Uber INDIA Systems Private Limited vs. State Of Karnataka

Facts

The petitioners, Uber India Systems Private Limited and ANI Technologies Private Limited (operating as Ola), challenged a notification dated 25.11.2022 issued by the State of Karnataka, which fixed fares for autorickshaws onboarded on aggregator platforms. The petitioners argued that the notification was arbitrary and illegal. The State of Karnataka and other transport authorities were the respondents. The core issue revolved around the fixation of fares for autorickshaws operating through mobile applications, with the petitioners seeking to quash the notification and for the authorities to prescribe fares in accordance with the Motor Vehicle Aggregator Guidelines, 2020. Intervenors also raised concerns about surge pricing being retained by aggregators.

Held

The Court held that the impugned notification dated 25.11.2022 was not ultra vires the Motor Vehicles Act, 1988, the rules framed thereunder, or the Motor Vehicle Aggregator Guidelines, 2020. Regarding surge pricing, the Court found that aggregators cannot charge surge pricing, dynamic pricing, or peak pricing due to an undertaking given to the Division Bench in previous writ appeals (W.A. No. 4787/2016, 4789/2016 and 47109/2018) on 07.12.2016. The Court reasoned that such pricing is essentially levied due to the aggregator's own default in not making sufficient vehicles available, and an aggregator cannot collect a premium for its own failures. The Court also noted that if surge charges were levied, the State would have to take action, including initiating contempt proceedings. However, the Court clarified that aggregators would be entitled to collect 5% service charges as per the upheld notification over and above the fixed fare.

Key Issues

1. Whether the impugned notification dated 25.11.2022, fixing fares for autorickshaws on aggregator platforms, is ultra vires the Motor Vehicles Act, 1988, the rules framed thereunder, and the Motor Vehicle Aggregator Guidelines, 2020? The petitioner argued that the notification was arbitrary, mala fide, and irrational, failing to consider relevant factors and guidelines. The revenue contended that the notification was issued in exercise of statutory powers and was therefore valid. 2. Can aggregators charge surge pricing, dynamic pricing, or peak pricing? The petitioner argued for the right to charge such prices based on market dynamics. The intervenors and the State argued that aggregators had previously undertaken not to charge surge pricing, and such charges were not being passed on to drivers. The Court also considered whether such pricing was permissible given the aggregator's obligation to ensure vehicle availability.