Need framework, not knee jerk reaction for taxi aggregators

The taxi aggregators are unfortunately still lying in regulatory quicksand. This is clear from last week’s news of the Central Government’s Department of IT instructing Internet Service Providers (ISPs) to block the URLs of Uber, Ola, and TaxiForSure in New Delhi (that fact that the blocking did not technically go through is another matter). The decision to block the aggregators is mired in confusion over the legal position surrounding them. This is despite the passage of well over five months since the primary trigger of the controversy: the unfortunate incident in New Delhi involving an alleged rape by an Uber-partnered driver.  

Even prior to that incident, those of us aware of the regulation of city taxies knew that we were in the midst of a lull before a definite storm. Brands like Uber, Ola, and TaxiForSure had entered the market and always took the position that they were only technology platforms facilitating access to third party transport services. They argued that they were not covered by the ‘city/radio taxi schemes’ of various State governments, since these schemes pertained to taxi fleet ‘operators’ which owned or leased vehicles. 

The complication arose, however, because the aggregators faced the customer during the booking process, decided fares, orchestrated the trips through a branded app and device, generated the bill at the end of the trips, and sometimes even branded the vehicles. They were hence put in the delicate position between a simple agent and a full-fledged taxi operator. 

For their part, the State governments’ taxi schemes are not uniform and lack clarity. Each transport department has drafted them independently and usually without legislative guidance. Moreover, the schemes often do not cite the legal powers under which they are issued, and the schemes of Karnataka, NCT Delhi, and Chandigarh have not – to our best information – been published in the official gazette, as all binding laws are required to be. 

As a result, a curious state of limbo was in place up until the Uber incident, in which neither the regulators nor the aggregators moved (vigorously enough) to tip the balance: presumably, the former, because changing the regulation would require a massive overhaul, and the latter, because status quo was a fairly happy place to be.   

When the December 2014 incident happened, authorities were at a loss as to how to hold the aggregators accountable. Authorities in NCT Delhi, Karnataka, and Chandigarh purported to ban all ‘unregistered’ entities: without notice, and without opportunities of hearing. In Karnataka, the ‘ban’ was made, startlingly, through a series of press statements and media-accompanied raids, without a word in writing. These bans were in large part based on a Union Home Ministry advisory to State governments urging them to prohibit the operations of all “web based taxi service providers which are not licensed” (while at the same time, the Union Transport Minister publicly disagreed). 

The bans were challenged in Court by the aggregators, with varying outcomes. None of the challenges has resulted in clarity on the legal position, largely because overhauling the draft Jaideep Reddy rules is the legislature’s and administration’s responsibility rather than the courts’. It is in the midst of this uncertainty that the Delhi Transport Department – under the impression that the aggregators are still banned – requested the Department of IT to block the aggregators’ URLs. Without paying adequate heed to the questionable legal basis of the ban, or to the legal grounds for blocking, the Department of IT duly obliged.  

There have been reports of consultations between and among transport authorities, taxi aggregators, and traditional taxi service providers, regarding the regulation of the aggregators. The aggregators’ basic position is that they are conducting a legitimate business activity and should not be penalised for the novelty of their business model. Recently, the Minister for Road Transport and Highways, Mr. P. Radhakrishnan, stated that a draft advisory has been finalised for the State governments to regulate the aggregators under the ‘agents and canvassers’ provision of the Motor Vehicles Act. Agents and canvassers are those who solicit customers for public service vehicles (including taxis). Their regulation is the prerogative of State governments. The existing rules in most States only contemplate agents who carry on the activity of the sale of tickets, and are not currently sophisticated enough to properly regulate the nuanced models of the aggregators. The content of the Central government’s advisory has not been made public yet, and it has not been officially acted on the State governments, so it remains to be seen whether the advisory presents a satisfactory solution. At the least, it will result in less disparity in State governments’ views on regulating the aggregators.  

There is also a new framework being considered for aggregators under the draft Road Safety and Transport Bill, 2015, which is meant to replace the existing Motor Vehicles Act. The Bill now includes a definition of an ‘aggregator’. However, it does not lay down any detailed regulations in this connection. Apart from the definition, it only mentions that an aggregator may be required to provide information to concerned authorities on the details of journeys undertaken through its services. Other responsibilities of aggregators are conspicuously absent. The Bill hence requires a fair deal of work before it can be called a suitable solution. 

The ideal regulatory framework should focus on imposing stringent due diligence requirements on the aggregators, with respect to their affiliated vehicles and drivers. These would include ensuring physical (not just app-based), tamper-proof safety measures in the cabs; proper background checks of drivers; regular driver training; and supervising the legal compliance of drivers and vehicles (i.e., proper permits and licenses, compliance with conditions, and approved meters). The accountability of the aggregators for accidents and for misbehaviour of drivers during the trips should be linked to whether these due diligence steps have been taken. The aggregators should also be held to a degree of responsibility for cancellations and postponements of bookings, since it is them that the consumer approaches. 

In the final analysis, what both the public and the aggregators need is less regulatory uncertainty and a framework that ensures safety and reliability in what has come to present a convenient alternative to traditional means of public transport.