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IN THE HIGH COURT OF KARNATAKA
Raghvendra S. Chauhan, J.
Satish N. Narayan and others - Petitioners
Versus
State of Karnataka and others - Respondents
Writ Petition No. 30917, 30191 of 2016 and Writ Petition Nos. 31356-61, 31673-31674 of 2016
Decided On : 10-11-2016
(2) Since the definition of an "Aggregator", given in the Aggregator Rules, also includes an Operator, and the Aggregator Rules also deal with a contract carriage, therefore, the Aggregators Rules are legally framed under Section 95 of the Act.
(3) Section 96(1) and Section 96(2) of the Act, bestow ample power upon the State for framing Rules dealing with the provisions of Chapter V of the Act. Therefore, the Aggregator Rules are legally framed under Section 96(1) of the Act. Hence, the State Government is well within its competence to frame the Aggregator Rules under Section 93, 95 and 96(1) of the Act. The Aggregator Rules are, thus, intra-vires the Act.
(4) The aggregator under the Aggregator Rules, and the Operator under the City Taxi Scheme from two distinct and separateclasses. Therefore, they need not be subjected to the same control, or to the same set of liabilities. Since they are unequals, they cannot be treated equally.
(5) Rule 6(a) of the Aggregator Rules, which requires that an aggregator should have a fleet of minimum of hundred taxis, either owned or through an agreement, is not violative of Article 14 of the Constitution of India.
(6) Similarly, Rule 7(c) of the Aggregator Rules, which requires that the taxis registered with an aggregator should have a panic button, is not violative of Article 14 of the Constitution of India.
(7) Likewise, Rule 10(h) of the Aggregator Rules, which requires the aggregator to verify the antecedents of the drivers, for the last seven years, through the police, before registering the driver on its platform is not violative of Article 14 of the Constitution of India. Moreover, the requirement is neither oppressive, nor unreasonable. Hence, Rule 10(h) of the Aggregator Rules is constitutionally valid.
(8) Rule 11(1) (a), (b), and (c) of the Aggregator Rules, which bestows a power on the licensing authority to suspend or to cancel the aggregator's license under the circumstances mentioned therein, is also not violative of Article 14 of the Constitution of India. Furthermore, Rule 11(1) of the Aggregator Rules does not grant an unbridled, uncontrolled power to the licensing authority to suspend or cancel the aggregator's license. Since the said power is 12 of the Aggregator Rules, Rule 11(1) of the Aggregator Rules is constitutionally valid.
(9) Rule 10(n) of the Aggregator Rules, which excludes the All India Tourist Vehicle Permit Holder from the purview of the Aggregator Rules, is also not violative of Article 14 of the Constitution of India.
(10) All India Tourist Vehicle Permit Holders under Section 88(9) of the Act form a separate class from the permit holders under Sections 74 and 88(8) of the Act.
(11) The All India Tourist Vehicles can carry only tourists and cannot ply commuters.
(12) The state does not have the power to make rules for the All India Tourist Vehicle Permit Holders, provided the said Rules are not inconsistent with any Rule made by the Central Government for the All India Tourist Vehicles. But merely because the State is competent to make such a Rule for the All India Tourist Vehicle, the exclusion of the said category from the purview of the Aggregator Rules does not violate Article 14 of the Constitution of India.
(13) The exclusion of All India Vehicle Permit Holder from the Aggregator Rules also does not violate Article 19(1)(g) of the Constitution of India.
(14) Rule 6(a) of the Aggregator Rules which prescribes the minimum requirement of having hundred taxis for an aggregator is a legislative policy decision of the State Government. Therefore, this Court refrains from declaring the requirement as being violative of Article 19(1)(g) of the Constitution of India qua the Start Ups. It is for the State Government to decide the ways and means to encourage and promote the interest of the Start Ups in the Taxi Sector.
(15) Rule 10(o) of the Aggregator Rules, which prohibits the permit holder and the driver, who are registered with an aggregator, from independent operation, or from accepting booking directly, does violate the fundamental rights of the permit holders and the drivers under Article 19(1)(g) of the Constitution of India. Since the restriction is not protected by Article 19(6) of the Constitutition of India. Thus, Rule 10(o) of the Aggregators Rules is unconstitutional.
(16) Rule 10(c) and Rule 10(v) of the Aggregator Rules bestow an unbridled, uncontrolled power upon the State to have access to the personal information about the passenger. Such unfettered power is likely to be abused by the State. Thus, Rule 10(c) and Rule 10(v) of the Aggregator Rules violate the right of privacy. The right of privacy is not only a human right, but is also a fundamental right under Articles 19 and 21 of the Constitution of India. Moreover, India being a signatory to International Conventions, which guarantee the right of privacy to the people, the Indian Judiciary is legally bound to protect and promote the right of privacy. Since Rules 10(c) and 10(v) of the Aggregator Rules violate the right of privacy, they are unconstitutional. Furthermore, the said provisions are contrary to other laws of the land, namely Rule 6 of the SDPI Rules and Rule 3(7) of the Intermediary Rules. Hence, Rule 10(c) and Rule 10(v) of the Aggregator Rules are also unconstitutional on this account.
(17) Before the conditions to the Aggregator Rules can be read into a permit issued under Section 74 of the Act, the Regional Transport Authority is legally bound to follow the procedure prescribed by Aection 74(2)(ix) of the Act. Hence, the conditions imposed by the Aggregator Rules cannot be read as automatically attached to the permit issued under Section 74 of the Act.
(18) Rule 8(c) of the Aggregator Rules, which requires that a driver should be a resident of Karnataka for a period of two years, and Rule 8(d) of the Aggregator Rules, which requires that the driver should have a working knowledge of Kannada language, both these provisions are constitutionally valid. For, these provisions are within the object and purpose of the Act, which is to ensure the smooth functioning of the contract carriage, and to ensure the safety and comfort of the passenger.
(19) Rule 14 of the Aggregator Rules, which requires an aggregator to make a security deposit of Rupees One Lakh for up to one thousand taxis, is contradictory to Section 93(2) of the Act. Hence, Rule 14 of the Aggregator Rules is unconstitutional.
(20) Rule 5(3) of the Aggregator Rules, which prohibits the aggregator from owning or leasing any vehicle unless it has a license under the Aggregator Rules, and Rule 6(a) of the Aggregator Rules, which requires that the aggregator should have a fleet of hundred taxis, either owned or through an agreement, before it can apply for a license under the Aggregator Rules, both these provisions are self-contradictory. They cannot co-exist simultaneously. Thus, these provisions are unreasonable and arbitrary. Hence, Rule 5(3) and Rule 6(a) of the Aggregator Rules are unconstitutional.
(21) Merely because there are technical difficulties in implementation of, and in the efficient functioning of the panic button, the requirement of panic button, prescribed by Rule 7(c) of the Aggregator Rules, would not make the said provision an unreasonable or arbitrary one. Thus, Rule 7(c) of the Aggregator Rules is constitutionally valid.
(22) Rule 7(e) of the Aggregator Rules, requiring that the taxis registered with an aggregator should display a board with the word "Taxi" written on it, and which should be illuminated during the night, is in public interest. Thus, Rule 7(e) of the Aggregator Rules is constitutionally valid.
(23) Rule 10(g) of the Aggregator Rules which imposes the duty on the aggregator to investigate a passenger's complaint alleging violation of zero tolerance policy can be read down as the responsibility "to inquire" into the said compliant. Thus, Rule 10(g) of the Aggregator Rules is constitutionally valid.
(24) Similarly, Rule 10(i) of the Aggregator Rules, which requires the aggregator to ensure that a driver does not work more than the maximum number of hours prescribed by the Motor Transport Workers Act, 1961, is constitutionally valid. For, the aggregator has sufficient control over the working of the driver, and the functioning of the permit holder through the agreement entered between the aggregator and the permit holder. Thus, Rule 10(i) of the Aggregator Rules is constitutionally valid.
(25) Rule 10(q) of the Aggregator Rules requiring that the taxi service has to be available all the time, has to be interpreted practically. Thus, it does not require that the taxi service should be made available even during abnormal or disastrous situations. It merely means that the technological platform should be available to the passenger during the normal conditions. Hence, Rule 10(q) of the Aggregator Rules does not impose an oppressive condition upon the aggregator. It is constitutionally valid.
(26) Rule 11(1)(e) of the Aggregator Rules, which permits the licensing authority to suspend or cancel the aggregator's license if "any criminal complaint is files against the driver, or the aggregator, or its employee", suffers from vagueness. Thus, the said provision is unconstitutional.
(27) The petitioner-Company has conceded that the State Government has the power, under the Act, to prescribe the limits of the fares to be charged by the permit holder. Since the petitioner Company has given an undertaking before this Court that it will not charge more fare from the passenger than the maximum fare laid down by the State Government, this Court hopes the petitioner-Company will abide by its undertaking.
(28) The impugned notice dated 23-4-2016 is legally valid as the said notice has merely directed the petitioner-Company to take a license under the Aggregator Rules. Since the Aggregator Rules are constitutionally valid, the notice dated 23-4-2016 cannot be faulted.
(29) In case the All India Tourist Vehicle is found to be carrying commuters and not tourists, then such a vehicle is liable to be detained and seized under Section 207 of the Act. For, while carrying commuters the All India Tourist Vehicles is violating the "purpose" for which the permit was issued under Section 88(9) of the Act.
(30) This Court has declared some of the provisions of the Aggregator Rules as being unconstitutional. However, as the remaining valid parts of the Aggregator Rules can be severed from the invalid parts of the Aggregator Rules, applying the doctrine of severability, the Aggregator Rules, de hors the invalid parts, are constitutionally valid.
(31) Since this Court has declared the Aggregator Rules to be constitutionally valid, while striking down some of its provisions as unconstitutional, the immediate implementation of the Aggregator Rules may create some difficulties for the petitioner-Company and for other aggregators. Therefore, the respondents are directed to give the petitioner-Company, and the other aggregators, a reasonable time of one month to comply with the requirements of the Aggregator Rules. During this period, the respondents are directed not to take any coercive steps against the petitioner-Company and against the other aggregators.
(32) Moreover, since the petitioner-Company has already applied for the license under the Aggregator Rules, in case the petitioner-Company fulfills the requirements of the Aggregator Rules, the respondents are directed to issue the license as expeditiously as possible and certainly within a period of one month from the date the requirements are fulfilled by the petitioner-Company.
(33) Since the order may also cause some inconvenience to the All India Tourist Vehicle permit holders, the respondents are directed to give wide publicity to the fact that the said permit holders shall be required to carry only tourists in their vehicle(s). Any violation of the purpose of the permit will entail seizure and detention of the said vehicle. The wide publicity shall be carried out for a period of one month. Only thereafter, would the respondents be justified in invoking their power under Section 207 of the Act. Although this Court does not mean to curtail the power under section 207 of the Act, but its immediate implementation, in the garb of following the present order, may lead to inconvenience both to the All India Tourist Vehicle permit holder, and to the public at large. Hence, the present direction by this Court.
Raghvendra S. Chauhan, J.
Information Technology, and globalization have revolutionized our lives. The introduction of e-commerce, of e-govemance, of e-banking, of telemarketing, have transformed our world. The taxi sector, in the urban transportation system, is a glaring example of the phenomenal changes brought by information technology and globalization. Gone are the days of endlessly waiting for a taxi to catch. At a click of a button, taxis can be called for anytime and anywhere. Through the use of downloaded software, a passenger can specify not only the kind of taxi he/she requires, but can also choose the kind of driver he/she prefers. The days of 'hail and ply taxis' are over; the days of radio taxis seem to be numbered. However, globalization has introduced cut throat competition, as multi-national companies are threatening the very existence of the indigenous companies. The rapid spread of information technology, the extensive reach of globalization are, thus, a boon and a bane for the people at large.
2. A few astray incidents in taxis, supplied by technological transport service provider, otherwise called "aggregator", in few parts of the country, and the threat posed by new players has alerted the Government to a perceived danger: the emergence of "the aggregator". Such new breed of taxi providers need to be regulated as much as the brick and mortar taxis. An advisory issued by the Central Government, dated 08.10.2015, a direction issued by the Karnataka High Court in the case of B.G. Lingaraju @ B.G. Shivanna and another v. Government of Karnataka and others [(W.P. Nos. 2178-2179/2015) decided on 20.01.2015] convinced the State Government to go into the fast lane, and to frame the Karnataka On-demand Transportation Technology Aggregators Wes. 2016 ('the Aggregator Rules', for short).
3. However, the implementation of the Aggregator Rules has disturbed the lives of many: of the taxi drivers and the taxi permit holders whose taxis are being seized by the overzealous traffic police, the multi-national companies, like Uber, whose functioning is being questioned and controlled, and the start-ups whose entry into the lucrative business of taxi sector it being thwarted. Questioning the constitutional validity of the Aggregator Rules, these stakeholders have approached this court.
4. But the threat of growing influence of Uber Company, in the world of taxi transportation, has convinced its business rivals, like ANI Technologies Private Limited (the operator of OLA Cabs), and the Association of Radio Taxis, to implead themselves, as party-respondents, in the writ petitions filed by the Uber Company and others. The impleaded respondents have supported the State in defending the constitutionality of the Aggregator Rules.
5. A large number of writ petitions have been filed before this court. Since all these writ petitions revolve around the constitutional validity of the Aggregator Rules, and few other issues, they are being decided by this common order.
6. The facts are being taken from Uber India Technologies Pvt. Ltd. and another v. State of Karnataka and others, (Writ Petition Nos. 31673-31674/2016).
7. According to the petitioners, petitioner No. 1; Uber India Technologies Pvt. Ltd., is a registered company under the Companies Act, 1956; its registered office is in Delhi. Meanwhile, the Petitioner No. 2, Uber B.V. is a company incorporated under the laws of Kingdom of Netherlands; its registered office is in Amsterdam, Netherlands.
8. In 2010, the Uber Technologies Inc, a USA based company, created a "Uber Platform", a mobile phone based technology that provides a software programme on smart phones which can be utilised by passengers seeking a taxi ride, and by taxi drivers seeking a passenger. This programme connects the passenger to the driver in real time. Thus, through the Uber Platform a passenger can request
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