Supreme Court Refuses To Entertain Rapido's Plea Against Maharashtra Government's Refusal To Grant Bike-Taxi Aggregator License; Grants Liberty To Approach Bombay HC Afresh

Update: 2023-02-07 07:40 GMT

The Supreme Court on Tuesday refused to entertain Rapido's plea against the Maharashtra government's refusal to grant two-wheeler bike taxi aggregator license to the company on the ground that the petitioner was at liberty to pursue alternative remedy before the Bombay High Court. Thus, the bench comprising Chief Justice DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala gave the company liberty to approach the Bombay High Court challenging the notification of the State government dated January 19, 2023 which had prohibited the use of non-transport vehicles (2,3 or 4-wheelers) for aggregation and carpooling. The bench stated that the correctness of order of RTO, Pune which had rejected Rapido's plea for licence on 21 December 2022 would stand subsumed by the wider decision of State government.

At the outset, Senior Advocate Mukul Rohatgi, appearing for Rapido, submitted that certain conditions, which were necessary to obtain a license were "impossible to achieve". Further, he stated that the State of Maharashtra did not have a scheme for two-wheelers and thus, Rapido's application was rejected wrongfully. He added–

"The Central policy says that each state needs to have a policy unless there are justifiable reasons for no policy. I say that the ban is illegal. They say that application has some defects. But those defects can't stand if you don't have a policy."

Per contra, Solicitor General Tushar Mehta, appearing for the State of Maharashtra submitted–

"We don't say we don't have a scheme. We're saying we're examining whether to have two wheelers or not- for safety, traffic considerations."

CJI DY Chandrachud, while dictating the order, noted–

"The marginal note for Section 93 of the MV Act was substituted by amending statute prior to which it was titled "Agent or Canvasser to Obtain License". The effect of the amended provision is that no person can engage himself as an aggregator without a license from such authority and subject to such conditions as may be prescribed by state government. In terms of the first proviso of Section 93, the state government, while issuing the licence to an aggregator may follow such guidelines as issued by the central government".

It was also noted by the bench that following the amendment of provisions of the Act of 2019, which provides that "while issuing the license to on aggregator the state Government may follow such guidelines as may be issued by the Central Government" the Union Government formulated the Motor Vehicles Aggregator Guidelines 2020. The said guidelines have been issued as the "guiding framework for State governments" for issuing license. Clause 15 of the guidelines stipulates on one hand that the central and the state government shall pursue the objective of reducing traffic conjunction and pollution as well as effective asset utilisation. However, it also stipulates that non-transport vehicle pooling may be provided by the aggregator unless prohibited by the State government. 

In the present case, it was noted that the state government had not yet formed any rules and regulations of aggregators for the purpose of enforcing the provisions of Chapter 5, more particularly Section 93(1). The court found that while the guidelines were to be borne in mind, the decision ultimately lied with the state government. 

The court noted that in the present case, the petitioner's application for license was rejected on the ground that it didn't comply with terms and conditions of guidelines of 2020. Against the same, the petitioner had approached the Bombay High Court which, while rejecting the challenge, also proceeded to observe that the guidelines of 2020 leave a certain degree of latitude to state government and there was no policy of the State government at the present point on basis of which petitioner would have unrestricted right to obtain a license.

The Bombay High Court had found that, the issue as to whether or non-transportation vehicles could be used as transportation vehicles, including for aggregation and pooling, required consideration in regards to its terms and conditions for the purpose of which it had constituted a committee comprising senior IAS and government officers to look into the same. The State government had then come up with a notification on January 19 prohibiting the use of non-transport vehicles for the purpose of aggregation.

Today, the bench noted–

"The correctness of RTO's order rejecting the application for license is now overshadowed by the subsequent decision of the state government arising out of its notification dated 19th January 2023. The state government has categorically taking the decision that the issue as to whether non transport vehicles should be permitted to be used as transport vehicles, including for aggregation and ride-pooling, required consideration. Pending the decision of the committee, the State government prohibited the use of non transport vehicles for aggregators. There was no challenge before the High Court to the notification dated 19th January 2023. The petition is now being instituted before this court for the purpose of challenging the notification. We are not inclined to entertain challenge to notification dated 19th January 2023 since the petitioner will be at liberty to pursue alternative remedy before the High Court. The correctness of order of RTO, Pune dated 21 December 2022 will stand subsumed by the wider decision of State government."

While disposing the petitions the bench issued the following directions:

1. Grant liberty to petitioner to move to High Court afresh to challenge notification of state government dated 19.01.2023;

2. High Court shall consider the challenge without consideration to previous order;

3. Once the state government takes a final decision, the petitioner can pursue legal remedies;

4. State government by 31 March 2023, to take a final decision in terms of matter before the committee. The committee shall take its decision by 15th March.

Mr. Tushar Mehta, SG along with Mr Siddharth Dharmadhikari, Mr Abhikalp Pratap Singh & Mr Shrirang Varma,Adv appeared for the State of Maharashtra. Rapido was represented by Mr Mukul Rohatgi, Sr Adv assisted by DMD Advocates.


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