'Absence Of Rules Can't Justify A Ban; State Can't Go Beyond Motor Vehicles Act': Aggregators, Bike-Taxi Owners To Karnataka High Court

Before a bench of Chief Justice Vibhu Bakhru and Justice C M Joshi, Ola, Uber and a group of bike taxi owners, primarily contended that the State Government has created an artificial deadlock by refusing to frame rules while simultaneously citing the absence of those rules to impose a ban.

It was also the core argument of the appellants that the State Government lacks the authority to impose a blanket ban on non-transport vehicles which seek to operate as transport vehicles as such a prohibition goes against the Central Motor Vehicles Act, 1988.

Senior Advocate Dhyan Chinnappa, appearing for a group of bike taxi owners, primarily argued that the State's refusal to grant permits is an attempt to use policy to negate those rights which are granted by a Central Statute.

Chinnappa submitted, "State can't refuse contract-carriage permit to bikes. They have no power. We just want our vehicles to be used as transport vehicles...Report handed to the bench is handed over as if it is a policy, but this report is not a policy, as it is not considered by the cabinet and it has not gone through the executive...But the question is also this, can the policy go beyond the Law itself? If the Motor Vehicles Act allow for Bike Taxi, the Government can't say i won't allow it".

Referring to Section 178 (3) of the 1988 Act, he submitted that the Law itself contemplates a motorcycle to be used as transport (contract carriage) vehicle. 

He relied heavily on Section 80(2) of the Motor Vehicles Act, 1988, to argue that the granting of a permit "...shall not ordinarily be refused...". He added that state lacks competence to refuse a permit, it has no discretion to refuse it. "If I satisfy the requirement of law for the issuance of contract carriage permit, I am entitled to it...it is not open for the state government to turn around and say that notwithstanding the qualification criterion of law, just by saying that it doesn't think that permit should be given," he submitted.

He contended that while the statute mandates the Central Government to do certain things and the State to do others but "no provision provides that a class of vehicle can be refused by the state to be granted a contract carriage permit".

In other words, he submitted that the State government is not empowered to bar a particular class of vehicles (bikes in this case) from being used as taxis.

Chinnappa emphasized that the State's refusal is merely a policy decision without legislative backing. "State is just saying that we will not give you permit, but it is just a policy of the government, but no enabling provision for them to do so. They don't have right to refuse...Unless they can show that any provision that they can refuse based on the policy, they can't refuse", he argued.

He referred to the 1991 Supreme Court judgment in Mithilesh Garg vs Union Of India as he quoted: "...every citizen whether rich or poor can take up & carry on, if he so wishes, motor transport business."

Chinnappa pointed out that the State seems to assume that if a vehicle is permitted to carry goods, it is automatically disqualified from carrying passengers. He argued that nothing in the 1988 Act supports such a rationale.

He further submitted that as per Section 74 (3), the State Government can limit the number of contract carriages only if directed by the Central Government, having regard to the number of vehicles, road conditions and other relevant matters

He added that while the State has the power to frame policies, but a policy can only be made to "supplant the Act, not contradict it." By denying registration and permits, the State was infringing upon the Fundamental Right under Article 19 of the Constitution, he submitted.

Here, it may be noted that it is the stand of the state government that "motorcycle cannot be a transport vehicle" as the statutory definition does not contemplate its use for carrying passengers or for hire.

In fact, an expert panel constituted by the Karnataka government following the HC directive recently advised that private two-wheelers may continue to be used for app-based delivery services, but that won't amount to legalizing bike taxis.

Senior Advocate Arun Kumar, who appeared for ANI Technologies (Ola), highlighted the procedural limbo which is being faced by the aggregators. He argued that despite court directions, there is no mechanism currently available to file applications seeking permits.

Kumar contended that the Single Judge had acknowledged that motorcycles are permitted under the Act but required a policy to be in place. He argued, "State takes advantage of this... State can't put a blanket ban on bike taxis, this I am saying at the cost of repetition."

He further criticized the State's administrative opacity, noting, "There is a conspicuous reluctance to say anything in writing, if they come out with something, we may challenge it on the grounds of being arbitrary or other grounds."

Towards the end of the hearing, the counsel for Uber also made submissions and challenged the validity of the State's report recommending a ban on bike-taxi.

He submitted that the State's report was flawed as "none of the stakeholders were consulted" during its preparation. It was argued that the report reflected only internal discussions rather than a comprehensive legal or public review.

The core of Uber's argument was that the State cannot use its own inaction as a weapon. "Absence of rules cant be used to say that an act can't be done," the counsel submitted. "They can't say that I will not frame rules and at the same time, I will not allow bike-taxis," he contended

He further proposed an interim solution: "Till they are framing rules, they could be asked to adopt the central government guidelines and grant permits under Section 93 of the Act."

The aggregators concluded by asserting that if the State cannot justify why a license cannot be granted under the Central Act framework, no prohibition can be imposed by them. It was also reiterated that the aggregators are willing to abide by conditions if contract carriage permits are granted to bike taxis.

In fact, Ola & Uber specifically argued that they, being aggregators, are helping the State Government as the drivers can't survive without tech platforms. It was submitted by Uber that bike taxis are only lawful and they serve public interest by reducing road congestion.