The Karnataka High Court has upheld the state government’s decision to cap the service charge for app-based auto-rickshaw services at 5%. This ruling follows the petitions filed by major ride-hailing companies like Ola and Uber, which challenged the government’s directive on the grounds that it overstepped its jurisdiction under the Motor Vehicles Act.
Background of the Case
The Karnataka government’s order, issued on November 25, 2023, mandated that app-based auto aggregators could not charge more than 5% of the ride fare as a service fee, plus applicable taxes. This measure was introduced to protect consumers from excessive charges and ensure transparency in the pricing of auto-rickshaw services offered through mobile apps【578†source】【579†source】.
Court’s Observations
- Legal Jurisdiction:
- The court examined the arguments from the petitioners, Ola and Uber, who contended that the state government lacked the jurisdiction to impose such caps under the Motor Vehicles Act. However, the court found that the state had acted within its rights to regulate service charges in the interest of public welfare.
- Consumer Protection:
- The High Court emphasized the importance of consumer protection, stating that the cap on service charges was a reasonable measure to prevent exploitation and ensure that fares remained affordable for the general public.
- Interim Stay and Further Proceedings:
- While the court upheld the service charge cap, it also placed an interim stay on the government’s order, allowing further examination of the issue. The proceedings are scheduled to continue on January 12, 2024【577†source】【580†source】.
Implications
This decision by the Karnataka High Court underscores the balance between regulatory oversight and the operational freedom of private companies. By capping the service charge, the court aims to protect consumer interests while ensuring that the regulatory framework supports fair competition and transparency in the market.