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Uber case: Karnataka HC questions state govt on stifling start-up business

Earlier last month, Uber’s counsel Sajan Poovayya had submitted that since taxi-hailing app Uber is a technology platform that connects drivers with passengers, it cannot be regulated under India’s Motor Vehicles Act, which governs taxis and aggregators in the country.  Photo: BloombergPremium
Earlier last month, Uber’s counsel Sajan Poovayya had submitted that since taxi-hailing app Uber is a technology platform that connects drivers with passengers, it cannot be regulated under India’s Motor Vehicles Act, which governs taxis and aggregators in the country.
Photo: Bloomberg

High court questions the state on 'stifling' the start-up business through regulatory norms that create an 'unviable' environment while wanting to encourage start-ups

Bengaluru: The Karnataka high court on Wednesday questioned the state government on “stifling" the start-up business through regulatory norms that create an “unviable" environment while wanting to encourage startups.

“On the one hand, you (government) want to encourage start-ups in the state and, on the other, you want to stifle its business by framing rules like the Karnataka On-Demand Transportation Aggregators’ Rules (OTTA)," Justice Raghavendra Chouhan said during the hearing of a petition by cab aggregator Uber.

Justice Chouhan made the observations while questioning the submissions made by A.S. Ponnanna, counsel for the state who defended OTTA rules.

Uber had moved the court after the transport department impounded the vehicles for not securing licences under the new norms. It also suspended operations of taxis, which led to protests by drivers.

Justice Chouhan said the rules would create an unviable environment for start-ups and would have repercussions for investments in the state.

“If we have such regulatory rules, it will create an unviable environment for start-up business in the state. Start-up companies like Uber may pull out of business in the state, which will not be good. It will have a negative impact or repercussions on investments," he said.

Earlier last month, Uber’s counsel Sajan Poovayya had submitted that since taxi-hailing app Uber is a technology platform that connects drivers with passengers, it cannot be regulated under India’s Motor Vehicles Act, which governs taxis and aggregators in the country.

The hearing in the matter will continue Thursday .

Drivers have also independently filed a petition in court. The transport department had in April increased the penalty for cab aggregators from

1,000 to 5,000, aleging they were operating without obtaining necessary licence despite its repeated warnings.

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