Magic Sewa challenges minimum fares charged by taxi aggregators

Claims they are violating Motor Vehicles Act, and are deliberately killing competition by undercharging

Taxi operator Magic Sewa challenged minimum fares charged by taxi aggregator firms such as Uber and Ola in the Delhi High Court today.

Magic Sewa claimed that taxi aggregators were violating the provisions of Section 67(1) of the Motor Vehicles Act 1988 (the Act) and are deliberately killing competition by undercharging customers. According to Magic Sewa, this has forced the company to suspend operations since May 2016 and caused widespread hardship to other operators as well.

The respondent taxi aggregators rejected the assertions on the ground that Section 67(1) of the Act requires a state government notification to fix maximum and minimum fares and that no such notification had been made in regard to lower limits.

 

On perusing the relevant provision, Justice Manmohan came to the preliminary conclusion that the court did not have the authority to prescribe minimum rates when the state government had not issued a notification in that regard. "Suppose someone wants to give a discount. Are you (Magic Sewa) saying a consumer can't avail this benefit (in the absence of any restriction)?" said Justice Manmohan.

The taxi aggregators also submitted that the undertaking previously made by the companies not to charge surge pricing only applied to maximum fares and did not include any commitments that prevented them from charging a lower fare than other providers.

Rakesh Agarwal, a representative of Magic Sewa appearing in person, countered the defense of the aggregators by giving examples of the Delhi Government issuing challans to taxi companies for undercharging in the past.

The court refused to entertain this plea either, on the reasoning that the challans in question may not have been issued in accordance with the law. "If there are any grievances regarding unfair (trade) practices, then one should approach the CCI (Competition Commission of India) and not this court," said the bench.

Justice Manmohan went on to highlight the nature of e-commerce companies, which in his opinion are often valued by the number of hits on their platforms and not necessarily by profit margins. According to the presiding Justice, the principles applicable to transport companies cannot always be applied to online entities such as Uber and Ola.

At the end of the day's proceedings, the court allowed all the respondents liberty to file affidavits in opposition to the present claim while listing the matter again on November 21, along with other ongoing petitions in relation to safety and surge pricing already pending against the taxi aggregators.