Supreme Court Stays Delhi HC Order Which Allowed Bike-Taxi Operations Of Rapido, Uber In Delhi

“Under these circumstances, in our opinion, an interim order staying the whole-scale operation of a statutory regime till the finalisation of policy was unwarranted and we stay both the impugned orders passed by the Delhi High Court.”

While staying the interim order passed by the Delhi High Court a vacation Bench comprising Justice Aniruddha Bose and Justice Rajesh Bindal recorded the statement of Senior Advocate, Manish Vashisht on behalf of the Delhi Government that the concerned policy would be in place and the licensing regime would be operational by 31st July, 2023. At the request of the Senior Counsels representing the petitioners, the Bench categorically noted that once the State’s notification was in place it would deal with the applications in a time-bound manner. The Bench also granted liberty to the parties to approach the Delhi High Court seeking early hearing of the main matter.

On 19th February, 2023, the Delhi Government issued a public notice, in essence, prohibiting use of two wheelers by aggregators. As per the Government, the notice was issued as two wheelers are being utilised by the aggregators without proper license or permit. The said public notice was challenged by aggregators like Rapido and Uber before the Delhi High Court invoking its writ jurisdiction. While the matter was pending before the High Court, the Delhi Government issued show cause notice to the aggregators on 21st February 2023 contemplating coercive action. By way of the impugned order, passed by the Delhi High Court on 26th May, 2023, it directed that no coercive action be taken against the bike-taxi aggregator till a final policy has been notified by the Delhi Government.

In the plea before the Apex Court, the Delhi Government had argued that owing to the High Court’s interim order, Uber and Rapido are continuing the use of non-transport vehicles including two-wheelers for the purpose of aggregation and ride pooling, which is impermissible under the Motor Vehicles Act read with the Motor Vehicle Aggregator Guidelines, 2020 without obtaining valid permits. Senior Advocate, Neeraj Kishan Kaul appearing on behalf of Uber countered Delhi Government’s contention and argued that there is no such prohibition under the statute.

Kaul submitted that though the Union Government had formulated the Motor Vehicle Aggregator Guidelines in 2020, till date the Delhi Government has not drafted a scheme based on Centre’s guidelines.

Justice Bose enquired, “Can the guidelines override a statute?”

Kaul emphasised that there was no such prohibition as has been pleaded by the Delhi Government under the Motor Vehicles Act. He submitted that in terms of S. 41(4) of the Motor Vehicles Act two wheelers have been permitted to be used as transport vehicles. He further submitted that no harm would be caused to the general public of the two wheelers are allowed to ply pending the formulation of the policy by the Delhi Government.

The judge was of the opinion that two wheelers cannot ply on the roads of Delhi without valid Government permits.

On the last occasion, the Apex Court sought the Centre’s response in the plea. Appearing before the Bench on behalf of the Union Government, ASG Sanjay Jain submitted that though it is State subject there is a guideline formulated by the Central Government to facilitate the State Governments

“The Central Govt guidelines have been issued to facilitate the State Government because it is a State subject. License is of course the sine qua non. No doubt about that. Kindly see the definition of license”, Jain submitted. He pointed out that though a license is necessary, as per the Union Government’s guidelines aggregators can use two wheelers.

Justice Bose asked, “Two wheelers can be a transport vehicle but can it be permitted without registration?”

The ASG submitted, “S. 93 license is a regime in itself. There mayn’t be any need to go under S. 66, which is for transport vehicles.”

Justice Bose further enquired, “But can it be so that once you have the aggregator license unregistered vehicle can be permitted.” The ASG responded, “Vehicles have to be registered....”

Kaul argued that the regulation of aggregators falls under the ambit of Entry 37 in List I of the Seventh Schedule of the Constitution of India and is not a state subject. He submitted that in view of the same, the State Government cannot lay down any guidelines pertaining to the operation of the aggregators.

Kaul also referred to an order of the Bombay High Court wherein aggregators were asked to register under the Central Government guidelines till the time the State Government came up with a framework.

In order to distinguish between the Maharashtra matters and the present proceedings, Vashisht reminded the Bench that in the former the Apex Court had directed them to register under Section 93 of the Motor Vehicles Act, whereas in the latter the provision is under challenge.

Senior Advocate, Siddharth Bhatnagar appearing on behalf of Rapido also attempted to distinguish the present proceedings from the Maharashtra matters. He submitted, “In the Maharashtra case, the RTO Pune had rejected my license under guidelines. In Delhi, the license has not been rejected. They have passed no order on my license. I had applied under Central Govt notification.”

Justice Bose said, “License is at two stages, by owner and aggregators. The permit is absent at both the stages in this case. How can you override the statute which mandates the same?”

Justice Bindal added, “Can you use a vehicle which is not registered as a transport vehicle?”

Bhatnagar, once again, referred to the Central Government guidelines. Justice Bose reminded the Senior Counsel that the guidelines can never override a statute.

Bhatnagar argued, “From 2020 etc onwards we applied for a license. State cannot say that they will not decide on a license.”

Vashisht emphasised that as per the observation of the Apex Court no person can continue to operate as an aggregator without a license. He argued, “Until and unless they have a license in their hand they cannot run their business. In the Maharashtra matter, the Supreme Court had said that kindly re-apply, let them wait for the policy and let the Govt decide.”

He added -

“We have issued notices to them that put your house in order. We will eventually publish the final draft of the policy. By 31st July we will come up with the policy. My statement may be recorded. The policy has already been drafted.”

The Bench was further apprised that the Delhi Government has drafted the policy [Delhi Motor Vehicle Aggregator Scheme, 2023]; public notices have been invited to participate and give objections. The last date for receiving objections is June 24. The Delhi Government aims to notify the policy by 31st July, 2023.