Uber takes Karnataka to court on new rules; says it is constitutional

This is the second time it has challenged local authorities after it took on the Delhi govt for denying it a licence to operate in the capital

Uber on Wednesday filed a petition against the Karnataka government in the state high court, seeking to quash new rules requiring online taxi aggregators to acquire licences and end surge pricing.

Judge Aravind Kumar directed the transport department to stop impounding taxis on grounds of non-compliance with rules that came into effect in April. The court has set the next hearing for June 20.

This is the second time Uber has challenged local authorities. It took on the Delhi government for denying it a licence to operate in the capital.

A Uber spokesperson confirmed the development but did not elaborate. Rival Ola did not comment.

Uber’s move comes days after the Karnataka commissioner of transport directed taxi aggregators to suspend operations till they secured licences under the new norms.

The department also impounded taxis, sparking protests by drivers, affiliated with both Uber and Ola. They blocked traffic near the airport this week to express their dissent. Drivers have also independently filed a petition in court.

Uber has sought quashing of the Karnataka On-demand Transportation Technology Aggregators Rules, 2016, calling these unconstitutional and without legislative backing. Uber said it was a marketplace that connected riders with drivers and it never initiated a transaction.

The licence bans surge pricing, unpopular with commuters, and requires compliance with maximum fares set by the government periodically and registering services with local transport authorities.

Uber said it had applied for a licence but not received approval. The commissioner for transport could not be reached for comment.

Karnataka is the first state in the country to license taxi aggregators. About 50,000 taxis in Bengaluru are affiliated with Uber and Ola.

Ola and Uber, backed by private equity funds, have committed to spend Rs 15,000 crore in India to win the country’s taxi market. They operate an asset-light business model, working to get more cab drivers to use their platform and making it easy for consumers to hail them using a smartphone app. The progress in Karnataka’s licensing move is being watched by other states and may have an impact on the business model of these aggregators.  Maharashtra has issued draft rules that require digital meters, end of surge pricing, and registration with local transport authorities.

Delhi Chief Minister Arvind Kejriwal had banned surge pricing during the fortnight’s odd-even experiment in April aimed at decongesting the capital.