Karnataka HC Stays 5% Commission Cap On Service Fee For Ola, Uber, Rapido Autos

The Karnataka High Court, on Wednesday (January 4) stayed the transport department's notification of setting a 5 per cent cap on service charges collected by internet aggregators for autorickshaw-hailing. The interim order was passed after the aggregators -- Ola and Uber -- disputed the notice dated November 25, 2022.

Aggregators Claim Loss

Following the intervention of the High Court, a fresh notification was issued directing all stakeholders' perspectives to be considered. Until then, the court permitted aggregators to charge a service fee of 10 per cent, reported The Economic Times.

Even if they only take 10 per cent, the aggregators claimed they were losing money. Additionally, they cited the central government that had approved a 20 per cent service fee.

According to the petitioners, the state authorities do not have the authority under the Motor Vehicles Act to control or determine the 'service fee' levied by aggregators. The 'service fee' is not a fare and cannot be regulated under Section 67 of the Act. As per the petitioners, the service offered by cab aggregators is not like transportation services and is not directly related to the "hire" of motor vehicles.

After receiving several complaints about customers being overcharged, the Karnataka transport authorities ordered app aggregators like Ola, Uber, and Rapido in Bengaluru to halt vehicle services and declared them illegal in October last year.

Following the issuance of the stay, Justice CM Poonacha, who was presiding over the matter, stated that the court would hear the case and the main petition about the aggregator licensing for such autorickshaw-hailing.

Mixed Reactions From Consumers

Sam George, a regular commuter in Bengaluru, told The Logical Indian, "Since everything is becoming expensive these days, a cap on service charges would be welcome. Earlier, the fee would be high; now the 5 per cent seems reasonable."

While speaking with The Logical Indian, another resident of Bengaluru, Sanjay Ponappa,, said, "It almost feels like we are going back to the good old days of paying the rickshaw whatever shows on the meter. I've been fed up with the prices of these cabs and autos and the fact that we commuters have no other option but to pay 100 bucks for 1 km. This is definitely great for the common man!"

However, an auto-rickshaw driver from one of these aggregators who refused to be named told The Logical Indian that "ensuring cheaper rates for transport is a good decision, but the govt won't bear our losses. This cap will directly impact us individually, considering this is the only livelihood option for many of us. All we expect is to make the necessary profit. He also added that with the current rates, they would definitely be in losses. "And if this decision will make us cancel a few rides because they're not profitable, it is also a problem for the commuters," he added.

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