Karnataka high court questions government about startups

karnataka high court

Karnataka government dances to the music of the Karnataka high court for ‘stifling’ startups like Uber and Ola

The Karnataka high court headed by the honorary high court judge, Mr. Raghavendra Chouhan criticized the Karnataka government on Wednesday (03/08/2016) for ‘stifling’ startups like Ola and Uber with rules like the Karnataka On-Demand Transportation Aggregators’ Rules (OTTA). He said that laws/rules like these would create an ‘unviable’ environment to operate taxis in the state and would ‘stifle’ startups like Ola and Uber. “On the one hand, you (government) want to encourage start-ups in the state and, on the other, you want to stifle its business by framing rules like the Karnataka On-Demand Transportation Aggregators’ Rules (OTTA)” said the high court judge on Wednesday (03/08/2016).

Uber had filed a case in the court after the Karnataka Transport Department suspended and confiscated taxis belonging to Uber (and Ola) for not securing driving and other licenses for the vehicles (taxis) under the new transport norms. Taxis belonging to Ola and Uber, which do not have the necessary licenses under the new norms, have now been suspended from operating inside and outside the state. Also, the transport department in April had increased the penalty for cab aggregators from Rs.1000 to Rs.5000, alleging that they were operating without the necessary licenses despite its repeated warnings. These actions by the Karnataka state transport department has led to protests by the drivers of both the companies, particularly Uber. The honorary Karnataka high court judge, Mr. Raghavendra Chouhan, on Wednesday also stated that such measures will cause startups like Ola and Uber to withdraw their business in Karnataka, which will have a negative impact on investments and investors in the state. “If we have such regulatory rules, it will create an unviable environment for start-up business in the state. Start-up companies like Uber may pull out of business in the state, which will not be good. It will have a negative impact or repercussions on investments,” he said. Ola and Uber have so far been fined upto Rs. 1 lakh each for operating cabs without licenses.

Earlier last month, (in the month of July) Uber’s counsel Mr. Sajan Poovayya had submitted that since the taxi-hailing app, Uber, is a technology platform that connects drivers with passengers, it cannot be regulated under India’s Motor Vehicles Act, which governs taxis and aggregators in the country. The hearing in this case will continue on Thursday (11/08/2016).

Our take

Ever since their launch, Ola and Uber have made commuting very easy in the state of Karnataka, especially in the city of Bengaluru/Bangalore. Instead of coming under scrutiny, we feel they should be given awards for such a good and radical transformation they have brought about in the field of commutation and transport. Both the companies have increased their cab fleet strength a great deal in the span of a few years and it is not practically possible to ensure that ‘all’ their cabs have the required licenses to operate. We feel therefore that the Karnataka government should give them sufficient time (a few years) to enable their drivers to obtain the necessary licenses to operate, to stabilize their cab fleet strength and to sack non- compliant drivers. This would ensure passenger safety and would also create a ‘viable’ environment for cab aggregating companies like Ola and Uber to operate. It would also encourage startups in the state and bring back the ‘confidence’ to investors to invest in the state.

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