carried in stage carriages at rates fixed by the
Government. The real grievance of the operators is
not that they have to carry postal goods as a
condition of their permits but that the rates fixed are
too low. The proper remedy for such a grievance is,
as the High Court rightly pointed out, to apply to the
Government for revision of rates fixed.
7. Coming to the second submission, we may
observe that, although, there is ample authority for
the proposition that the grant of stage carriage
permits is a quasi-judicial function, with which the
State Government cannot interfere by giving
directions which may impede the due performance of
such functions, yet, when Section 48(3) speaks of
the power to attach conditions after the decision to
grant the permit, it really deals with what lies past
the quasi-judicial stage of decision to grant the
permit. At that stage, the decision to grant the
permit is already there and only conditions have to
be attached to the permit, such as the necessity to
carry postal goods on certain routes at rates fixed by
the Government. On the face of it, these rates
cannot be properly determined by the Regional
Transport Authority. They have to be uniform
throughout the State. A decision on what they should
be must rest on considerations of policy and on facts
which are not quite relevant to the grant of stage
carriage permits. In any case, it is the State
Government which has the data, and the legal
power, under Section 43(1) of the Act, to fix freights
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for carriage of postal goods in various types of
carriages, mentioned there, including stage
carriages. We think that such charges are merely a
species of freight on postal goods about which the
State Government can issue appropriate directions to
the State Transport Authority. The Regional
Transport Authority has only to annex the condition
automatically in areas where such a condition may
be required to be annexed to the permits granted.
6.9. The State has, under Section 67 of the Act,
fixed the fare in respect of four-wheeler taxis
operating on aggregator platforms like Uber
and Ola on 1.4.2021, which has been accepted
and followed by both Ola and Uber, no
challenge having been made to the power of
the State to fix such fare, it is only now in
respect of autorickshaws such a challenge has
been made. Uber and Ola cannot have two
different stands for these vehicles, especially
when the same app is used for both services.
The fare fixed for four-wheelers not having
been challenged is deemed to be accepted.
Thus, the power of the State under Section 67
has been accepted by both Uber and OLA with
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respect to the fixation of fares. They cannot
now contend otherwise with respect to the fares
fixed under Section 67 for an autorickshaw.
6.10. Section 93 is not one that covers the power to
fix fares; it only covers the procedure of how an
aggregator is granted a license and what the
requirements are to be satisfied by the
aggregator. Fare is not an item that comes
under Section 93; it is already covered under
Section 67. The fare has been fixed by the
State, taking into consideration all and every
aspect that is required to be so taken into
consideration.
6.11. Price fixation, being a legislative activity, is not
justiciable, and this court cannot determine its
validity or otherwise. In this regard, he relies
on the decision of the Hon'ble Apex court in
Cynamide India Ltd.(supra11), more
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particularly para 4, 5 and 7 thereof, which are
reproduced hereunder for easy reference:
4. We start with the observation, "Price fixation is
neither the function nor the forte of the court". We
concern ourselves neither with the policy nor with the
rates. But we do not totally deny ourselves the
jurisdiction to enquire into the question, in
appropriate proceedings, whether relevant
considerations have gone in and irrelevant
considerations kept out of the determination of the
price. For example, if the legislature has decreed the
pricing policy and prescribed the factors which should
guide the determination of the price, we will, if
necessary, enquire into the question whether the
policy and the factors are present to the mind of the
authorities specifying the price. But our examination
will stop there. We will go no further. We will not
deluge ourselves with more facts and figures. The
assembling of the raw materials and the mechanics
of price fixation are the concern of the executive and
we leave it to them. And, we will not re-evaluate the
considerations even if the prices are demonstrably
injurious to some manufacturers or producers. The
court will, of course, examine if there is any hostile
discrimination. That is a different "cup of tea"
altogether.
5. The second observation we wish to make is,
legislative action, plenary or subordinate, is not
subject to rules of natural justice. In the case of
Parliamentary legislation, the proposition is self-
evident. In the case of subordinate legislation, it may
happen that Parliament may itself provide for a
notice and for a hearing -- there are several
instances of the legislature requiring the subordinate
legislating authority to give public notice and a public
hearing before say, for example, levying a municipal
rate -- in which case the substantial non-observance
of the statutorily prescribed mode of observing
natural justice may have the effect of invalidating the
subordinate legislation. The right here given to rate
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payers or others is in the nature of a concession
which is not to detract from the character of the
activity as legislative and not quasi-judicial. But,
where the legislature has not chosen to provide for
any notice or hearing, no one can insist upon it and it
will not be permissible to read natural justice into
such legislative activity.
7. The third observation we wish to make is, price
fixation is more in the nature of a legislative activity
than any other. It is true that, with the proliferation
of delegated legislation, there is a tendency for the
line between legislation and administration to vanish
into an illusion. Administrative, quasi-judicial
decisions tend to merge in legislative activity and,
conversely, legislative activity tends to fade into and
present an appearance of an administrative or quasi-
judicial activity. Any attempt to draw a distinct line
between legislative and administrative functions, it
has been said, is "difficult in theory and impossible in
practice". Though difficult, it is necessary that the
line must sometimes be drawn as different legal
rights and consequences may ensue. The distinction
between the two has usually been expressed as "one
between the general and the particular". "A
legislative act is the creation and promulgation of a
general rule of conduct without reference to
particular cases; an administrative act is the making
and issue of a specific direction or the application of
a general rule to a particular case in accordance with
the requirements of policy". "Legislation is the
process of formulating a general rule of conduct
without reference to particular cases and usually
operating in future; administration is the process of
performing particular acts, of issuing particular
orders or of making decisions which apply general
rules to particular cases." It has also been said:
"Rule-making is normally directed toward the
formulation of requirements having a general
application to all members of a broadly identifiable
class" while, "an adjudication, on the other hand,
applies to specific individuals or situations". But, this
is only a broad distinction, not necessarily always
true. Administration and administrative adjudication
may also be of general application and there may be
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legislation of particular application only. That is not
ruled out. Again, adjudication determines past and
present facts and declares rights and liabilities while
legislation indicates the future course of action.
Adjudication is determinative of the past and the
present while legislation is indicative of the future.
The object of the rule, the reach of its application,
the rights and obligations arising out of it, its
intended effect on past, present and future events,
its form, the manner of its promulgation are some
factors which may help in drawing the line between
legislative and non-legislative acts. A price fixation
measure does not concern itself with the interests of
an individual manufacturer or producer. It is
generally in relation to a particular commodity or
class of commodities or transactions. It is a direction
of a general character, not directed against a
particular situation. It is intended to operate in the
future. It is conceived in the interests of the general
consumer public. The right of the citizen to obtain
essential articles at fair prices and the duty of the
State to so provide them are transformed into the
power of the State to fix prices and the obligation of
the producer to charge no more than the price fixed.
Viewed from whatever angle, the angle of general
application, the prospectiveness of its effect, the
public interest served, and the rights and obligations
flowing therefrom, there can be no question that
price fixation is ordinarily a legislative activity. Price
fixation may occasionally assume an administrative
or quasi-judicial character when it relates to
acquisition or requisition of goods or property from
individuals and it becomes necessary to fix the price
separately in relation to such individuals. Such
situations may arise when the owner of property or
goods is compelled to sell his property or goods to
the Government or its nominee and the price to be
paid is directed by the legislature to be determined
according to the statutory guidelines laid down by it.
In such situations the determination of price may
acquire a quasi-judicial character. Otherwise, price
fixation is generally a legislative activity. We also
wish to clear a misapprehension which appears to
prevail in certain circles that price fixation affects the
manufacturer or producer primarily and therefore
fairness requires that he be given an opportunity and
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that fair opportunity to the manufacturer or producer
must be read into the procedure for price fixation.
We do not agree with the basic premise that price
fixation primarily affects manufacturers and
producers. Those who are most vitally affected are
the consumer public. It is for their protection that
price fixation is resorted to and any increase in price
affects them as seriously as any decrease does a
manufacturer, if not more.
6.12. Fare is a final payment made by any customer.
Their submission is that the same is inclusive of
all charges excluding taxes and, therefore, is
within the power of the state government under
Section 67 to regulate. Though the KODTTA
Rules of 2016 have been introduced prior to the
amendment to M.V.Act, his submission is that
those Rules are one which is contemplated
under Section 93, 95(1) and 96(1), and all the
formalities in respect of the said provisions
have been complied with, the KODTTA Rules
would have to be taken into consideration,
whose validity has already been upheld by the
Coordinate Bench.
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6.13. In terms of Rule 9 of the KODTTA Rules, an
aggregator is not entitled to charge a fare
higher than that fixed by the state government.
The fare fixed under Section 67, with 5% of the
said fare being the service fee, it would have to
be complied, and the distinction drawn by Uber
and Ola that fare under Rule 9 is one single
composite fare and a separate service fee
cannot be included is only a distinction without
any difference.
6.14. Section 67 provides omnibus power to the State
government to give directions as regards the
ceiling of fare, keeping in view the passenger
convenience, economically competent price,
prevention of overcrowding and road safety,
such power having been exercised by the State
cannot be so questioned by the petitioner in the
manner done before this court. In the present
case, no one has challenged the fare perse, but
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the challenge is to the service fee, which cannot
be raised today on the basis of the petitioners
being entitled to make profits.
6.15. The fare fixation made on 6.11.2021 is binding
on the service providers. The service providers
being entitled to 5% of the said fare as service
charges by the impugned notification is in
compliance with the order dated 14.10.2022
passed by this court, and same cannot be found
fault with.
6.16. Their submission is that the fare fixed includes
a service fee, the power thereof being drawn
from a conjoint reading of Sections 67 and 68
of the M.V. Act. Subsection (3) of Section 68
provides for the State Transport Authority and
every Regional Transport Authority to give
effect to directions issued under Section 67.
Section 67 provides that the State government
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could issue directions to both the State
Transport Authority and every Regional
Transport Authority regarding competitive fares.
Section 67 was amended in the year 2019,
before such amendment it read as follows:
67. Power to State Government to control road
transport.-
(1) A State Government, having regard to-
(a) the advantages offered to the public, trade and
industry by the development of motor transport,
(b) the desirability of co-ordinating road and rail
transport,
(c) the desirability of preventing the deterioration of the
road system, and
(d) the desirability of preventing uneconomic
competition among holders of permits.
may, from time to time, by notification in the Official
Gazette, issue directions both to the State Transport
Authority and Regional Transport Authority-
(i) regarding the fixing of fares and freights (including
the maximum and minimum in respect thereof) for
stage carriages, contract carriages and goods carriages:
(ii) regarding the prohibition or restriction, subject to
such conditions as may be specified in the directions, of
the conveying of long distance goods traffic generally, or
of specified classes of goods by goods carriages;
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(iii) regarding any other matter which may appear to
the State Government necessary or expedient for giving
effect to any agreement entered into with the Central
Government or any other State Government or the
Government of any other country relating to the
regulation of motor transport generally, and in particular
to its coordination with other means of transport and the
conveying of long distance goods traffic:
Provided that no such notification in respect of the
matters referred to in clause (ii) or clause (iii) shall be
issued unless a draft of the proposed directions is
published in the Official Gazette specifying therein a
date being not less than one month after such
publication, on or after which the draft will be taken into
consideration and any objection or received has, in
consultation with the State Transport Authority,
suggestion which may be been considered after giving
the representatives of the interests affected an
opportunity of being heard.
(2) Any direction under sub-section (1) regarding the
fixing of fares and freights for stage carriages, contract
carriages and goods carriages may provide that such
fares or freights shall be inclusive of the tax payable by
the passengers or the consignors of the goods, as the
case may be, to the operators of the stage carriages,
contract carriages or goods carriages under any law for
the time being in force relating to tax on passengers and
goods.
6.17. Section 67 post the amendment in the year
2019, reads as under:
67. Power to State Government to control road
transport.--
[(1) A State Government, having regard to--
(a) the advantages offered to the public, trade and
industry by the development of motor transport;
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(b) the desirability of co-ordinating road and rail
transport;
(c) the desirability of preventing the deterioration of the
road system, and
(d) promoting effective competition among the transport
service providers,
may, from time to time, by notification in the Official
Gazette issue directions both to the State Transport
Authority and Regional Transport Authority regarding
the passengers' convenience, economically competitive
fares, prevention of overcrowding and road safety.]
(2) Any direction under sub-section (1) regarding the
fixing of fares and freights for stage carriages, contract
carriages and goods carriages may provide that such
fares or freights shall be inclusive of the tax payable by
the passengers or the consignors of the goods, as the
case may be, to the operators of the stage carriages,
contract carriages or goods carriages under any law for
the time being in force relating to tax on passengers and
goods:
[Provided that the State Government may subject to
such conditions as it may deem fit, and with a view to
achieving the objectives specified in clause (d) of sub-
section (1), relax all or any of the provisions made
under this Chapter.]
[(3) Notwithstanding anything contained in this Act, the
State Government may, by notification in the Official
Gazette, modify any permit issued under this Act or
make schemes for the transportation of goods and
passengers and issue Licenses under such scheme for
the promotion of development and efficiency in
transportation--
(a) last mile connectivity;
(b) rural transport;
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(c) reducing traffic congestion;
(d) improving urban transport;
(e) safety of road users;
(f) better utilisation of transportation assets;
(g) the enhancement of economic vitality of the area,
through competitiveness, productivity and efficiency;
(h) the increase in the accessibility and mobility of
people;
(i) the protection and enhancement of the environment;
(j) the promotion of energy conservation;
(k) improvement of the quality of life;
(l) enhance integration and connectivity of the
transportation system, across and between modes of
transport; and
(m) such other matters as the Central Government may
deem fit.
(4) The scheme framed under sub-section (3), shall
specify the fees to be charged, form of application and
grant of a License including the renewal, suspension,
cancellation or modification of such License.]
6.18. After the amendment, the scope of power of the
state government increased. Prior to the
amendment, the State government could only
issue directions regarding fixing of fares, freight
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charges for stage carriages, contract carriages
and good carriages. After the amendment, the
scope includes the issuance of directions to fix
economically competitive fares without any
limitation regarding any class of vehicle. The
fare as fixed is a policy decision, and the scope
of judicial review in relation thereto is very
limited. In this regard, he relies upon the
decision of this court in Canara Bus
Operators Association vs. The Principal
Secretary to the Transport34, more
particularly para 5 and 6 thereof, which are
reproduced hereunder for easy reference:
5. In this context, it is relevant to note the
observations of the Supreme Court in the case
of ASSOCIATION OF INDUSTRIAL ELECTRICITY
USERS v. STATE OF A.P. reported in AIR 2002 SC
1361 which reads thus:-
"We also agree with the High Court that the
judicial review in the matter with regard to fixation
of tariff has not to be as that of an appellate
authority in exercise of its jurisdiction under Article
226 of the Constitution. All that the High Court has
34 2011 SCC Online Kar 888
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to be satisfied is that the commission has followed
the proper procedure and unless it can be
demonstrated that its decision is on the face of its
arbitrary or illegal or cantrary to the Act the Court
will not interfere. Finding the tariff and providing
for cross-subsidy is essentially a matter of policy
and normally Court would refrain from interfering
with the policy decision unless the power exercised
is arbitrary or ex facie had in law."
6. Hence the impugned notification Annexrure-E
cannot be said to be illegal as the same is in
consonance with the notification issued by the State
Government vide Annexure-B dated 3.11.2010. The
same need not he interfered with. However, the first
respondent may be directed to consider the
representation filed by the petitioner association as
per Annexure-F submitted on 24.9.2011 seeking
enhancement of fare in accordance with law and on
merits, as early as possible, but not later then outer
limit of three months from the date of receipt of this
order.
6.19. They rely on the decision in Kerala State
Electricity Board v. Sir Syed Institute for
Technical Studies35, more particularly para 18
thereof, which is reproduced hereunder for easy
reference:
18. If any appeal is preferred in relation to any
specific case, the Commission would then have to
justify fixing a tariff rate in such a case. The duty to
disclose reason would crystallise then only, in a
situation where a particular tariff fixing proposal goes
without any objection after its draft publication. Not
having gone to the appellate forum, the writ
35 2020 SCC OnLine SC 229 : 2020 INSC 218
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petitioners approached the writ court. Before the writ
court, such tariff fixation was open to challenge in
the same way tariffs fixed in exercise of quasi-
legislative or administrative power are subjected to
judicial review. Thus, in our opinion, in the absence
of any statutory provision to the contrary, once tariff
proposal is published and goes unobjected to before
the State Commission, the question of disclosure of
reason for such fixation would not arise at the stage
of finalisation of tariff. If such tariff orders are later
challenged before the appellate forum or the writ
court, the Commission would have to defend its
decision the same way an administrative or quasi-
legislative decision on fixing of tariff is defended.
Since we have taken this view, we do not consider it
necessary to deal with the authorities which lay down
the dictum of law that a quasi-judicial authority is
required to disclose reasons in support of its
decision.
6.20. Placing reliance on the above, they submit that
merely because tariff fixation notification did
not contain any reasons, it cannot be faulted
with. Even a tariff fixation without reasons can
be defended in a court of law in the same way
as an administrative or quasi-legislative
decision. Fixing of fares is a quasi-legislative
function as held by the Hon'ble Apex Court in
Pawan Alloys & Casting (P) Ltd. v. U.P.
SEB36, more particularly para 25 and 26
36 (1997) 7 SCC 251 at page 272 : 1997 INSC 569
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thereof, which are reproduced hereunder for
easy reference:
25. However Shri Dave, learned Senior Counsel
appearing for the Board, vehemently pressed into
service a decision of a three-Judge Bench of this
Court in the case of Ashok Soap Factory v. Municipal
Corpn. of Delhi [(1993) 2 SCC 37] . In that case the
Court was concerned with the power exercised by the
Delhi Municipal Corporation under Section 283 of the
Delhi Municipal Corporation Act, 1957 to levy charges
for the supply of electricity at such rates as may be
fixed from time to time by the Delhi Municipal
Corporation in accordance with law. The dispute
centred round the question of levying minimum
consumption guarantee charges for large industrial
power consumers and tariff revision in connection
therewith. The Court upheld the revision of minimum
demand charges but while doing so in para 29 of the
Report observed that apart from that, the fixation of
tariff was a legislative function and the only
challenge to the fixation of such levy could be on the
ground of unreasonableness or arbitrariness and not
on demonstrative grounds in the sense that the
reasons for the levy of charge must be disclosed in
the order imposing the levy or disclosed to the court,
so long as it was based on objective criteria.
26. We fail to appreciate how those observations
made in connection with entirely a different challenge
based on different statutory scheme can be
straightaway pressed into service for contending that
even grant of rebate of electricity charges as a part
of permissible incentive scheme would also be a
legislative function. It has to be kept in view that the
Board exercises its statutory powers under Section
49(1) of the Act by fixing uniform rates of tariff for
electricity charges. When it fixes general tariffs, it
may be said to be exercising delegated legislative
power. But while doing so, it also in exercise of its
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statutory power can grant rebate to a given class of
consumers under Section 49 sub-sections (2) and (3)
read with Section 78-A of the Act. Once the uniform
tariffs are fixed the statutory function of quasi-
legislative nature gets fructified. Dehors such rates if
some concession by way of rebates is to be given the
same would still remain in the field of statutory
exercise of power. On this aspect we may usefully
refer to a decision of this Court in the case of Bihar
SEB v. Usha Martin Industries [(1997) 5 SCC 289]
rendered by a Bench of two learned Judges wherein
one of us (K.T. Thomas, J.) was a member. Dealing
with the very same Section 49(1) the following
pertinent observations were made by Sen, J.
speaking for the Bench: (SCC pp. 294-95, para 17)
"17. Moreover, the tariff is fixed by exercise of
statutory power. It is not fixed as a result of any
bargaining by and between the Board and the
consumers. It is a uniform tariff which every
consumer will have to pay for the electricity
consumed by him. In fact, the consumer has no
option but to pay the tariff fixed by the Board in
exercise of power conferred by Section 49."
For the purpose of the present discussion we may
proceed on the basis that while fixing general tariffs
and making them subject to the schemes of rebate,
the Board exercises delegated legislative function
flowing from the statute. However once incentive
rebate is granted in the general rate of tariffs on
directions by State under Section 78-A, the said
incentive rebate offered by the Board would remain
in the realm of exercise of statutory power-cum-
duty. In the exercise of the same power the Board
in its discretion can grant rebate in appropriate
cases within the four corners of Sections 49 and 78-
A of the Act. Of course this exercise will be subject
to legally permissible limits and subject to the said
concessional rates being found reasonable on the
touchstone of Article 14 of the Constitution of India.
It is, therefore, not possible to countenance the
submission of Shri Dave that there cannot be any
promissory estoppel against the Board when it
exercises its powers under Section 49(1) of the Act
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whatever may be the settings for exercise of this
power and even if it is exercised as a part of a
scheme of incentive package required to be offered
to new industries as enjoined on the Board as per
statutorily binding directions issued by the State to
the Board under Section 78-A of the Act.
6.21. They reiterate that the State Government has
fixed minimum and maximum (fare) for four-
wheeler taxi services, which also include the
aggregator fee, vide notification dated
1.04.2021 issued under Section 67 of the MV
act. The power under Section 67, as also the
tariff which has been fixed, has been accepted
and implemented by Uber and Ola, as such
similar exercise now done under Section 67 in
respect of autorickshaws cannot be found fault
with. The uniform fare structure has been
prescribed, taking into account the payment to
be made by the consumer, merely because
there is an aggregator who acts as a
middleman, and the fare with or without an
aggregator cannot be different.
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6.22. Any commission that an aggregator wishes to
charge would have to be within the fare, and no
amount greater than the fixed fare can be
charged. Sections 67 and 68 of the M.V. Act
have to be read along with Rule (9) of the
KODTTA Rules, which would make it clear that
the fare is all-inclusive, and there cannot be
any amount charged over and above the fare.
6.23. Insofar as the Central Motor Vehicle Guidelines
2020 is concerned, they submit that the same
is directory (discretionary) and not mandatory
since the words used are "the State
government may follow the central guidelines
and may issue a license to the aggregator...".
This aspect has already been considered by the
Hon'ble Apex Court in Roppen Transportation
Services (P) Ltd. v. Union of India37,
wherein it has been held that guidelines are
37 (2023) 4 SCC 349 : 2023 INSC 102
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persuasive, relevant paras 9 and 10, which are
reproduced hereunder for easy reference,
9. Clause 15(1) stipulates that the Central and the
State Governments seek to pursue the objective of
reducing traffic congestion and automobile pollution
as well as effective asset utilisation. However, Clause
15 also stipulates that the pooling of non-transport
vehicles may be provided by the aggregator unless
prohibited by the State Government. The rationale
for such a prohibition has to be specified in writing by
the State Government and has to be accessible on its
transport portal.
10. The Government of Maharashtra has not
formulated any rules in relation to aggregators for
the purpose of enforcing the provisions of Chapter V,
more particularly, Section 93(1). The first proviso to
Section 93 stipulates that while issuing a License to
an aggregator, the State Government may follow
such guidelines as may be issued by the Central
Government. The Guidelines which have been issued
by the Central Government have a persuasive value.
They are not mandatory. When the State
Government formulates rules in pursuance of its
power under Section 96, it may also bear in mind the
Guidelines which have been framed by the Union
Government in 2020. Both in terms of the first
proviso to Section 93(1) and the plain terms of the
Guidelines, it is evident that while these Guidelines
have to be borne in mind, the ultimate decision is to
be arrived at by the State Government while
considering whether to grant a License and in regard
to the formulation of rules in pursuance of the
general rule-making power under Section 96.
6.24. The Hon'ble Apex Court has also held that
unless there is a proper license for specific
vehicles, the aggregation of such vehicles
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cannot be allowed, and in this regard, he relies
upon the decision dated 12.06.2023 in Civil
Appeal No.4040/2023.
6.25. As regards Sub-rule 4 of Rule 13 of the
guidelines, they submit that what is stated
therein is that a driver should receive at least
80% of the fare. The same does not indicate
that the aggregator will have to receive 20% of
the fare. There is no vested right carved out in
sub-rule (4) of rule 13 entitling an aggregator
to 20% of the fare.
6.26. It is up to Uber and Ola to enter into such an
agreement with the permit holder/Cab driver as
agreeable between the parties. Even as per the
Central Government Guidelines, there is no
specific distinction between fare and service
fee, what is stated is that the driver would be
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entitled to at least 80% of the amount collected
by the aggregator.
6.27. The State has fixed the fare, taking into
consideration the end user/consumer who is
required to know exactly how much is to be
paid and he pays the amount expected while
doing so, the state has also taken into
consideration all aspects affecting the permit
holder, including the expenses incurred which in
turn includes the commission to be paid to the
aggregators, the state has taken all relevant
factors into account while fixing the fare, the
same cannot be contended to be arbitrary as
done in the present petitions.
6.28. A challenge to the KODTTA Rules, 2016, having
been made before this court, a Single judge
having upheld most of the provisions. The
central guidelines are persuasive, and most of
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the issues covered under the central guidelines
are covered under the KODTTA Rules. Uber and
Ola cannot seek the implementation of
guidelines as a matter of right. It is left to the
State to decide which part of the guidelines
would apply and to what extent.
6.29. Uber and Ola have been contending that they
are entitled to 20% or 25% of the fare as the
service fee. Many times, they have also
contended that they are entitled to a surge fee
despite having undertaken before the division
bench that they would not charge a surge fee,
and thus, the service fee is now proposed to be
charged on the surge fee also, which is not
permissible. Despite several requests having
been made by the State to Uber and Ola to
place on record the expenses incurred by them,
since it is they who are in the full know of the
charges and expenses incurred, more so in view
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of the interim order passed by this court on
14.10.2022, neither Uber nor Ola have placed
all the details on record. There is absolutely no
transparency in the actions of Uber and Ola, not
having furnished the details, they cannot now
contend that the fixation made by the state is
arbitrary or irrational.
6.30. The State has taken into consideration the
available material, in order to safeguard the
interest of the consumer's viz., the passengers
of the autorickshaws as also the permit holders.
Uber and Ola were asked to clearly place on
record the cost component under each head of
account if they intended to claim any such
amount.
6.31. The State has not taken any action against Uber
and Ola despite several violations that they
have committed during the pendency of the
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above petitions due to the orders passed by the
Division Bench. Uber and Ola have been
misusing the order dated 13.12.2016 passed by
the Division Bench. Firstly, they are aggregating
the taxis, and now they are aggregating the
autorickshaws without obtaining a License.
They are required to obtain a specific license for
a specific vehicle for each type of vehicle by
giving particulars of the vehicle, number of
vehicles, etc. both Uber and Ola, not having
done the needful, have violated the KODTTA
Rules and M.V Act, and continue to do so day
on day.
6.32. Autorickshaws and four-wheeler motor Taxis are
treated differently. In a country like India,
autorickshaws are used by the common, lower
middle class and below, whereas four-wheeler
taxis are used by the middle class and above. It
is the interest of those persons belonging to the
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lower middle class and later which are to be
protected. Autorickshaws form a backbone of
transport activities; there being several issues
relating to overcharging, fare has been fixed for
autorickshaws, which can be enforced by the
concerned authorities. The meter fixed as also
calibration thereof is also done by State
authorities to see that the passenger is not
cheated or taken advantage of.
6.33. The service fee that Uber and Ola are
demanding to be fixed is far from the fare fixed
under Section 67, and the reasons given by the
said service providers are that the vehicle will
come to the doorstep, and the passenger is not
required to go in search of the vehicle, and
there are several other value-added services
which are provided. The driver coming to the
doorstep is a service rendered by the
driver/permit holder and not by Uber/Ola;
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hence, the question of claiming any amount
would not arise. At the most, the driver/permit
holder would be entitled to an additional
amount to come to the pick-up point or to the
location; neither Uber nor Ola can charge any
money for the same.
6.34. Autorickshaws, being ubiquitous and forming a
part of the urban landscape, is the cheapest
mode of travel for people belonging to the
lower middle class, and later, if the claims of
Uber and Ola are accepted, then the said
customer will be forced to pay more money
than the fare fixed, which will impinge upon his
rights.
6.35. The decision relied upon by Sri. K.G.Raghavan,
learned Senior counsel in Mohinder Singh
Gill's case (supra9), has been distinguished in
All India Railway Recruitment Board v. K.
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Shyam Kumar38, more particularly para 16
thereof which is reproduced hereunder for easy
reference:
16. We heard the learned counsel on either side at
length and we have also gone through the extract of
the vigilance report which appears in para 15 of the
judgment of the High Court. The report indicated that
100 to 200 candidates were suspected to have
obtained answers for the questions three hours
before the examination through some middleman
who had arranged the answers by accepting huge
bribe. Apart from the serious allegations of
impersonation in respect of 62 candidates it was
stated on close scrutiny of the answer sheets, at
least six candidates had certainly adopted unfair
means to secure qualifying marks in the written test.
The report says that investigation prima facie
established leakage of question papers to a sizable
number of candidates for the examination held on
23-11-2003. Further, it was also noticed that leakage
of question paper was preplanned and widespread
and the possibility of involvement of the Railway/RRB
staff and also outsiders could not be ruled out and
hence, recommended that the matter be referred to
CBI.
6.36. A distinction has also been made in PRP
Exports v. State of T.N.39, more particularly
para 8 thereof, which is reproduced hereunder
for easy reference:
38 (2010) 6 SCC 614 : 2010 INSC 283
39 (2014)13 SCC 692 :
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8. Shri Harish Salve, learned Senior Counsel
appearing for the petitioner, submitted that he is
more concerned with the first question and
arguments were advanced by him as well as Shri C.
Sundaram, learned Senior Counsel appearing for the
State, on that point. In our view, the Division Bench
of the High Court is right in examining the
subsequent events as well in a case where larger
public interest is involved.
"45. We are of the view that the decision-maker can
always rely upon subsequent materials to support
the decision already taken when larger public
interest is involved. This Court in Madhyamic
Shiksha Mandal, M.P. v. Abhilash Shiksha Prasar
Samiti [(1998) 9 SCC 236] found no irregularity in
placing reliance on a subsequent report to sustain
the cancellation of the examination conducted where
there were serious allegations of mass copying. The
principle laid down in Mohinder Singh Gill case
[(1978) 1 SCC 405] is not applicable where larger
public interest is involved and in such situations,
additional grounds can be looked into to examine
the validity of an order. The finding recorded by the
High Court that the report of CBI cannot be looked
into to examine the validity of the order dated 4-6-
2004, cannot be sustained."
6.37. Thus, they submit that the fare fixed under
Section 67 is proper and correct. There are no
particular Rules that are to be framed under
Section 93 when the State has exercised
statutory power under Sections 67 and 68 of
the M.V. Act, and the writ petitions have to be
dismissed.
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Submissions on part of Intervenors:
7. There were several applications filed for impleading,
and this Court, being of the considered opinion that
those persons or entities are not strictly proper and
necessary parties, has brought them on record as
intervenors to assist this court. Submissions were
heard from the counsels representing the
intervenors.
8. Sri. N.P.Amruthesh, learned counsel who appears for
Bharath Transport Association, submitted that:
8.1. The said association is an organization for the
welfare of taxi and autorickshaws (service
providers) who have been providing taxi and
autorickshaw services in Bangalore for several
years.
8.2. The drivers who are members of the said
association are normally not educated, come
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from village areas, they had been eking out a
livelihood by providing taxi and autorickshaw
services. Once Uber and OLA started their
business as aggregators, these drivers were
constrained to enrol themselves with Uber and
OLA, hoping that they would get good revenue
as per the promise held out by Uber and OLA.
Uber and Ola had also promised incentives over
and above the fare for being onboarded. It is on
that basis that many joined these aggregators;
with the passage of time, the incentives
promised have all but vanished.
8.3. He submits that Uber and OLA started
exploiting and are now exploiting the drivers
and owners of taxis and autorickshaws because
of the monopoly they enjoyed. Customers and
passengers have also been exploited in making
payments for minimum fares way above the
fare fixed by the transport authority, apart from
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GST, service charges, surge charges,
maintenance charges, etc.
8.4. Despite several complaints by drivers, owners,
and respective associations, neither Uber nor
OLA has mended themselves, nor has the state
taken any action. Despite the Members of
Parliament having written to the Chief Minister
about such exploitation, the Government has
not taken action.
8.5. On repeated follow-ups, a notice came to be
issued to OLA and M/s Roppen Transport
Services, who runs the services by the name
Rapido. Thereafter, the Transport Minister
addressed a press meeting by directing the
authorities to seize the autorickshaws that were
demanding more than the minimum fare fixed
by the government. However, the government
authorities, being hand in glove with Uber and
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OLA, have been mute spectators and have not
taken any action. The State having called for a
meeting with Uber and OLA, several
deliberations have been held, and no mutual
agreement having been arrived at; the State
took a decision to ban Uber and OLA on
11.02.2022, which indicates that the action
taken by the State is to protect the interest of
both the drivers and owners of the vehicles as
also passengers/customers.
8.6. His further submission is that when Permit
Holders/Drivers complain about the actions of
the Aggregators, they are blacklisted and not
allowed to be onboarded once again, which
amounts to use of the dominant position of the
aggregators. He adds that there is cartelization
amongst the aggregators; if Uber blacklists a
driver, he is not onboarded by Ola, and vice
versa. The information about blacklisting is
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communicated amongst the aggregators. On
that basis, he submits that there is also
cooperation amongst these two aggregators,
who are the largest in the aggregating
business, having a market share of more than
90%; it is only now that there are new entrants
like Rapido and Namma Yatri.
8.7. As far as the surge price is concerned, he
submits that no amount is paid to the Permit
Holder/Driver; it is retained by the Aggregator.
8.8. Though much arguments have been advanced
by the aggregators as regards the vehicles
offering the services of doorstep pick up, his
submission in this regard is that such services
are offered by the Permit Holder/Driver and not
by the aggregators; the aggregators do not
make payments of any amounts on this head of
account to the permit holder/driver. Thus, it is
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the permit holder/driver who provides these
services at their cost, as regards which the
aggregators want to charge a fee, which is
completely dishonest and, again, an
exploitation of the permit holder/driver. He,
therefore, submits that what has been fixed is
proper and that the petitions have to be
dismissed.
9. Sri. Nataraj Sharma Learned Counsel representing
M/s G.Narayanaswamy, president of Karnataka
Chalakara Okkoota, who has also been brought on
record as intervenor, submitted that:
9.1. The Karnataka Chalakara Okkoota is a
registered association of taxi drivers and
autorickshaws running in the State of
Karnataka, and more than 10,000 drivers are
registered.
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9.2. The drivers and owners of autorickshaws before
the advent of Uber and OLA had been strictly
following the fare fixed by the RTA, which fare
was arrived at on the basis of mutual
discussions between the authority, association,
Unions, State transport department, Technical
department, etc.
9.3. The price earlier fixed was on a scientific basis,
taking into account the price of the vehicle,
maintenance cost and fuel cost by the expert
committee.
9.4. Once Uber and OLA entered the business, the
rate cards which had been fixed by the
State/RTAs were thrown to the wind, and they
started collecting charges in an exorbitant
manner, which caused harassment to the
passengers/customers, which was required to
be answered by the drivers, since there was no
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representative of Uber and OLA who was
available, when the questions were posed to
the drivers.
9.5. His submission is that neither the
drivers/permit holders nor
passengers/customers can interact with the
officials of Uber and OLA on the App or
otherwise, constraining the driver/permit
holders to bear the brunt of the complaints
made by the customers, which complaints have
been brought to the notice of Uber and OLA by
the drivers/permit holders.
9.6. The autorickshaws owners are the persons who
invest in the vehicle, maintain the vehicles, pay
EMI as regards the loan borrowed for the
purchase, bear the cost of fuel/LPG/CNG, the
salary of the drivers if drivers are engaged,
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insurance cost and all other cost relating to the
autorickshaws.
9.7. Uber and OLA, being only brokers and
middlemen, are seeking more money than they
are entitled to, which increases the fare and
adversely affects drivers and permit holders.
His submission is that the aggregators are
charging more money than the Permit
holder/driver of the vehicle earns.
9.8. The bill being exorbitant would either be
automatically deducted from the account of the
passenger without the passenger having any
say in the matter, or the passengers/customers
would have to make payment of the amounts,
which many a time they refuse to make
payment contending that it is exorbitant.
9.9. His further submission is that when demands
for the amount are made by the drivers/permit
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holders, the passengers/customers have also
filed police complaints, thus putting the life and
liberty of the drivers at risk.
9.10. The autorickshaw drivers/owners are required
to take permits, whereas Uber and OLA are not
required to; they do not even have a license
but are making more money than the
driver/owner since there are no expenses
incurred by Uber and OLA for the purchase of
and or running of an autorickshaw. The only
service offered is for connecting the
passenger/customer with the permit
holder/driver on the aggregator platform
through an application that can be installed on
mobile phones; the number of employees
engaged by Uber and OLA is also very low.
9.11. The persons using the autorickshaws, most of
them being below the poverty line, the
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driver/owners are unable to answer the queries
of such passengers/customers regarding the
increase in the fare as compared to the fare
which was charged earlier before Uber and OLA
came into the picture. His submission is that
apart from the drivers/owners, the
passengers/customers are also suffering.
9.12. His submission is also that none of the facilities
indicated by Uber and OLA is provided to the
passengers/owners/permit holders of the
autorickshaws. No training has been provided
to any of the drivers. Drivers and owners are
not allowed to interact with Uber and OLA
employees. It is only when they want to contact
the drivers/owners that they approach them. In
the event of the driver/owner approaching the
employees of Uber and OLA for any problems
they face, they are not permitted to interact,
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and there is nobody to assist or cater to their
problems or solve them.
9.13. Uber and OLA do not carry out any verification
of the drivers; they on-board anyone and
everyone since they want more and more
drivers and vehicles to be part of Uber and OLA
so as to get more and more commission from
the rides. While so on-boarding no verification
is being done; there are several persons with
not-so-good track records who are on-boarded
and do not abide by the applicable law, bringing
disrepute to the other good drivers of taxi and
autorickshaws.
9.14. Most drivers do not know in what manner surge
pricing is calculated and charged, they are not
aware of the amounts received by Uber and
OLA, no accounts are being furnished, and the
drivers are forced to accept whatever amount is
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transferred by Uber and OLA to their respective
accounts.
9.15. Any driver who is on-boarded has to reach the
doorstep of the customer for which he does not
get paid either by Uber or OLA; the cost of
fuel/LPG/CNG for travel from where the vehicle
is parked to the pickup point is borne by the
driver, and the claim made by Uber/OLA that
they incur the cost for the taxi and
autorickshaws to reach the pickup point is
completely false. Uber and OLA do not provide
these services. The drivers and owners of the
autorickshaws are forced to bear this cost.
9.16. There is no helpline provided to the
drivers/owners of the autorickshaws; the driver
bears the insurance cost for the vehicle, and
Uber or OLA do not bear such cost. The
drivers/owners do not have any method of
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resolving their grievances. All the service costs
for that vehicle are borne by the
drivers/owners; there is no engineering support
provided by Uber and OLA. There is no legal or
otherwise assistance provided by Uber and OLA
to the drivers/owners if any action is taken by
the passengers. Uber and OLA have abused and
misused their monopoly by mistreating the
drivers/owners.
9.17. His submission is that Uber and OLA do not
make payment of the amounts falling to the
credit of the driver in time, though they collect
all the amounts from passengers/customers
immediately upon completion of the ride.
Payments are released only after repeated
follow-ups by the drivers/owners. The
autorickshaw drivers and owners are satisfied
with the fare fixed by the government; they are
not seeking any enhancement. Uber and OLA
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are trying to make use of the situation to seek
for enhancement of fare and thereby the
service charges, as also surge pricing/dynamic
pricing, it all enures to the benefit of Uber and
OLA, and it is to the detriment of the
passengers/customers firstly and thereafter
drivers/owners of the vehicles.
9.18. Uber and OLA are asking for a 25% commission
on the fare, disregarding the earnings of the
driver/owner. For a fare of Rs.30/- for 2 km
Uber and OLA want 25% commission which
amounts to Rs.7.5, whereas the earning of the
driver who runs the autorickshaws for himself,
the net earning is stated to be Rs.5.4/km, the
owner gets Rs.10.80 for two kilometres,
whereas Uber/OLA wants to get Rs.7.5 for two
kilometres which indicates the gross abuse of
the system on the part of Uber/OLA. Thus, he
submits that, in so far as the surge price
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demanded by Uber/OLA, out of such surge
amount collected, no amount would come to
the driver/owner.
9.19. Lastly, he submits that Uber and OLA want to
make money from and out of driver/owners'
vehicles without suitably rewarding the said
driver/owner, who actually works and in the
bargain, the cost for passengers/customers is
increasing, thereby adversely affecting the
passengers/customers for autorickshaws, most
of whom are below the poverty line.
9.20. Based on all the above, he submits that the writ
petitions filed by the aggregators are to be
dismissed, and action is required to be taken
against the aggregators for all the lapses and
violations.
10. Sri. Gowrishankar, learned counsel who had filed an
application in IA-2/2023 for being impleaded, has
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been allowed to assist this Court as an intervenor;
his submission is that:
10.1. Both the state and aggregators like Uber and
Ola are acting contrary to the interests of the
general populace. Though the learned Advocate
General had assured this court while passing
order dated 14.10.2022 that all concerns of the
general public would be addressed and the
suggestions from the general public would be
taken into consideration, no advertisement has
been published inviting public opinion or public
concerns, the involvement of the public not
being there, it is only the State who has chosen
to decide on its own.
10.2. Consultative meetings did not include the
general public; the general public, being
victims, are the ones who have suffered since it
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is the general public who has to pay the fare,
whether including the service fee or not.
10.3. His submission is that the fares have to be as
low as possible, and companies like Uber and
OLA ought not to be permitted to charge
unreasonable amounts of money, making the
choice of transport for a poor man impossible to
afford.
11. Heard Sri. K.G. Raghavan learned Senior Counsel for
the petitioner in W.P. No.24501/2022, Sri.Aditya
Sondhi, learned Senior Counsel for the petitioner in
W.P. No.24486/2022; Sri.Shashi Kiran Shetty,
learned Advocate General for respondents-State and
Sri.Amruthesh.N.P, learned counsel and Sri.S.Nataraj
Sharma, learned counsel for intervenors. Perused
papers.
12. Having heard all the learned counsels, the following
points arise for consideration:
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1) Is it mandatory for a State to prepare
Regulations under Section 93 of the
M.V.Act, or is it optional?
2) Are the guidelines issued by the Central
Government in the year 2000 mandatory
for the State to follow, or is it directory?
3) Whether without exercising powers under
Section 93 of the M.V.Act, could the fare of
an autorickshaw payable to the Permit
Holder/Driver as also the
service/convenience fee payable to the
aggregator be fixed by the transport
authority under Section 67 of the M.V.
Act?
4) Would the fare fixed under Section 67 of
the M.V.Act include the service fee or
convenience fee charged by an
aggregator?
5) Can the State fix the service fee charged
by an aggregator, or can it be left to the
exclusive discretion of the aggregator?
6) Whether an aggregator who has accepted
the fare fixed for four-wheeler taxis under
Section 67 of the M.V.Act can now contend
that the State/authority does not have the
power to fix the fare and/or service fee
under Section 67 of the M.V.Act for
autorickshaw?
7) Could the interim order dated 14.10.2022
make the Central guidelines applicable to
an aggregator requiring the authority to
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fix the fare and the service fee
accordingly?
8) Was it required for the State/authority to
specifically ask for information or was it a
duty on part of the aggregator to furnish
all the information required to fix the
service fee?
9) Does the service fee of 5% fixed by the
transport authority fall foul of
Wednesbury's principles of arbitrariness?
10) Is the fare fixation and/or service fee
fixation a legislative activity that was not
justiciable before this Court?
11) Whether there is a separate License
required for an autorickshaw under
KODTTA Rules distinct from the License for
a four-wheeler?
12) Whether UBER is responsible for providing
transport services by the permit
holders/driver of the vehicle or is the
responsibility of an aggregator restricted
to the booking of the vehicle on the
aggregator platform or, in other words,
whether there is a tripartite contract
between the aggregator, driver/permit
holder and passengers/customer or is it
only a bilateral contract between:
a)aggregator and permit holder;
b)aggregator and passenger/customer;
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c)customer/passenger and permit holder.
13) Have the aggregators made use of their
dominant position to prevail upon the
permit holders/drivers to onboard with
themselves on the terms and conditions
fixed by the aggregator requiring the
matter to be referred to the competitive
Commission?
14) Can the aggregators charge surge pricing
in view of the undertaking provided by
them to the Division Bench in
W.P.No.4287/2016, 4789/2016 and
47109/2018 as observed vide order dated
07.12.2016?
15) What orders?
13. I answer the above points as under:
14. Answer to Point No.1: Is it mandatory for a
State to prepare Regulations under Section 93
of the M.V.Act, or is it optional?
14.1. Section 93 reads as under:-
93. Agent or canvasser or aggregator to obtain
License.--
(1) No person shall engage himself--
(i) as an agent or a canvasser, in the sale of tickets for
travel by public service vehicles or in otherwise
soliciting custom for such vehicles, or
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(ii) as an agent in the business of collecting,
forwarding or distributing goods carried by goods
carriages,
[(iii) as an aggregator,]
unless he has obtained a License from such authority
and subject to such conditions as may be prescribed
by the State Government.
[Provided that while issuing the License to an
aggregator the State Government may follow such
guidelines as may be issued by the Central
Government:
Provided further that every aggregator shall comply
with the provisions of the Information Technology Act,
2000 (21 of 2000) and the rules and regulations made
thereunder.]
(2) The conditions referred to in sub-section (1) may
include all or any of the following matters, namely:--
(a) the period for which a License may be granted or
renewed;
(b) the fee payable for the issue or renewal of the
License;
(c) the deposit of security--
(i) of a sum not exceeding rupees fifty thousand in the
case of an agent in the business of collecting,
forwarding or distributing goods carried by goods
carriages;
(ii) of a sum not exceeding rupees five thousand in the
case of any other agent or canvasser, and the
circumstances under which the security may be
forfeited;
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(d) the provision by the agent of insurance of goods in
transit;
(e) the authority by which and the circumstances
under which the License may be suspended or
revoked;
(f) such other conditions as may be prescribed by the
State Government.
(3) It shall be a condition of every License that no
agent or canvasser to whom the License is granted
shall advertise in any newspaper, book, list, classified
directory or other publication unless there is contained
in such advertisement appearing in such newspapers,
book, list, classified directory or other publication the
License number, the date of expiry of License and the
particulars of the authority which granted the License.
14.2. A perusal of the above provision indicates that
no person shall engage himself as an
aggregator unless he has obtained a License
from such authority subject to such conditions
as may be prescribed by the State Government.
14.3. The proviso indicates that while issuing the
License to an aggregator, the State Government
may follow such guidelines as may be issued by
the Central Government. In terms of Sub-
Section (2), the conditions referred to in Sub-
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Section (1) may include all or any of the items
stated therein. In terms of Sub-Section (3),
the licensee would be required to publish the
License number, the date of expiry of the
License and particulars of the authority which
granted the License in all advertisements and
publications made. The contention of the
learned counsel for the petitioners is that it is
mandatory for regulations to be prepared under
Section 93. Section 93, as observed above,
relates to the issuance of a License to an
aggregator, and it is only in regard thereto that
the condition mentioned under Sub-Section (2)
of Section 93 be taken into consideration.
14.4. In the present case, the contention of the
learned counsel for the petitioners is that no
License is required since the petitioner's
business is not related to transport services.
They are not required to obtain any License,
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and the issue of License or requirement thereof
is pending before the Division Bench of this
Court.
14.5. The Hon'ble Apex Court in Roppen
Transportation Services Private Limited vs.
Union of India40 more particularly at Para 5
has held as under:-
5. The effect of the amended provision is that no
person can act as an aggregator without a License.
The License is to be "from such authority and subject
to such conditions as may be prescribed by the State
Government". In terms of the first proviso to Section
93(1), the State Government, while issuing a License
to an aggregator, "may follow" the guidelines issued
by the Central Government. Section 96 confers a
rule-making power on the State Government for
implementing the provisions of Chapter V.
14.6. The Hon'ble Apex Court has concluded that no
person or entity can act as an aggregator
without a License. A License is to be issued by
such authority and subject to such conditions as
may be prescribed by the State Government.
In terms of the first proviso to sub-Section (1)
40 (2023) 4 SCC 349
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of Section 93, the State Government, while
issuing a License to the aggregator, may follow
the guidelines issued by the Central
Government. Section 96 confers rule-making
power on the state government to implement
Chapter V.
14.7. A reading of the above para would indicate that
the Hon'ble Apex Court has categorically held
that no person can conduct the business of an
aggregator without a License. Thus, the
contention of the learned counsel for the
petitioner that the matter is now pending
before the Division Bench and the Division
Bench is required to decide on the aspect of
requirement or otherwise of a License has been
rendered academic with the Hon'ble Supreme
Court has categorically held that such a License
is required.
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14.8. The License is required to be issued by such
authority and subject to such conditions as may
be "prescribed" by the State Government. The
word "prescribed" is sought to be interpreted by
the counsel for the petitioners by referring to
Sub-Section (32) of Section 2 of the Act reads
as under:-
"Section 2(32) "prescribed" means prescribed by
rules made under this Act;"
14.9. By relying on the above, it is contended that
"prescribed" would be prescribed by Rules
made under the Act. By referring to Section
96, it is contended that any rules made for the
purpose of carrying into effect the provisions of
Chapter V of the Act can only be made under
Section 96, which can be so made only by
following the procedure detailed under Section
212 of the Act.
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14.10. Thus, it is contended that in terms of proviso to
sub-Section (1) to Section 93, the conditions
that could be imposed by the State Government
can only be made in terms of Rules made under
Section 96 of the Act.
14.11. The restrictions under Section 93 can be divided
into two parts, i.e., (i) no person shall engage
himself as an aggregator unless he has
obtained a License from such authority, (ii) no
person shall engage himself as an aggregator
without obtaining a License from such authority
and subject to such conditions as may be
prescribed by the State Government.
14.12. The first part would indicate that a License is
absolutely required to be obtained. The second
part deals with conditions that could be
imposed by the State Government, and such
conditions would have to be as prescribed by
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the State Government and are relatable to sub-
Section (32) of Section 2, Section 96, and
Section 212. Thus, insofar as the requirement
of the License is concerned, there would be no
rules or regulations that are required to be
formulated by the State. However, while
issuing a License, if a condition were to be
imposed, then no condition can be imposed
unless rules are formulated under Section 96 by
following the procedure under Section 212.
14.13. In the present case, when the earlier License
was issued to the petitioner, no condition had
been imposed that would come within the
purview of Section 96 or Section 212. The
conditions are more fully set out in sub-Section
(2) of Section 93, which has been extracted
hereinabove. Thus, for any of the conditions
detailed in sub-Section (2) to be imposed,
Rules would have to be framed.
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14.14. Therefore, I answer Point No.1 by holding
that for an aggregator to run its business,
the aggregator has to obtain the necessary
License; for the State to impose any
condition under sub-Section (2) of Section
93, it would be mandatory for Rules to be
made under Section 96 by complying with
the requirements under Section 212.
However, if no such condition is imposed,
there would be no requirement for Rules
to be formulated.
15. Answer to Point No.2: Are the guidelines issued
by the Central Government in the year 2000
mandatory for the State to follow, or is it
directory?
15.1. The submission of Sri. K.G. Raghavan learned
Senior Counsel and Sri. Aditya Sondhi, learned
Senior counsel appearing for the petitioners is
that the Central government guidelines are
mandatory to be followed, and without
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following the said guidelines, the service fee or
convenience fee cannot be fixed.
15.2. In this regard, Sri. Aditya Sondhi relies upon
the decision of Roppen Transportation
Service's case to contend that the guidelines
have to be borne in mind by the State
government. These guidelines have been
issued by the central government in terms of
Section 93, and it is mandatory for the state
government to apply the said guidelines for any
decision to be taken in relation thereto. By
relying on Preethi Srivatsava's case, he
submits that even if the guidelines were held to
be persuasive and not having binding force, the
State cannot act contrary to such guidelines.
State authorities must keep in view the
guidelines issued while undertaking any
exercise covered by such guidelines.
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15.3. He also relies on the interim order dated
14.10.2022 in W.P. No.24486/2022, more
particularly para 19 thereof, to contend that
this Court, having observed that the State
would have to follow the guidelines, the
guidelines would have to be applicable, the
State not having followed the said guidelines,
the service fee or convenience fee fixed by the
State is not proper.
15.4. Again, by relying on para 28 of the order dated
14.10.2022 in W.P. No.24486/2022, it is
contended that this court has observed that the
notification dated 25.11.2022 would not be
issued without following the requirements of
Section 93.
15.5. This question is no longer res integra. The
Hon'ble Apex Court in Roppen Transportation
Services Pvt. Ltd's case (supra31) at Para 9
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thereof has categorically held that the State
Government is not bound to follow guidelines
issued by the Central Government and that
they are only guiding factors having a
persuasive value. Said Para 9, is reproduced
hereunder once again for easy reference:-
9. Government of Maharashtra has not formulated any
rules in relation to aggregators for the purpose of
enforcing the provisions of Chapter V, more
particularly, Section 93(1). The first proviso to Section
93 stipulates that while issuing a License to an
aggregator, the State Government may follow such
guidelines as may be issued by the Central
Government. The Guidelines which have been issued
by the Central Government have a persuasive value.
They are not mandatory. When the State Government
formulates rules in pursuance of its power under
Section 96, it may also bear in mind the Guidelines
which have been framed by the Union Government in
2020. Both in terms of the first proviso to Section
93(1) and the plain terms of the Guidelines, it is
evident that while these Guidelines have to be borne in
mind, the ultimate decision is to be arrived at by the
State Government while considering whether to grant
a License and in regard to the formulation of rules in
pursuance of the general rule making power under
Section 96.
15.6. The Hon'ble Apex Court having categorically
held that the Motor Vehicle Aggregator
Guidelines, 2022 not being mandatory but
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being only persuasive, the contention of learned
counsel for the petitioners that the State of
Karnataka would mandatorily have to follow the
Guidelines 2020 is not sustainable.
15.7. The Hon'ble Apex Court, having held that the
guidelines have a persuasive value and it is not
mandatory, it cannot now be contended by the
aggregators that without the guidelines being
followed, no service fee or convenience fee can
be fixed. Insofar as the observations made in
the interim order dated 14.10.2022, the said
observation is a prima facie observation made
by a co-ordinate bench of this Court on the
basis of the submissions made by the counsels.
15.8. This court had directed the State to consider
the representation submitted by the
aggregators and fix the service fee or
convenience fee within a period of 15 days. In
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pursuance thereof, the aggregators submitted
their representation, which was considered and
the impugned notification was issued.
15.9. It is now contended by the aggregators that
guidelines not only have to be followed, but
while following them, Rules have to be made by
following the procedure prescribed under
Sections 96 and 212; without doing so, no
service fee or convenience fee can be fixed.
Such a submission, in my opinion, is a
completely paradoxical statement and
contention made by the aggregators.
15.10. On 14.10.2022, the aggregators were of the
opinion that it would take less than 15 days for
the State to consider the representation and fix
the service fee. If the procedure under Section
96, read with Section 212, were to be followed
for the purposes of fixing service fees or
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convenience fees, it is clear that the said
procedure could not have been completed
within 15 days.
15.11. At that point in time, there was no contention
raised by the aggregators that requirements of
Sections 96 and 212 were to be followed before
the State was to fix the service fee or
convenience fee on the basis of the
representation made by the aggregators. It
cannot, therefore, now be contended that the
prima facie opinion expressed by this court
while passing the interim order on 14.10.2022
would make it mandatory for the State to follow
the guidelines issued by the Central
government in a mandatory manner and
formulate Rules under Section 96 by following
the procedure under Section 212.
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15.12. As such, I answer point No.2 by holding
that the Motor Vehicles Aggregator
Guidelines, 2020, issued by the Central
Government, are not mandatory for the
State Government to follow; the State can
consider the said Guidelines which have
persuasive value to form its own
regulations as and when so formed under
Section 93 of the M.V. Act.
16. Answer to Point No.3: Whether without
exercising powers under Section 93 of the
M.V.Act, could the fare of an autorickshaw
payable to the Permit Holder/Driver as also the
service/convenience fee payable to the
aggregator be fixed by the transport authority
under Section 67 of the M.V. Act?
16.1. The contention of learned counsel for the
petitioners is that fare can only be fixed under
Section 93, and that too by Rules satisfying the
requirement of Section 96 and Section 212. As
afore-stated, the conditions which could be
imposed while issuing a License are more
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particularly contained under sub-Section (2) of
Section 93, which is once again reproduced
hereunder for easy reference:-
section 93(2) - The conditions referred to in sub-
section (1) may include all or any of the following
matters, namely:--
(a) the period for which a License may be granted or
renewed;
(b) the fee payable for the issue or renewal of the
License;
(c) the deposit of security--
(i) of a sum not exceeding rupees fifty thousand in
the case of an agent in the business of collecting,
forwarding or distributing goods carried by goods
carriages;
(ii) of a sum not exceeding rupees five thousand in
the case of any other agent or canvasser, and the
circumstances under which the security may be
forfeited;
(d) the provision by the agent of insurance of goods
in transit;
(e) the authority by which and the circumstances
under which the License may be suspended or
revoked;
(f) such other conditions as may be prescribed by the
State Government.
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16.2. A perusal of Sub-Section (2) would indicate that
the conditions that may be imposed could
include all or any of the matters stated therein
under clause (a) to (f) thereof. None of those
conditions relate to fare as sought to be
contended by the learned senior counsels for
the petitioners.
16.3. Fare is defined under sub-section (12) of
Section 2, which reads as under:-
(12) "fare" includes sums payable for a season
ticket or in respect of the hire of a contract carriage;
16.4. Section 67 of the Act reads as under:-
67. Power to State Government to control road
transport.--
[(1) A State Government, having regard to--
(a) the advantages offered to the public, trade and
industry by the development of motor transport;
(b) the desirability of co-ordinating road and rail
transport;
(c) the desirability of preventing the deterioration of the
road system, and
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(d) promoting effective competition among the transport
service providers,
may, from time to time, by notification in the Official
Gazette issue directions both to the State Transport
Authority and Regional Transport Authority regarding
the passengers' convenience, economically competitive
fares, prevention of overcrowding and road safety.]
(2) Any direction under sub-section (1) regarding the
fixing of fares and freights for stage carriages, contract
carriages and goods carriages may provide that such
fares or freights shall be inclusive of the tax payable by
the passengers or the consignors of the goods, as the
case may be, to the operators of the stage carriages,
contract carriages or goods carriages under any law for
the time being in force relating to tax on passengers and
goods:
[Provided that the State Government may subject to
such conditions as it may deem fit, and with a view to
achieving the objectives specified in clause (d) of sub-
section (1), relax all or any of the provisions made
under this Chapter.]
[(3) Notwithstanding anything contained in this Act, the
State Government may, by notification in the Official
Gazette, modify any permit issued under this Act or
make schemes for the transportation of goods and
passengers and issue Licenses under such scheme for
the promotion of development and efficiency in
transportation--
(a) last mile connectivity;
(b) rural transport;
(c) reducing traffic congestion;
(d) improving urban transport;
(e) safety of road users;
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(f) better utilisation of transportation assets;
(g) the enhancement of economic vitality of the area,
through competitiveness, productivity and efficiency;
(h) the increase in the accessibility and mobility of
people;
(i) the protection and enhancement of the environment;
(j) the promotion of energy conservation;
(k) improvement of the quality of life;
(l) enhance integration and connectivity of the
transportation system, across and between modes of
transport; and
(m) such other matters as the Central Government may
deem fit.
(4) The scheme framed under sub-section (3), shall
specify the fees to be charged, form of application and
grant of a License including the renewal, suspension,
cancellation or modification of such License.]
16.5. By referring to the decision in Captain Sube
Singh's case, submission of Sri. Aditya Sondhi,
learned Senior counsel is that Sections 67 and
93 provide different powers which are
qualitatively different. Section 67 does not
contemplate fixation of service fee or
convenience fee, same cannot be so fixed by
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contending that service fee or convenience fee
are part of the fare fixed under Section 67.
16.6. Similar is the submission of Shri K G Raghavan,
learned Senior Counsel, who further submits
that service/convenience fee cannot even be
fixed under Section 93 of the Act since the said
provision does not contemplate any powers
vested with the state to fix such
service/convenience fee charged by an
aggregator.
16.7. It is under Section 67 of the Act that a State
Government having regard to the factors stated
therein may, from time to time by notification in
the official gazette, issue directions to both the
State Transport Authority and Regional
Transport Authority regarding passengers'
convenience, economically competitive fare,
prevention of overcrowding and road safety.
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16.8. In terms of sub-section (2) of Section 67, any
direction issued under sub-section (1) provides
for fixing of fares and freights for contract
carriages and goods carriages and may provide
that such fares or freights shall be inclusive of
the tax payable by the passengers or the
consignors of the goods as the case may be to
the operators of the Stage carriages, Contract
carriages and Goods carriages and any law for
the time being in force.
16.9. In my considered opinion, it is only Section 67
which provides power to the State Government
to fix fares from time to time by notifying in the
official gazette to issue directions both to the
STA and RTA having regard to the
passengers/customers' convenience,
economically competitive fares, prevention of
overcrowding, road safety, etc.
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16.10. The fixation of the said fare in terms of Sub-
section (2) of Section 67 relates to all stage
carriages, contract carriages and goods
carriages.
16.11. Stage carriage is defined under Subsection (40)
of Section 2, which reads as under:
(40) "stage carriage" means a motor vehicle
constructed or adapted to carry more than six
passengers excluding the driver for hire or reward at
separate fares paid by or for individual passengers,
either for the whole journey or for stages of the
journey;
16.12. Contract carriage is defined under Subsection
(7) of Section 2, which reads as under:
(7) "contract carriage" means a motor vehicle
which carries a passenger or passenger or
passengers for hire or reward and is engaged under
a contract, whether expressed or implied, for the use
of such vehicle as a whole for the carriage of
passengers mentioned therein and entered into by a
person with a holder of a permit in relation to such
vehicle or any person authorised by him in this
behalf on a fixed or an agreed rate or sum-- (a) on a
time basis, whether or not with reference to any
route or distance; or (b) from one point to another,
and in either case, without stopping to pick up or set
down passengers not included in the contract
anywhere during the journey, and includes-- (i) a
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maxicab; and (ii) a motor cab notwithstanding that
separate fares are charged for its passengers;
16.13. Goods carriage is defined under Subsection (14)
of Section 2, which reads as under:
(14) "goods carriage" means any motor vehicle
constructed or adapted for use solely for the carriage
of goods, or any motor vehicle not so constructed or
adapted when used for the carriage of goods;
16.14. A motor cab is defined under Subsection (25) of
Section 2, which reads as under:
(25) "motorcab" means any motor vehicle
constructed or adapted to carry not more than six
passengers excluding the driver for hire or reward;
16.15. A motor car is defined under Subsection (26) of
Section 2, which reads as under:
(26) "motor car" means any motor vehicle other
than a transport vehicle, omnibus, road-roller,
tractor, motor cycle or invalid carriage;
16.16. In the present case, we are not concerned with
goods carriage since what is in issue is the
carriage of passengers. We are also not
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concerned with stage carriages because, in the
present case, we are dealing with an
autorickshaw, which has a carrying capacity of
2 or 3 persons, while a stage carriage would
apply to a vehicle carrying more than 6
passengers, excluding the driver for hire or
reward at separate fare paid for individual
passengers.
16.17. What would be relevant is contract carriage
under Sub-section (7) of Section 2, which
means a motor vehicle which carries
passenger/s for hire or reward and is engaged
under a contract, whether express or implied,
for use of such vehicle as a whole for carriage
of passengers mentioned therein and entered
into with a holder of a permit in relation to such
vehicle or any person authorized in this behalf
on a fixed or agreed rate, on a time basis from
one point to the other, etc.
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16.18. Thus, whenever a passenger contracts with a
permit holder in relation to such vehicle or any
person authorized by the permit holder, the
same would amount to a contract carriage. In
the present case, if any person were to make
use of an autorickshaw to travel from one point
to the other or use an autorickshaw on a time
basis, the autorickshaw being plied by a driver
and a permit having been issued to the said
autorickshaw for such plying, any amount paid
for such service would be covered under
contract carriage.
16.19. The fixed or agreed rate sum would be a fare in
terms of Sub-section (12) of Section 2, which
includes a sum payable for a season ticket or in
respect to the hire of a contract carriage.
16.20. Thus, under Section 67, the state government
has the power to fix the fare, including or
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otherwise, of tax and for fixing such fare, the
state can consider all relevant factors. No
power is conferred on the State under sub-
section (2) of Section 93 to impose any fare
condition on a passenger/customer vis-a-vis an
aggregator. This, in my opinion, would be a
natural, harmonious, and proper reading of the
said two provisions.
16.21. What is required to be fixed by the State is the
fare and freight for Stage Carriages, Contract
Carriages and Goods Carriages, which would
mean the amounts to be paid by the
passenger/s or consigner/s of the goods. The
said passenger/s is required to know what is
the fare required to be paid if he or she were to
use the service. Thus, the concept of fare
would be an all-inclusive amount, which can
only be fixed under Section 67 of the Act, and
Section 93 does not provide for the same.
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When such a fare is fixed, unless the state were
to indicate that the fare includes tax, the fare
would have to be held to be excluding the tax
applicable, which will have to be calculated on
the basis of the applicable laws and collected.
16.22. In so far as service/convenience fees are
concerned, neither Section 67 nor Section 93
speak of such service/convenience fees; there
is no distinction made between fare on the one
hand and service/convenience fees on the
other. Fare, being an all-inclusive amount as
observed above, would also be deemed to
include a service/convenience fee, which is
dealt with in detail in answer to the next point.
Though in the present case by the impugned
notification, the service fee/convenience fee is
fixed by a separate notification under Section
67, there is no infirmity in the same; the
service/convenience fee also forming part of
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the fare, it could be so fixed either by a single
notification or multiple notifications, the power
to fix the same being conferred on the state in
term of Section 67.
16.23. I answer Point No.2 by holding that
Subsection (2) of Section 67- categorically
states that any direction under Subsection
(1) of Section 67 regarding the fixing of
fares for contract carriages can be issued;
it is clear that the fare of a contract
carriage can only be fixed by a State
government under Section 67 of the MV
Act, there being no such provision under
Section 93, no fare can be fixed under
Section 93 of the MV Act. The
service/Convenience fee or any fee
charged on such carriage by any name
whatsoever will have to be part and parcel
of the fare and cannot be over and above
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the fare, which can be so fixed under
Section 67 as a single notification or
multiple notifications.
17. ANSWER TO POINT NO.4 AND 5:
(4) ANSWER TO POINT NO.4 : Would the fare
fixed under Section 67 of the M.V.Act
include the service fee or convenience
fee charged by an aggregator?
and
(5) ANSWER TO POINT NO.5: Can the State
fix the service fee charged by an
aggregator, or can it be left to the
exclusive discretion of the aggregator?
17.1. By referring to the decision of the Hon'ble Apex
Court rendered in Uber India Systems Pvt.
Ltd. -v- Union of India 2024(1) SCC 438, the
submission of Sri. Aditya Sondhi is that the
State does not have any power to regulate an
aggregator or the fees receivable by the
aggregator under Section 67 of the M.V. Act.
By referring to the decision of the Hon'ble Apex
Court in Prakash Dal Mill's case, his
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submission is that any price, fare, charge or the
like would have to be fixed within the stipulated
parameters contained in the statute. Section
67 does not deal with service fees or
convenience fees; the same could not be fixed
by the State under Section 67 of the Act. By
referring to Reliance Infrastructure's case,
he submits that since the statutorily prescribed
procedure under Sections 96 and 212 has not
been followed. Any price or tariff that has been
fixed would be ultra vires and is, therefore,
required to be set aside.
17.2. By relying on Mohd. Faruk's case, his
submission is that the service fee or
convenience fee fixed by the State is violative
of Article 19(1G) inasmuch as it imposes a fixed
amount to be received by the aggregators
which do not suffice to meet the expenses
incurred by the aggregators.
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17.3. As dealt with in answer to point No.2 above, the
fare for contract carriage would have to be fixed
under Section 67, which has been reproduced
hereinabove. Section 67 also underwent an
amendment in 2019 under the Motor Vehicles
Amendment Act 2019, by virtue of which
Section 93 was also amended to introduce an
aggregator. Subsection (1) has been
substituted by way of amendment, and
Subsection (3) has been inserted.
17.4. Subsection (1), as indicated above, provides
power to the State government to issue
directions to both STA and RTA regarding the
passengers' convenience, economically
competitive fare, overcrowding and road safety.
Sub-section (2) provides for any direction
issued regarding fare and may provide that
such fares be inclusive of tax paid by
passengers/customers under any law for the
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time being in force relating to tax on
passengers and goods. Subsection (3) provides
for modification of any permit issued under the
Act or making schemes for the transportation of
goods and passengers and issuing Licenses
under such scheme for the promotion,
development and efficiency of transportation,
taking into account several factors therein.
17.5. The petitioners provide a platform for the
permit holders/drivers to enroll and for the
passenger to book a ride using the said
platform on such vehicle that has been
enrolled. If not for the said platform, the
methodology of the passenger and permit
holder/driver to contact each other is only by
physical methodology.
17.6. Sri. K.G. Raghavan learned senior counsel
would submit that there is only a bilateral
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contract between Uber and the permit
holder/driver on the one hand and Uber and the
passenger on the other hand, and there is no
tripartite contract. His submission is that since
there are two separate bilateral agreements,
Uber is not involved in any act of
transportation, and as such, the fare would not
be applicable to Uber; the fare is one between
the permit holder and the passenger.
17.7. Invoking the principles of Laissez-faire and
freedom of economy, he submits that a service
provider like Uber can levy any charge it deems
fit on the passenger or the permit holder, which
cannot form part of the fare nor can it be
controlled or regulated by authorities.
17.8. I am unable to agree with Sri. K.G. Raghavan,
who learned senior counsel. An aggregator
cannot seek to deny its liability or responsibility
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or its obligation. A passenger is essentially
booking a ride on the aggregator app to go
from one place to another or to hire a vehicle
for a particular period of time or to go to
multiple places.
17.9. Certain value-added services are claimed to be
provided by the aggregator platform; it is
claimed that the following services are provided
(as per the representation filed by Uber)
Value added services provided by Aggregator
Platforms
4.1 Aggregator platforms also enable the provision
of value-added services such as, (i)GPS tracking &
Routing; (ii) 24x7 safety Helpline; (iii) In-app panic /
emergency button; (iv) 24x7 support, including
phone-call support and in-person support backed by
600+ support agents, (v) Digital payments (credit
cards, debit cards, wallets and UPI) (all digital
payments except UPI require aggregators to pay a
fees to the payment gateways); (vi) Driver
background checks; (vii) Rider and driver on-trip
insurance; (viii) Data backup, Engineering support to
match riders and drivers and provide the best-in-
class point-to-point transport service and new
products (for e.g WhatsApp booking); (ix) Phone
number anonymization; (x) Law enforcement
response assistance: (xi) Marketing to generate
more demand for drivers covering but not limited to
performance marketing, brand campaigns, new rider
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and driver incentives, gift cards etc.; (xii) Other
physical infrastructure and support
4.2 It has been observed that launch of aggregator
platforms and the associated services has also led to
a significant reduction in refusal of trips by auto
rickshaw drivers.
4.3 The above-mentioned services enhance the
safety and reliability of a trip for a passenger.
Aggregator platforms incur a significant amount of
cost in the provision of such value added services
and it is, therefore, imperative that such platforms
be allowed to charge a fee ("Platform/Technology
Fee") for the services provided by them. Without
such a Platform/Technology Fee it will not be cost
effective for aggregator platforms to provide
aggregation services.
4.4 It may further be noted that the Motor Vehicle
Aggregator Guidelines, 2020 published by the
Ministry of Road Transport and Highways, in addition
to recognizing that auto rickshaws can be
aggregated by aggregator platforms has also allowed
for a 20% commission to be charged by such
platforms. This commission, however, is based on
the fact that pricing is dynamic and not static and
that the aggregator platforms can charge surge
pricing up to 1.5 times the base fare determined for
passenger transportation in a particular state.
17.10. A perusal of the above would indicate that the
aggregator platform provides for digital
payments which payments are collected by the
platform from the passengers/customers and
thereafter distributed to the drivers/permit
holder.
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17.11. The platform claims to have conducted a driver
background check, insured both rider and driver
for the trip, provides engineering support to
drivers and provides best-in-class service from
point to point and new product marketing to
generate more demand for drivers, other
physical infrastructure and support, among
others.
17.12. Item No.8 - (viii) Data backup, Engineering
support to match riders and drivers and provide
the best-in-class point-to-point transport service
and new products (for e.g. WhatsApp booking). A
reading of this would indicate that there are
three parts to it. Firstly, data backup; secondly,
engineering support to riders and drivers;
thirdly, to provide best-in-class, point-to-
point transport service; and lastly, for new
products. There is, therefore, a clear and
categorical admission made that the best point-
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to-point transport service is being provided as
regards which a higher service fee is claimed;
it, therefore, fails to reason as to how it can be
contended before this court that Uber is not
providing transport service.
17.13. When a categorical assertion has been made
that there is a driver background check, rider
and driver trip insurance, matching of riders
and drivers, providing best-in-class service
from point to point, marketing, providing
physical infrastructure, etc., in my considered
opinion, it cannot be said that there are only
bilateral contracts and or that aggregator is not
involved in any transport activity. All the above
value-added services are provided with respect
to the service of transport; without transport,
none of the above value-added services are
required or have any role.
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17.14. The permit holder/driver enrols on the
aggregator's platform on the promise held out
by the aggregator that passengers/customers
would hail the vehicle for transport purposes
and that the aggregator would make payment
of the due amounts collected from the
passengers/customers.
17.15. The passengers/ customers download the
application of the aggregator and book/s a ride
on the said app on the express promise held
out by the aggregator that the driver
background check has been done; there is
insurance provided, best-in-class transport
service from point to point is provided, apart
from other things which have been mentioned
hereinabove.
17.16. The action taken by the aggregator in bringing
together the permit holder and the
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passengers/customers facilitating the contract
being entered into between them through the
aggregator is a contract between the three
parties. The Permit Holder/driver and the
passenger, each of them acting on the
representation of the other, would indicate the
interdependence on the representations made
by each other. Merely because the aggregator
enters into two separate contracts, one with the
passenger and the other with the permit
holder/driver, it cannot be said that there are
two different bilateral contracts and there is no
privity of contract or that there is no tripartite
contract. The privity of contract exists in both
contracts, which are dependent and
interdependent on each other. Neither of the
contracts can exist or be of use without the
other. A common factor in both the contracts is
the aggregator, and the common focus in both
the agreements is hailing a ride for transport
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from one place to another or for a particular
period, as the case may be as regards which
payment is made by the passenger/customer
which is collected by the aggregator and paid to
driver, retaining the service/convenience fee.
Thus, looked at from any angle, it is a tripartite
contract entered into between the three parties.
The artificial distinction now sought to be
brought out by the aggregator to distance
themselves from their responsibilities cannot be
countenanced either in law or facts.
17.17. Having held that there is a tripartite agreement
and also having held that fare can be fixed
under Section 67 of the Act. Amendments
having been carried out to Section 67 in the
year 2019 and Section 93 not referring to fare,
fare under Subsection (2) of Section 67 being
inclusive of tax, fare as defined under
Subsection (12) of Section 2 being sums
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payable for a season ticket or in respect of the
hire of a contract carriage, contract carriage
being a fixed or an agreed rate or sum payable
on a time basis whether or not with reference
to any route or distance or from one point to
another, I am of the considered opinion that the
fare fixed under Section 67 would be an all-
encompassing amount which is payable by a
passenger for the said journey and as such, the
contention of both the Senior counsels for the
petitioners that service fee is different and over
and above the fare is not acceptable.
17.18. For this purpose, what is required also to be
seen is the intent and purport of Section 67.
Essentially, the intent and purport, in my
considered opinion, on examination of the Act
would be for the State to determine and fix the
fare payable by a passenger for a contract
carriage and other forms of carriages so that
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the passenger is aware of the amount payable
by the passenger/customer on such a carriage
and that the passenger is not taken by surprise
by demand made for a higher amount, the
services being offered being essential transport
services.
17.19. An aggregator app like Uber and Ola being
introduced recently and service being provided
by Uber and Ola for ride-hailing or booking, I
am of the considered opinion that they, being
aware of the statutory requirement under
Section 67, would have to conduct their
business in such a manner that the final fare
required to be paid by the passenger does not
exceed the fare fixed under Section 67.
17.20. The service fee chargeable by the aggregator
from either the passenger or the driver/permit
holder can only be within the fare fixed under
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Section 67. Irrespective of what name is given
by the aggregators to the fee, be it service fee
or, convenience fee or the like, the fee is to
form part of the fare, more so when in terms of
Subsection (2) of Section 67, even tax can form
part of the fare.
17.21. Thus, I answer Point No.4 by holding that
the fare fixed under Section 67 of the MV
Act would include a service fee or
convenience fee charged by an
aggregator; it is for the aggregator and
the permit holder/driver to arrive at what
is the service fee or convenience fee that
the aggregator can claim from and out of
the fare.
17.22. I answer Point No.5 by holding that fare
being inclusive of the service fee or
convenience fee, the ultimate amount
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payable by the passengers/customers
would be fixed under Section 67; the State
cannot fix the service fee or convenience
fee since said service fee or convenience
fee is to be received by the aggregator
from and out of the fare fixed under
Section 67. It is for the aggregator and
the permit holder to arrive at an
agreement as to what a service fee or
convenience fee payable to the aggregator
would be. This being a contract between
the aggregator and the permit
holder/driver, cannot be said to be at the
exclusive discretion of the aggregator.
18. ANSWER TO POINT NO.6: Whether an
aggregator who has accepted the fare fixed for
four-wheeler taxis under Section 67 of the
M.V.Act can now contend that the
State/authority does not have the power to fix
the fare and/or service fee under Section 67 of
the M.V.Act for autorickshaw?
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18.1. An interesting argument addressed by the
learned Advocate General is that insofar as
four-wheelers are concerned, the fare has been
fixed by the State under Section 67 for the
four-wheeler, which has not been challenged by
the aggregators; it is only in respect of
autorickshaws when the fare has been fixed,
the aggregators are contending that the State
has no power to fix the fare under Section 67
but ought to be under Section 93.
18.2. The argument of Sri.K.G.Raghavan is that the
aggregators do not have any grievance as
regards the fare fixed for four wheelers, which
they find it to be as per the market condition;
however, insofar as the fare fixed for
autorickshaws, they being aggrieved by the
rate fixed are before this Court, since it is not
as per market condition and does not take into
consideration the expenses incurred by the
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aggregator among other grounds indicated
above.
18.3. It is not required for a litigant to challenge any
action taken by the State, and merely because
an earlier challenge is not made, it cannot be
contended that there is acquiescence on the
part of the litigant. However, the manner in
which the aggregators have accepted the fare
fixed for four-wheelers but have now challenged
the fare fixed for autorickshaws would only
indicate that the aggregators are following
double standards.
18.4. A fare, if fixed under Section 67 for motorcars
being valid, accepted, and implemented, the
conduct on the part of the aggregators
challenging the fare fixed under the very same
provision for autorickshaws cannot also be
sustained.
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18.5. On the one hand, Sri. K.G. Raghavan, learned
Senior counsel, submits that without
Regulations being framed under Section 93, no
fare could be fixed regarding autorickshaws.
However, based on the facts of the conduct of
the aggregators, it is established that without
regulation, the aggregator has accepted the
fixed fare. A challenge to the exercise of power
by the State cannot only be on the basis of
monetary terms but has to be on constitutional
terms.
18.6. The manner in which the aggregators are
seeking to take different stands and different
arguments, on the one hand contending that no
License is required, on the other hand
contending that no License can be made
mandatory without regulations under Section
93 and third without regulations, no fare can be
fixed, however accepting the fare fixed under
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Section 67 for four-wheelers without there
being regulations under Section 93 would
disentitle the petitioners from claiming any
reliefs insofar as the power of the State to fix
the fare under Section 67. If that is eschewed,
the only ground that remains is regarding the
expenses incurred by the aggregator, which
cannot be the basis of a challenge to validly
exercise power by the state.
18.7. Thus, I answer Point No.6 by holding that
the aggregators who have accepted the
fare for four-wheelers under Section 67 of
the MV Act cannot now contend that the
State does not have the power to fix
service fees under Section 67 of the M.V.
Act for autorickshaws.
19. ANSWER TO POINT NO.7: Could the interim
order dated 14.10.2022 make the Central
guidelines applicable to an aggregator
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requiring the authority to fix the fare and the
service fee accordingly?
19.1. Both the learned Senior counsel appearing for
the petitioners sought to contend that an
interim order dated 14.10.2022 has not been
followed by the State while fixing the fare. It is
also contended that in the interim order, this
court, having recorded the submission of the
learned Advocate General, that guidelines
issued by the Central Government would be
followed, the said Guidelines have also not been
followed.
19.2. The interim order dated 14.10.2022 was passed
in the circumstances as then existed and was
so passed to provide temporary relief and or
temporary arrangement for the parties. The
said interim order cannot be said to have
attained a finality to be taken into consideration
at the time of passing final orders. Merely
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because the learned Advocate General had
indicated that the Guidelines would be taken
into consideration would not make the
Guidelines applicable and or make it
mandatory. Whether the State followed the
Guidelines at the time when the fare was fixed
or not, this Court, during the final hearing, is
required to consider all aspects and pass orders
on merits. Any remedy that the Petitioners
have regarding the alleged violation of a
submission is distinct from what is required to
be considered by this court on merits at this
stage.
19.3. The aspect of whether the guidelines are
mandatory or directory has already been
answered hereinabove. I have also held that
the fare fixed under Section 67 would include a
service fee or convenience fee or any other fee
proposed to be levied. The fare is fixed for the
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knowledge of the passengers/customers since it
is he/she who would be making payment of the
said amounts. Thus, in my opinion, the
submission of the learned Advocate General
regarding the Guidelines being taken into
consideration while fixing the fare would not
make it binding on this Court, which would
have to be independently assessed and
answered.
19.4. The observation made by this Court while
passing interim order on 14.10.2022 was only a
prima facie view, the pleadings having been
completed and the matter having been taken
up for final hearing, arguments on all aspects
having been addressed by all concerned, this
Court would have to examine the matter on
merits and not on the basis of the prima facie
view at the interlocutory stage. The interim
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order dated 14.10.2022, as aforesaid, was only
a prima facie view expressed.
19.5. The Hon'ble Apex Court has concluded that the
guidelines are not mandatory but only
persuasive; the prima facie finding in the
interim order dated 14.10.2022 cannot make
the guidelines applicable to all aggregators
requiring the Authority to follow the said
guidelines in a mandatory manner.
19.6. Hence, I answer Point No.7 by holding that
the interim order dated 14.10.2022 will
not make the guidelines mandatory and
applicable to the aggregators. This aspect
having been considered by the Hon'ble
Apex Court and answered in the negative,
I have also considered this aspect, taking
into consideration all the facts, law, and
arguments at the final hearing and I'am of
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the considered opinion that the guidelines
are only persuasive in nature and as such
there is no requirement for the state to
follow the same while fixing the fare.
20. ANSWER TO POINT Nos.8, 9 and 10:
(8) ANSWER TO POINT Nos.8: Was it
required for the State/authority to
specifically ask for information or was it
a duty on part of the aggregator to
furnish all the information required to fix
the service fee?
(9) ANSWER TO POINT Nos.9: Does the
service fee of 5% fixed by the transport
authority fall foul of Wednesbury's
principles of arbitrariness?
(10) ANSWER TO POINT Nos.10: Is the fare
fixation and/or service fee fixation a
legislative activity that was not
justiciable before this Court?
20.1. All the above points are related to each other
and taken up for consideration together.
20.2. Sri.K.G.Raghavan, learned Senior counsel by
referring to the decision of the Apex Court in
Shri Sitaram Sugar Co. Ltd's case, contends
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that the fare has not been fixed in good faith,
more so the service fee is not fixed in good
faith, it is not a reasonable fee, not intravires
the power vested with the State and is,
therefore required to be quashed.
20.3. By relying on Cynamide India's case, he
submits that there are no guidelines available
under Section 67 for fixing the
commission/service charges, and the said
commission/service charges could only be fixed
under Section 93. There is no justification that
the State has made out as to why 5% service
fee has been fixed. By relying on Tata
Cellular's case, the submission of Sri. K.G.
Raghavan learned Senior Counsel is that the
service fee/commission charge, which is fixed
at 5%, is completely arbitrary, and no
reasonable person could have fixed such a fee.
Even according to the State, the State did not
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have the necessary details to fix the
commission/service fee. Thus, the said fee has
been fixed without considering the relevant
criteria, as it also has been fixed by considering
irrelevant material. By relying on 63 Moon
Technology's case, he submits that it is only
before this Court that the State has sought to
provide some justification. The said
justification cannot be considered at this stage.
The order by itself ought to have reflected the
reasons for passing such an order restricting
the service fee/convenience fee to 5%. By
relying on Mohammed Yasin's case, he
submits that Uber is entitled to make profits
from its operation. Uber, not being in the
business of charity, it should be permitted for
Uber to fix such rate of service fee/convenience
fee as it deems fit, the State not having any
role to play in relation thereto. By referring to
the Association of National Gas Consuming
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Industries of Gujarat's case, his submission
is that the Hon'ble Apex Court has recognized
the right of a public sector entity to make
profit. The petitioner/Uber, being a private
entity is also entitled to make profits. By
referring to All India Gaming Federation's
Case, he submits that 5% payable to the
aggregator as a service fee/convenience fee is
not proportionate to the expenses and efforts of
Uber, and, as such, the same being meagre
cannot be sustained. By referring to Pillai's
case and U.P. Rajya Khanij Vikas Nigam
Sangharsh Samiti's case, he submits that
irrespective of the aggregator having
participated in the meeting called for by the
authority pursuant to the interim order dated
14.10.2022, the aggregators can question the
methodology adopted to fix the service
fee/convenience fee. As such, he submits that
whether Uber furnished necessary documents
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or not, it was for the State to have ascertained
the facts and figures and thereafter fixed the
service charges/convenience fee, which not
having been done renders the entire process
and procedure fallacious, requiring it to be
quashed.
20.4. The contention of both the Senior counsels for
the petitioners is that the service fee of 5%,
which the Transport authority has fixed, falls
foul of Wednesbury principles and is, therefore,
arbitrary.
20.5. What is important to consider is that the
petitioners are not challenging the fare but are
aggrieved by the service fee fixed. Initially, no
particular service fee component had been
fixed; only a fare in terms of Section 67 was
fixed. Subsequently, in terms of the interim
order dated 14.10.2022, a separate amount
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was fixed as a service fee. This fixation at 5%
is contended to be arbitrary by both learned
Senior counsel on the ground that the State has
not taken into consideration the relevant
criteria and has taken into consideration
irrelevant factors.
20.6. Though I have come to the conclusion that the
service fee also would have to be part of the
fare and it cannot be a different component,
since extensive arguments have been advanced
on the above issues, these issues would also
have to be dealt with lest it is contended that
they have not been.
20.7. The contention of Sri.K.G.Raghavan, learned
Senior counsel who has appeared for Uber, is
that the State has not taken into consideration
the distinct service provided by autorickshaws
on aggregator platforms vis-à-vis the street
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hailed autorickshaws inasmuch as the
autorickshaws from the aggregator platform
provided doorstep pick up facility and as such,
the same does not adequately compensate the
additional distance travelled and service
provided in picking up passengers from the
doorstep. This argument, in my considered
opinion, would amount only to a charge that
could be levied by the autorickshaw permit
holder/driver from the point where he was to
the pickup location, which is required to enure
to the benefit of the driver/owner of the vehicle
rather than aggregator since in this regard the
aggregator is not providing any service. The
expenses involved in travelling from the
location where the autorickshaw is parked or
situated to the doorstep of the customer, such
as fuel charges, time, wear and tear of the
vehicle, etc., are all to the account of the
permit holder/driver. Uber only provides
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locations to be ascertained to enable the driver
to travel to the pick-up location. Thus, though
it is contended is a service which is available
only on the aggregator platform, what would
also have to be seen is this service is not
provided essentially by the aggregator, but it is
the service provided by the permit
holder/driver/owner of the autorickshaw at his
cost, this cannot enure to the benefit of the
aggregator. The intervenors have also taken up
this issue and contended that it is at their cost;
they are arriving at the doorstep, and the
aggregator cannot charge for it as part of its
commission.
20.8. A perusal of the challans which have been
produced would also indicate that there is no
particular charge levied by Uber on this aspect,
but it is now sought to be contended that this is
part of the service rendered by Uber. For all
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the aforesaid reasons, I reiterate that there is
no service rendered by Uber in this regard for
Uber to be entitled to charge any amount as
service fee or commission.
20.9. The other value-added services claimed by Uber
is that the aggregator platforms provide for:
i. GPS tracking and routing: On enquiry
with learned Senior counsel if there is a
separate app developed for Bangalore or it is
a common app for Karnataka, India and the
rest of the world, he fairly submitted that the
app is common with few modifications.
Thus, the GPS tracking and routing involved
cannot be exclusively attributed to the
service being delivered by autorickshaws in
the city of Bangalore. It is the same facility
provided for four-wheelers, as regards which
Uber acts as an aggregator. Furthermore, the
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GPS software essentially used is Google
Maps, which is available for free in the public
domain; a few modifications or customization
to the same will not make it the GPS
software of Uber. The app used by both Uber
and Ola is the same for all vehicles; further,
it is the same across India and in so many
other countries, it is similar. There is nothing
specific that is customized or created for
aggregating the autorickshaws except for
making a separate item/section for
autorickshaws and calculating the total fare
as per the fare fixed for autorickshaws.
ii. The application being used is the same for all
classes of vehicles; as such, there is nothing
substantial or specific that can be
attributable to Autorickshaws, nor is any
documentation placed on record in relation
thereto. Conversely, if this submission is
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accepted, the fare fixed for four-wheeler
taxis would have to be reduced, considering
the amortization of costs between four-
wheeler taxis and autorickshaws.
iii. 24x7 safety helpline: this is also a
common feature in the app, which is
available worldwide; merely because the
phone number in Bangalore is different and
or customer service executives are different
would not make it a separate service
rendered by Uber. Be that as it may, in so
far as Bangalore is concerned,, the helpline
numbers for both four-wheeler taxis and
autorickshaws are the same. There is no
specific value that could be attributed to it
nor is it provided.
iv. In-app panic/emergency button: this,
again, is a part of the common app
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developed and used across the world for
different classes of vehicles, and there is no
specific value that could be attributed to, nor
a value has been provided.
v. 24x7 support including phone call
support in-person support back by 600+
support agents: On enquiry whether these
agents are exclusively based in Bangalore
and provide service exclusively to
autorickshaws, firstly learned Senior counsel
is unable to state as to whether they are
based in Bangalore, but however submits
that the same agents are also used for four
wheeler taxis. These services are provided
across the country for both four-wheelers
and autorickshaws; there is no specific value
that could be attributed to them, nor is it
provided. 600 agents for an aggregator who
claims to be running lakhs of rides a day
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would indicate the severe shortage of agents
and give credence to the interveners'
submission that they cannot reach customer
service.
vi. Digital payment, Debit card, credit card,
wallet payment- this is a mode of payment
adopted by aggregators to receive payment.
Though the same may be a beneficial feature
for the passengers/customers, it cannot be
said to be a separate service provided by the
aggregator. Today, we have a vegetable
vendor using UPI. UPI payment could also
be made at a tea stall or small grocery store;
Courts have also enabled digital payments.
Digital payments are a necessity for
conducting a business as an aggregator on
an online platform using an app. Therefore,
the same cannot be a service offered by an
aggregator to the customer or driver. As far
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as the driver is concerned, the amounts
collected by the aggregator from the
customer are paid by the aggregator to the
driver/permit holder. There is no service
provided by the aggregator to the driver on
this account. Thus, providing a digital
payment methodology cannot be said to be a
service requiring Uber to claim a service fee
or convenience fee. As far as wallet is
concerned, Uber has not created any wallets.
In so far as Ola is concerned, though a wallet
has been created, the said wallet is not only
used for autorickshaws but also for all other
classes of vehicles and other services
provided by Ola. There are no particulars
provided to indicate the amortization of costs
in relation to this with reference to
autorickshaws.
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vii. Driver background checks: though much
was sought to be made about driver
background checks. There are no documents
placed on record in relation thereto, the
nature of checks conducted, or costs
incurred in relation thereto. It was sought to
be contended by Sri.K.G.Raghavan, learned
Senior counsel, that there is no tripartite
agreement, Uber has separate agreements
with passenger and driver, and as such, Uber
is not responsible for the providing of
transport or any action or inaction on the
part of the driver, which is a separate
contract between the driver and the
customer/passenger. Though I have not
accepted the said contention, when Uber has
made such categorical statements and
submissions to deny their liability towards
the driver for his actions or inactions, the
question of conducting a driver background
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check for the benefit of the customer is not a
service provided to the customer, at the
most, it could be a background check by
Uber to onboard drivers or owners on to its
platform. If at all an aggregator were to base
a claim for receipt of monies as a service fee,
such service is required to be provided. The
aggregator has to assume responsibility,
vicarious or otherwise, for the action and
inaction on the part of the driver/permit
holder/owner; Uber has sought to disown
any responsibility which would disentitle
Uber from collecting any amounts on this
head of account. I have however come to a
conclusion hereinabove that the aggregator
would be responsible for all actions and
inactions on part of the driver/permit holder
till the completion of the trip, as also in
association with the trip.
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viii. Rider and Driver in trip insurance: On
enquiry as to whether it is part of the fare,
part of the service fee or convenience fee, it
is submitted that while booking an app, a
feature is available for a rider to insure his
trip, i.e. to say this amount is over and
above the fare and the service fee. Hence,
the question of rider and driver in trip
insurance being provided for which Uber
would be entitled to service fee/convenience
fee cannot be accepted since a separate fee
is already being charged for the same.
ix. Data backup and engineering support to
match riders and drivers and provide the
best in class point-to-point transport
service and new products: though this
aspect has been claimed in the letter dated
28.10.2022 at Annexure-U to the petition, a
categorical statement has been made across
the Bar that Uber does not provide transport
service, and there is no tripartite contract.
When there is no tripartite contract, the
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question of matching riders and drivers and
providing the best-in-class transport service
goes against the submissions made repeatedly
across the Bar, and there is a repeated denial
of Uber being involved in any transport
business. The actions and submissions are
contradictory, and I refrain from calling them
dishonest, though that may not be far from
the truth of the matter. Hence, the aggregator
would not be eligible for any amounts as a
service fee on this account since no services
are provided, according to them. I have,
however, held that the aggregators are in the
business of providing transport service.
x. Phone number anonymization - This,
again, is a common factor in the app, which is
available across the world, and in India, it is a
common feature for all classes of vehicles.
There are no particular details of expenses
incurred on this head of account for
autorickshaws provided hence the same
cannot be considered.
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xi. Law enforcement response assistance:
the response is admittedly by law
enforcement authority and not by Uber. Uber
would be required to assist the law
enforcement agency in the event of any such
circumstances arising; assisting law
enforcement agencies, which is a duty cast
on Uber, cannot be said to be a service
rendered entitling Uber for any amount. It is
not required for rendering such assistance on
all rides; there are no details placed on
record indicating the number of times such
assistance was rendered and the costs
incurred in relation thereto. Any amount can
be charged only when such response or
assistance is provided and not on a ride
where no such service is provided. Hence,
Uber's alleged entitlement to this head of
account cannot be considered, let alone
countenanced.
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xii. Marketing to generate more demand for
drivers covering but not limited to
performance marketing, brand building,
new rider and driver incentives, gift
card, etc.: This again is an expense
incurred by Uber to market and brand its
business. Even otherwise, a reading of the
above would indicate that it is a service
provided to the driver, not to a customer.
These are expenses incurred by Uber to
develop the business of the aggregator and
can not be burdened on the
passenger/customer since it is from the
passenger/customer that amounts are
sought to be collected as service
fees/charges. Thus, Uber cannot charge a
service fee or convenience fee on this head
of account. Service fees/charges, as the
name itself indicates, can only be charged
for services rendered or availed.
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xiii. Other physical infrastructure and
support: -the physical infrastructure which
is created, solely enures to the benefit of and
belongs to Uber and does not in any manner
directly benefit the customer. Uber cannot
seek for the customer/passenger to make
payment for the physical assets that Uber
intends to create for itself. Hence, this again
would not be a ground to levy a service fee
or convenience fee. Furthermore, no details
in relation thereto have been placed on
record for consideration.
20.10. Thus, on the basis of the above, in proposal (a),
Uber contends that the current static meter
fares are to be done away with as regards
autorickshaws operating on aggregator
platforms and allow autorickshaws to operate
with dynamic pricing within the fare cap
minimum and maximum and aggregators being
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allowed to charge upto 25% of the fare as
platform/technology fee. In the alternative in
proposal (b) it is contended that Uber should be
allowed to charge 2X of the fare with 25% as a
platform technology fee, and in terms of
proposal (c), it is contended that the minimum
fare has to be increased from Rs.15 to 17 and
minimum from Rs.30 to 35/- with a pick up
charge of Rs.30/- and platform fee of 25%.
These being the proposals furnished on the
basis of the so-called services rendered by
Uber, it is contended by Sri.K.G.Raghavan,
learned Senior counsel, that fixation of service
fee of 5% falls foul of Wednesbury's principles
of arbitrariness, on the ground that all the
above services and costs have not been taken
into account and consideration by the State.
Relevant criteria not having been considered
and irrelevant criteria being considered, the
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impugned notification is required to be
quashed.
20.11. On enquiry as to whether the details as regards
the heads of account and expenses incurred in
respect thereto as regards autorickshaws have
been provided to the authorities concerned, his
submission is that it was for the
State/authorities to specifically ask for
information, whatever has been asked has been
provided, and as such, the fact that the State
did not have all information in its possession
would indicate that relevant aspects have not
been taken into consideration. I am unable to
agree with the said contention, inasmuch as
Uber is the entity in possession of the details,
including heads of accounts and monies and
expenses involved. It was for Uber to have
provided all these details to the State whether
it was asked for or not since the meeting had
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been called for all the stake holders to arrive at
a fare, etc., to be fixed.
20.12. Uber, which has chosen to retain all this
information for itself, cannot now be heard
contending that the action of the State is
arbitrary or unreasonable since the decision of
the State is allegedly without having the
necessary information. Even during the course
of arguments, when the counsels were called
upon to place on record the details of expenses
which have been incurred for app development,
how the expenses have been amortized across
the world or within India or within Bangalore,
the specific expenses which Uber incurs in
respect of autorickshaws in Bangalore, no
details have been forthcoming. As observed
above, no details or documents have been
placed on record for consideration of this court
despite sufficient and more opportunities
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having been provided to do so. Those details
not having been furnished to the State nor to
this Court, a person or entity who seeks to
maintain secrecy and or, for lack of a better
word, suppresses the heads of expenses and
quantum of expenses cannot be heard to say
that these have not been taken into
consideration by the State. A litigant who
comes to court is indeed required to do so with
clean hands; Uber not having placed the
documents and details for consideration before
the authorities, cannot now be heard to say
that the state has not considered it when all
such details are in the exclusive custody of
Uber. This contention and submission cannot be
accepted by me since Uber is seeking to take
advantage of its own wrongs, which is not
permissible.
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20.13. Insofar as Ola is concerned, it has submitted a
representation dated 7/10/2022, it was
contended by Sri.Aditya Sondhi, learned Senior
counsel, that Ola is a mobile-based aggregator
service company which allows the customer to
book a taxi service from the available options of
four Wheeler or three Wheeler, enabling them
to enjoy the comfort of doorstep pickup, which
is an advantage for the customer. Ola also
claims to provide services for ensuring safety of
the customer by providing GPS tracking, a
digital billing facility, and customer care
services. In its representation dated
28.10.2022, it is contended that separate
regulations for three Wheeler aggregator
services have to be made. It is contended that
if the collection on the part of the aggregator is
significantly low, the same would impact the
additional services or benefits to the drivers
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and may affect their performance, and as such,
20% of the commission has to be fixed.
20.14. Thus, even OLA has more or less contended the
same as contended by Uber; hence, the
reasoning given by me regarding Uber's claim
will also equally apply to Ola's claim. Ola has
also not placed any documents and details on
record before the authorities or before this
court for consideration.
20.15. Ola has additionally contended that if lesser
commission is allowed to be charged, the
services being offered by the driver would be
adversely affected. These statements on behalf
of Ola as regards drivers are contradicted by
the intervenors, who are associations of drivers
and owners of autorickshaws. Their contention
has been that both Uber and Ola are not paying
due amounts to the drivers, are keeping the
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lion's share of the money and are making use
of their dominant status in the industry to force
the drivers to come on board at the terms
dictated by Uber and Ola, which therefore ex-
facie is contrary to the statement of Ola that
they are charging for the benefit of the drivers.
20.16. Insofar as this usage of dominant position is
concerned, in terms of the Competition Act
2002, it would be for the Competition
Commission to conduct necessary enquiry into
the matter, ascertain the manner and
methodology of operation of Uber and Ola and
take necessary steps in that regard after due
enquiry. This Court cannot go through the
same, they being seriously disputed questions
of facts requiring a detailed enquiry to ascertain
the truth. The Registrar (Judicial) is directed to
forward a copy of this order to the Chairperson,
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Competition Commission at New Delhi, to take
such action as the Chairperson deems fit.
20.17. Both Uber and Ola are seeking to contend that
they are entitled to make profits. There can be
no two thoughts on the same. Any aggregator,
be it Ola or Uber or any other person who is not
before this Court, would be entitled to make a
profit in a commercial venture. However, the
said entity, private or otherwise, cannot seek
the State to fix its income in this case by way of
receipt of convenience fee/service charges at a
rate that would make the business profitable.
20.18. Any business entity would have to conduct its
business in a prudent manner to make profits,
and towards that end, the said business entity
must follow financial discipline in such a way
that the expenses incurred are lesser than the
income. Merely because the expenses are
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higher, the state would not be required to fix
commissions on the basis of such a quantum of
expenses.
20.19. In the present case, Uber and Ola are seeking
to contend that they have spent huge amounts
of money in promoting the business, spend
money on technology network costs, spend
money on driver onboarding, employee costs,
labour engineering costs and marketing costs,
amongst others. On that basis, it is contended
by Uber in the affidavit of Sri. Sharath Shetty,
that an amount of Rs.24.19 is incurred as cost
by Uber per trip. Much of the expenses stated
therein are relating to support services,
technology services, etc.
20.20. It is contended that the driver onboarding cost
is Rs.2.86, the employee cost of Uber is
Rs.3.77, and the marketing cost is Rs.2.2.
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These expenses can not be expenses which can
be mulcted upon the passenger/customer
inasmuch as these amounts are one's which are
to be borne by Uber for conducting its own
business if it wants to do so. Driver onboarding
is an essential part of the business, the same
cannot be passed on to the customer. The
marketing cost incurred by Uber cannot also be
passed on to the customer. These expenses are
to be incurred by Uber in a prudent manner.
20.21. Merely because Uber deems it fit to spend
certain amounts of money on a particular
aspect, the same cannot be said to be part of
the cost entitling the same to be collected as a
service fee/charge.
20.22. Be that as it may, despite repeated enquiry the
details of the expenses incurred by Uber for
services provided in Bangalore, in the State of
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Karnataka, in the Republic of India and in the
world for different classes of vehicles and how
the same has been amortised and calculated in
the table at Para 17 of the affidavit of
Sri.Sharat Shetty, has not been made available
to this Court.
20.23. Uber being in the custody of all the relevant
documents, financial statements, etc., having
chosen to only broadly give the statement
without supporting documents, the same not
having been certified by a Chartered
Accountant, the Books of Account not being
placed, these figures cannot be accepted to be
true.
20.24. Be that as it may, for the purpose of
arguments, even if it is assumed that the
amounts which have been stated are costs
incurred by Uber. As afore observed, merely
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because Uber incurs certain costs, the same
cannot be passed on to the customer with the
blessing of the State to be collected as a
service fee/charge. The State cannot be a tool
in the hands of a private entrepreneur or a
business entity to fix rates in such a manner as
to make such a private entity profitable.
20.25. There is no obligation imposed on the State to
make any business, let alone the business of
Uber or Ola, profitable. Uber or Ola should
operate within the fare fixed by the State in a
prudent manner to make profits and not call
upon the State to fix a separate commission
amount, which, according to Uber and Ola, will
make the business feasible and profitable. If
such a contention were to be accepted, every
other business entity, private or public would
seek for fixation of prices in such a manner as
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to make it profitable for such private or public
entity.
20.26. Be that as it may, Uber and Ola being in the
business of providing aggregation services, it is
for them to organize their affairs in such a
manner that it provides profitability to the
service providers. A businessman cannot be
heard saying that since he is in the business of
providing aggregator service and the service is
of public importance, a minimum fee has to be
fixed for such a businessman to be profitable
and in operation. A fare having been fixed
under Section 67, it is for
businessmen/business entities like Uber and
Ola to arrange their business in such a manner
that within the fare fixed, they charge such
amounts as service fee and/or Commission as
agreeable between the drivers and Uber/Ola
and not call upon the customer to make
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payment of more than the fare that has been
fixed. If it is not profitable for Uber and Ola to
carry out their business, there is no compulsion
for them to render such services. As aforesaid,
they cannot seek a fixation of the fare and/or
service fee/convenience fee to suit their
convenience and attain profitability. It is
however made clear that Uber and Ola would
be entitled to make such profits as they can
within the fare fixed, as regards which none can
have any dispute.
20.27. An autorickshaw being used by a common man
and woman to reach from point A to point B, it
is required that fare for such autorickshaw be
fixed at such price and at such rate so as to be
economical for a citizen of a country and to not
make it so uneconomical that such person
cannot afford to travel by autorickshaw which is
the lowest form of and least expensive
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transport available for hire. The State, in my
opinion, has taken all factors that are relevant
to fix the fare as fixed in the present matter.
20.28. The State has taken into consideration the
value of the vehicle, registration fee, renewal of
fitness certificate, vehicle insurance,
hypothecation fee, LPG cost, price of spare
parts, the house rent, day-to-day need of,
education fee, rate of fuel, situation during
lockdown period, commission to be paid by the
autorickshaw drivers, rate of interest on
borrowed loans, etc., these in my considered
opinion being relevant factors would not fall
foul of Wednesbury principles of arbitrariness as
sought to be contended.
20.29. In view of the above, I answer point No.8
by holding that it was not required for the
State or a Transport authority to
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specifically ask for information from the
aggregator; on the contrary, it was the
duty of the aggregator like Uber and Ola to
furnish all requisite information in its
possession without so being asked since
the matter relates to a fare fixation, as
also fixation of service fee, convenience
fee chargeable by the aggregator.
20.30. Having come to the conclusion that the service
fee is part of the fare, the 5% service fee fixed
by the State in pursuance of the interim order
passed by this Court will also form a part of the
fare whether fixed under a single notification or
multiple notifications. The same does not fall
foul of the Wednesbury's principle of
arbitrariness, since the alleged relevant details
and information have not been furnished by the
aggregators.
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20.31. Though it is contended by the learned Advocate
General that fixation of fare is a legislative
activity and not justiciable, in the present case,
the fare has been fixed by the executive action,
and as such, the said fare which has been fixed
will not get the protection as a legislative act.
20.32. Thus, I answer point No.9 by holding that
the fixing of service fee/convenience fee
at 5% by way of the impugned notification
does not fall foul of Wednesbury principles
of unreasonableness.
20.33. I answer point No.10, by holding that the
fare fixed by an executive action is
justiciable before this Court.
21. ANSWER TO POINT NO.11: Whether there is a
separate License required for an autorickshaw
under KODTTA Rules distinct from the License
for a four-wheeler?
21.1. By referring to Veeramani's case, Prakash's
case and Sumitra Autorickshaw Sahakari
Sangh Ltd.'s case, the submission of
Sri.K.G.Raghavan, learned Senior counsel is
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that there is no distinction between four-
wheeler and three-wheelers, both of them
coming under the definition of 'motor cab' a
single License would be sufficient for both these
vehicles since the law does not recognize both
of them to be different.
21.2. Sri. Aditya Sondhi, learned Senior counsel, also
refers to and relies on the very same decisions
and makes the very same submission. In
addition, he submits that the State has not
insisted on a separate license.
21.3. The fixation of fare made under Section 67 as
also the service fee earlier made at the rate of
10% on 6.11.2021, now at 5% on 25.11.2022,
the State has accepted that autorickshaw would
also be a motor cab, and there is no further or
separate License required for an autorickshaw
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to be onboarded on the platform of the
petitioners to provide ride-hailing services.
21.4. The contention of both learned Senior counsels
is that one single License would be sufficient for
both four-wheelers and three-wheelers. It is on
that basis it is contended that the License which
has been obtained by Uber and Ola for four-
wheelers would suffice for three-wheelers since
three-wheelers would also come under the
definition of motor cab under Subsection (25)
of Section 2, which reads as under:
(25) "motorcab" means any motor vehicle
constructed or adapted to carry not more than six
passengers excluding the driver for hire or reward;
21.5. His submission in this regard is that any vehicle
adapted to carry not more than six passengers
would be a motor cab, and a License issued for
a motor cab autorickshaw carrying less than six
passengers would also cover an autorickshaw.
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21.6. The submission of both the Senior counsels is
that the Guidelines 2020 are mandatory and
are required to be followed. Though I have held
the same to be only persuasive and not
required to be followed, a perusal of Form-3 of
the said Guidelines would indicate that a
License to operate as an aggregator under M.V.
Act, is issued to the following and in column
No.5, it is indicated no. of autorickshaw/E-
rickshaw/motor cab/ motorcycle/bus (as per
the list indicated) by aggregator in Form No.1
and 2 as may be applicable.
21.7. This would indicate that the License has to be
separate for each of the above types of
vehicles, and one License would not suffice for
all kinds of vehicles. Furthermore, a list of all
the vehicles is required to be enclosed by the
aggregator in Form No.1 when initially applying
for a License and in Form No.2 when seeking
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renewal. Row 7 of Form No.1 would indicate
the number of (type of vehicle) proposed to be
operated (enclose a separate list containing
vehicle no. and permit particulars of each
vehicle). When row 7 indicates the type of
vehicle, said type of vehicle read in consonance
with Form-3 would mean either an
autorickshaw/e-rickshaw/motor cab/
motorcycle individually and not all jointly.
21.8. On enquiry, if a separate list containing vehicle
no. and permit particulars have been provided,
both the Senior counsels submit that a partial
list has been provided since the onboarding is
dynamic, and the number of vehicles keeps
changing on a day-to-day basis.
21.9. The whole purpose of the Guidelines appears to
be that all the details are to be made available
to the authorities concerned, and these details
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are also to the knowledge of the aggregators.
This aspect has been violated, and action would
have to be taken if the Guidelines had been
adopted in the State of Karnataka. If the same
had not been adopted, this aspect would not be
of much relevance. Be that as it may, even as
per the arguments advanced by learned senior
counsels, the Guidelines of 2020 are applicable,
and that a single License would cover
autorickshaws is not borne out by the
Guidelines 2020.
21.10. What is applicable in the State of Karnataka is
the Karnataka On-demand Transportation
Technology Aggregator Rules 2016. These
rules, having been issued in the year 2016 have
only contemplated a taxi and not an
autorickshaw. Thus, there is no distinction
made between a four-wheeler taxi and an
autorickshaw under KODTTA Rules, 2016.
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21.11. Form No.1 of Appendix 1, row 6 indicates that a
separate list containing vehicle no. and permit
particulars for each vehicle is required to be
provided. Apparently, no list has been provided
by Uber or Ola regarding all the vehicles,
including autorickshaws onboarded on their
platform. Hence, suitable action would have to
be taken by the concerned authorities in this
regard, which the authorities have contended
that they are unable to take in view of the
directions issued by the Hon'ble Division Bench
of this Court in W.A. No.4787/2016 wherein
they have been restrained from taking any
coercive steps.
21.12. It is for the respondent state to bring the
violations on the part of Uber and Ola to the
notice of the Hon'ble Division bench to seek
permission to take action against the offending
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party since any violation by the offending party
has an adverse effect on the citizens in general.
21.13. Hence, I answer Point No.11 by holding
that under KODTTA Rules, the aggregator
has to provide the full list of all vehicles
along with permit details, and there would
be no requirement to obtain a separate
License under KODTTA Rules for
autorickshaws.
22. ANSWER TO POINT NO.12: Whether UBER is
responsible for providing transport services by
the permit holders/driver of the vehicle or is
the responsibility of an aggregator restricted to
the booking of the vehicle on the aggregator
platform or, in other words, whether there is a
tripartite contract between the aggregator,
driver/permit holder and passengers/customer
or is it only a bilateral contract between:
a)aggregator and permit holder;
b)aggregator and passenger/customer;
c)customer/passenger and permit holder.
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22.1. Many of the aspects relating to this matter have
already been considered in answer to the Points
above; the contention of Sri.K.G.Raghavan,
learned Senior counsel, is that there is no
tripartite agreement/contract between the
aggregator, driver/permit holder and
passenger/customer and that are only bilateral
contracts. This aspect having been considered
above, I have also adverted to the fact of
whether Uber provides transport services or
not.
22.2. Admittedly, there is a contract between the
aggregator and permit holder/driver, and
admittedly, there is a contract between the
aggregator and the permit holder/driver, and
admittedly, there is an agreement between the
aggregator and the passenger/customer. The
agreement between the passengers/customers
and permit holders/drivers is arrived at on the
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Uber platform. If not for the platform, neither
the permit holder/driver can contact the
passenger/customer nor can the
passenger/customer contact the permit
holder/driver.
22.3. The purpose of establishing the platform by the
aggregator is to enable the passenger/customer
to avail of the transport service and for the
permit holder/driver to provide transport
service. Though it is contended that Uber is
only an aggregator and does not provide
transport service, if not for Uber, there is no
transport service which could be availed of by
passenger/customer from permit holder/driver,
nor could such permit holder/driver render
service to passenger/customer.
22.4. Uber, being an aggregator, would have to be
distinguished from intermediaries like e-
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commerce web portals, viz., Amazon or
Flipkart. On those intermediary websites, there
are innumerable services and goods provided
by different vendors to the customer. There is
no particular representation made by Amazon,
Flipkart, Myntra or the like as regards the
merchantability of the goods or services,
whereas, in respect of Uber, there is a specific
representation made that Uber does a
background check of the drivers and pairs the
drivers with passenger/customer. Thus, this
pairing is done at the end of Uber, and Uber has
a choice of either the driver or the customer,
whereas on Amazon or Flipkart, the customer
gets to choose the product that the customer
intends to buy and from whom he intends to
buy. Amazon does not select the product or
pair the customer with the vendor/service
provider. Thus, the concept of an aggregator
vis-à-vis an e-commerce website would stand
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on a different footing than that of an
aggregator like Uber or Ola.
22.5. Not only is there a booking of the vehicle made
by a customer on the app of the aggregator, but
the said booking is made vis-à-vis the permit
holder/driver who has been paired with the
passenger/customer, as regards which
passenger/customer has no choice, there are
no options made available to the
Passenger/customer to choose a particular
driver for that particular class of vehicle only
choice made available is for choosing the class
of vehicle and not the driver. He can either
accept by booking or reject the booking and do
a search again, which would probably give the
same result. Thus, all the background activity
is done by the aggregator, the only input
provided by the passenger/customer being a
location where she is to be picked up and/or
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dropped (though, of course, there is a choice
made available as regarding the nature of the
vehicle whether it is Uber go, Uber premier,
Uber auto, Uber XL, Uber go sedan, etc in case
of Uber and in case of Ola the choices being
Auto, Bike, Mini, Hourly Rental, Prime SUV,
Prime Sedan, PrimePlus, Parcel, ebike ).
22.6. Insofar as autorickshaws is concerned, there is
one choice Uber Auto in the case of Uber and
Ola Auto in the case of Ola with the permit
holder/driver being paired in the background
with the passenger/customer, since this
automatic pairing occurs in the background.
22.7. The aggregator has made a specific
representation that a background check was
done on the driver and further provides for
emergency service, SOS services, panic button,
etc. The passenger/customer help desk and
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service centre, which the aggregator has
referred to in their proposal, are concerned with
the services provided by both the aggregators
regarding the app and the services provided by
the permit holder/driver.
22.8. It is also made clear that assistance would be
provided by the aggregator with respect to law
enforcement agencies if and when required.
Thus, to contend that the only responsibility of
the aggregator is restricted to onboard the
autorickshaw or taxi on the platform of the
aggregator, in my considered opinion, is a very
narrow approach by the aggregators to only
deny and escape any responsibility of the
aggregator to either the customer/passenger or
to the driver, while at the same time,
contending that it is on account of the services
being offered to the passenger/customer and
driver, that the aggregator is entitled to charge
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a hefty service fee or convenience charge.
Though the aggregator may not own the
autorickshaws or taxis, essentially all the
services provided by the aggregator are
transport services that the passenger/customer
wishes to avail themselves of and that the
driver wishes to provide.
22.9. Hence, I answer Point No.13, holding that
the aggregator is responsible for providing
transport services, and the responsibility
is not restricted to the booking of vehicles
on the aggregator platform. I also hold
that there is a tripartite contract that is
entered into between the aggregator,
passenger/customer, and permit
holder/driver for such transport services.
23. ANSWER TO POINT NO.13: Have the
aggregators made use of their dominant
position to prevail upon the permit
holders/drivers to onboard with themselves on
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the terms and conditions fixed by the
aggregator requiring the matter to be referred
to the competitive Commission?
23.1. This aspect has also been briefly considered
while answering Point No.8 above. This issue
has arisen on account of the intervenors, who
are the Association of permit holders/drivers
having categorically contended that the
aggregators are abusing their dominant position
and prevailing upon the permit holder/drivers
to accede to any terms and conditions imposed
by the aggregators and further that payments
which have been collected by the aggregators
from the passenger/customer simultaneously
with the ending with the trip are not settled
with the permit holder/driver for long periods of
time and that there are unexplained and
unnecessary deductions made in relation to the
said payments and on an enquiry, the permit
holder/drivers are often not given any valid
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answers but are given a choice to exit the
aggregator platform under a threat that they
will be blacklisted, and they will not be
permitted on board in any other aggregator
platform and or re-board with the aggregator
from which the permit holder has exited.
23.2. Learned Senior counsels, in reply to the
allegations made, would submit that there is no
such restriction on the permit holder/driver to
exit the aggregator platform; on-boarding or
de-boarding is the exclusive option of the
permit holder/driver. The aggregator does not
in any manner take any action against permit
holders/drivers who have de-boarded
themselves.
23.3. The aggregators settle the accounts of the
permit holder/drivers within reasonable periods
of time after the reconciliation of accounts; as
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such, it is contended that all allegations made
by permit holder/drivers are bereft of merit and
are required to be disregarded.
23.4. These are factual aspects that this Court cannot
consider. The allegations made by the said
permit holder/driver require an enquiry and
evidence to be led and would come within the
purview of the Competition Act, 2002, and the
amendments made thereto.
23.5. If the submissions made by the intervenors is
correct, then there is a cartelization which is
resorted to by the aggregators who would be
enterprises within such definition of the
Competition Act, which has resulted in an anti-
competitive agreement by abusing their
dominant position in combination with each
other which would have to be enquired by the
Competition Commission.
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23.6. The Competition Commission is a specialization
agency that has been established for such
purposes. This Court neither has jurisdiction nor
the wherewithal to ascertain if the allegations
made by the intervenors and the defences
made out by the Petitioners are correct or not.
The intervenors would always be at liberty to
approach the Competition Committee. The
Registrar (Judicial) of this Court is directed to
forward a copy of this order to the Chairperson,
Competition Commission of India, for
information and action, if any required.
23.7. It is made clear that this Court has not
expressed any opinion on the allegations made
by the intervenors and the defence that the
aggregators may have regarding any such
allegations.
24. ANSWER TO POINT NO.14: Can the aggregators
charge surge pricing in view of the undertaking
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provided by them to the Division Bench in
W.P.No.4287/2016, 4789/2016 and
47109/2018 as observed vide order dated
07.12.2016?
24.1. In the proposal that has been submitted by the
aggregators regarding the fare to be calculated,
both the aggregators have categorically
indicated that they should be allowed to charge
surge pricing.
24.2. Uber, in its proposal (a) submitted, has sought
to allow the autorickshaws to operate with
dynamic pricing with the aggregator platform
being allowed 25% of the fare; proposal (b)
indicates a dynamic pricing of 2X's government
mandatory fare and proposal (c) does not
indicate any such dynamic pricing insofar as
Uber is concerned.
24.3. Ola, in its proposal, has termed the surge price
as a peak factor and sought for levy of peak
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factor @ 2X's of the rate card during heavy
demand.
24.4. Thus, both Uber and Ola have sought to
contend that they should be permitted to
charge peak factor/surge price/dynamic price,
which is a factor or multiple of the fixed fare.
24.5. The intervenors contend that though an
undertaking has been provided by the
aggregators to the Division Bench in W.A. No.
4787/2016 on 07.12.2016, the aggregators are
still continuing to charge surge pricing and this
amount as surge price is not passed on to the
permit holder/driver but retained with the
aggregator. Despite the same having been
brought to the notice of the concerned
authorities, no action has been taken by the
authorities.
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24.6. In view of the undertaking furnished by Uber
and Ola to the Division Bench of this Court in
W.A. No. 4787/2016 on 07.12.2016 which has
been recorded in the order sheet, both Uber
and Ola have categorically stated that they
would not be charging surge pricing. Though
this undertaking was issued in respect of motor
cabs or four-wheelers, since the submission of
both the senior counsels is that a single License
will apply to both motor cars and
autorickshaws, said undertaking given in
respect of motor taxis [four-wheelers] would
equally apply to an autorickshaw. Thus, the
aggregator cannot charge dynamic pricing,
peak pricing, surge pricing, or the like by any
name. If any surge charge were to be levied by
whatever name called, the State would have to
take necessary action in relation thereto,
including initiating contempt proceedings.
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24.7. The directions of the Division bench not to take
coercive action is only in respect of the License,
and an undertaking having been provided by
the aggregators that they would not be
charging surge pricing if at all they are
resorting to charging peak pricing, dynamic
pricing or surge pricing it was for the concerned
authorities to take action in relation thereto,
not having done so is an abdication of the
duties of the concerned officers which will
require superior authorities to take necessary
action against the errant officers.
24.8. Peak pricing, dynamic pricing or surge pricing is
apparently charged due to non or low
availability of vehicles on the app of the
aggregator. In my considered opinion, the same
cannot be a basis of charge by the aggregator,
the aggregator having held out to the
passenger/customer that vehicles would be
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available for hire/hailing; it is on account of the
non-availability or low availability of the
vehicles on the aggregator app that the above
charges called as Peak pricing, dynamic pricing
or surge pricing are sought to be levied.
24.9. Essentially, these Peak pricing, dynamic pricing
or surge pricing charges are sought to be levied
since no vehicles are available on the app,
which is an obligation of the aggregator; the
aggregator not having made available the
requisite number of vehicles cannot charge
Peak pricing, dynamic pricing or surge pricing
charges. The same would amount to taking
advantage of the aggregator not being able to
provide the requisite number of vehicles, no
premium can be collected by the aggregator for
is own defaults.
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24.10. Looking at it from another angle, according to
the aggregators, they are not offering/providing
or being involved in any transport services;
there is nothing done by an aggregator; thus,
in that regard, an aggregator cannot claim to
be entitled to any amounts on account of
making available a vehicle.
24.11. If at all, the Peak pricing, dynamic pricing or
surge pricing can only fall to the share of the
Permit holder/Driver and not the aggregator.
24.12. I am also of the considered opinion having
considered all relevant aspects that if such Peak
pricing, dynamic pricing or surge pricing is
permitted, there is a possibility of the
aggregator falsely claiming these amounts
when there is a surge or peak, since all the
actions on the part of the Aggregators are
couched in secrecy and it not being placed on
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record as to the basis of such charge and in what
manner the same would be considered and or
calculated. Details of the total number of vehicles
onboarded, the number of vehicles in operation at
a given time, and the number of vehicles in
operation in a given area is not made available by
the aggregator to ascertain if there are indeed
lesser vehicles.
24.13. In respect of taxis or autorickshaws operating in
the physical world i.e., apart from the aggregator
app, the driver cannot refuse a fare when on
road, in the event of refusal, criminal action can
be taken against such driver. It is necessary that
all vehicles onboarded by the aggregator are
available for hire; if not so available, the
aggregator cannot claim additional amounts in
the form of surge pricing, peak pricing or
dynamic pricing as regards the same.
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24.14. Hence, I answer Point no. 13 by holding that
the aggregators cannot charge surge pricing
in view of the undertaking given to the
Division Bench in W.A.No. 4787/2016,
4789/2016 and 47109/2018 as observed
vide order dated 07.12.2016, as also for the
reasons mentioned above.
25. ANSWER TO POINT NO.14: What Order?
25.1. Given my finding concerning all the points above,
no grounds have been made out; the writ
petitions are dismissed.
25.2. It is, however, made clear that the aggregators
would be entitled to collect 5% service charges as
per the impugned notification now upheld, over
and above the fare fixed.
Sd/-
JUDGE
