Image source - https://bit.ly/2WmRtLK

This article is written by Kashish Khattar, who is an Advocate in Delhi. The article talks about all the compliances and the major overhauls that have been stated in the rules.

Introduction

The law regarding the Ubers and Olas of the country is set to get an overhaul as the authorities finally released the Motor Vehicle Aggregator Rules of 2020, issued on the 27th of November 2020. The market is mainly controlled by two major players – Bangalore based Ola and US-based Uber. 

The other cab aggregators that would be affected by these rules would include WagonCab, CabBazar, Savaari, Vihik Cabs, GetMeCab, Hippo Cabs, NE Taxi, Bharat Taxi, Gozo Cabs, My Taxi India, Spice Cabs, OneSideTaxi, Meru Cabs, etc.   

Applicability 

The guidelines are applicable to Aggregators who are onboarding vehicles in the area of operation. The vehicles would include cars and e-rickshaws. 

Definitions

An Aggregator is a “digital intermediary or marketplace for a passenger to connect with a driver for the purpose of transportation. App would mean an electronic operated by the Aggregator which can be accessed through a computer or a communication device”. 

Competent Authority would mean the State Government or any other authority empowered by the State Government to issue a Licence under Section 93 of the Motor Vehicles Act, 1988.

Furthermore, the Rider would mean “a person who books a journey through the Aggregator App for availing the transportation provided by a Driver who is integrated with the Aggregator.”

Application for grant or renewal of a license 

  1. License is to be valid for a period of five (5) years, it may be cancelled or renewed by the competent authority;
  2. List of licenses issued shall be issued and uploaded on the state’s transport portal;
  3. The Competent Authority has the right to reject applications if the conditions for grant of license are not met. 

Eligibility criteria

The applicant has to be a company registered under the Companies Act, 1956 or 2013 or a cooperative society registered under the Co-operative Societies Act, 1912 formed by an association of drivers or motor vehicle owners or such other association. It could also be a limited liability partnership under the Limited Liability Partnership Act, 2008

The applicant has to have a registered office in India and has to comply with all the provisions of the Information Technology Act, 2000 including the intermediary guidelines.

The applicant can not integrate any driver or let him represent himself as an Aggregator unless he holds a valid license issued by the state government. 

Conditions for grant of a license

An applicant who wants to secure a license shall show various compliances as have been listed in these guidelines including the following: 

  1. Arrangement of a driving facility with a stimulator to test the driving ability of the concerned driver with respect to the vehicle to be on boarded or outsource it to an authorized third party, and a set up for conducting the induction training program. An induction training program is a compulsory five-day training program for 30 hours conducted by the Aggregator. This has to be prior to the commencement of on-boarding of vehicle, either independently or with a professional institution for providing a course which has to be compliant with the National Skills Qualifications Framework (NSFQ);
  2. The course should educate and train the drivers to efficiently use the Aggregator app, know the provisions of the Motor Vehicles Act, 1988 and their rules; on road safety and first responder training for six (6) hours out of the total thirty (30) hours; careful driving; motor vehicle maintenance; personal hygiene; fuel-efficient driving; familiarization with the routes in the area of operation; terms and conditions of the contract between the driver and the aggregator; and gender sensitization and safety of women and girl child;
  3. The Aggregator will be responsible to ensure that drivers who have integrated with the Aggregator will have to ensure that they go into the induction training that is mentioned above; 
  4. The Aggregator can commence its business operations 6 months from the grant of License, or the License will be cancelled;
  5. The Guidelines issued by the Ministry of Health, WHO, or any other concerned authority or organization in the interest of public health and safety in regards to COVID19 or other such pandemics for precautionary steps like the sanitization of vehicles are to be complied with. This stays relevant in the context of the pooling of taxis also.

Compliances with regard to the drivers

  1. The Aggregator has to ensure that the drivers have a valid proof of identity being an EIC card or Aadhaar card or Pan card; 
  2. The driver should have a valid driving license of the relevant vehicle and badge as may be applicable;
  3. The driver shall have a minimum driving experience of 2 years. In case the experience is less than 2 years, the driver shall undertake a driver training facilitated by the Aggregator for a period of 15 days prior to the on-boarding. This will be in addition to the Induction Training Programme;
  4. The driver should have a KYC compliant bank account or holder of Jan-Dhan account under the Pradhan Mantri Jan-Dhan Yojana, in accordance with the norms that have been prescribed by the Reserve Bank of India; 
  5. The driver of the vehicle should not have been convicted within the past 3 years for the offense of driving under the influence or any cognizable offense under the Code of Criminal Procedure, 1973 or the Indian Penal Code, 1860 including fraud, sexual offenses, use of a motor vehicle to commit a cognizable offense, a crime involving property damage or theft, acts of violence, or acts of terror; 
  6. The driver has to undergo a medical test including an eye check-up by a hospital or a medical institution prescribed by the Aggregator. Costs for such a medical check-up shall be borne by the Aggregator; 
  7. Complete police verification of the identity of the Driver and his antecedents with a written record of such verification prior to fifteen days of on boarding. For the facilitation of the same, the police authorities should be provided access to the Aggregator’s Application Programming Interface (API) by the Aggregator. After this verification, the police can then grant a good moral certificate without any criminal record to the driver; and
  8. Execution of a valid enforceable service provider contracts with the relevant driver in English and a language understood by the Driver, specifying all necessary terms and conditions applicable for on-boarding of the vehicle and operating vehicles. 

The Aggregator compliances

The Aggregator has to ensure: 

  1. That health insurance for each driver should be not less than INR 5 Lakhs with the base year 2020-21 and increases by 5% each year; 
  2. Ensuring that a term life insurance of every driver of not less than INR 10 Lakhs with the base year as 2020-2021 and increases 5% each year;
  3. Conducting refresher training once a year. Records of such training sessions shall be documented and preserved for at least one year. The Aggregator may be permitted to collaborate with any specialized institution for providing such training; 
  4. The driver shall not be logged in for an aggregate of twelve hours on a calendar day. There has to be a mandatory break of 10 hours after login of 12 hours; 
  5. The Aggregator has to develop a mechanism on their App to ensure that Drivers engaged with more than one Aggregator do not drive beyond a cumulative period of 12 hours either on their or another Aggregators app; 
  6. Maintaining and examining updated copies of the records to the drivers of vehicles regularly on the portal of SARATHI:
  1. Photograph of the driver; 
  2. Driving license; 
  3. Present residential address along with proof; 
  4. RBI complied KYC bank account details; 
  5. Self-attested copies of the EIC card or Aadhaar card or Pan card;
  6. Contact details and addresses of two members from the driver’s family;
  7. Enabling the drivers to operate with multiple aggregators, provided each of them comply with the requirements and driver training programs;
  8. Ensuring that on termination or end of the service provider contracts with a driver, all equipment or brand stickers belonging to the Aggregator is removed and identity card or authorization issued to the Driver by the Aggregator is confiscated;
  9. A rating system for the cab rider and the driver is to be included; 
  10. Rating of drivers below the rating of 2 will have to mandatorily take a remedial training program until the completion of this, the driver will be off-boarded. 

Vehicle compliances

There has to be: 

  1. A valid registration of the vehicle; 
  2. A valid permit as may be applicable; 
  3. Valid fitness certificate; 
  4. Requisite placement of the registration mark displayed in English and the figures in Arabic numerals;
  5. Valid third party insurance;
  6. Valid pollution under control certificate (PUC);
  7. Compliance with emission norms, fuel norms, applicable taxes;
  8. Clearance of pending challans prior to registration of such vehicles; 
  9. Fitment of an AIS 140 certified vehicle tracking and monitoring system with panic buttons which are relevant for public service vehicle as specified by the Ministry of Road and Transport & Highways – this has to be connected to the control room of the aggregator; 
  10. Placement of a fire extinguisher, disabled child lock mechanism, manual override for the central locking system; 
  11. Displayed inside the vehicle, the vehicle’s permit, and driver’s driving license;
  12. Fitment of various taxi signs as laid down by the Applicable Industry Standards (“AIS”);
  13. During the operations, the Aggregator has to maintain records of (i) certificate of registration; (ii) certificate of fitness; (iii) vehicle permit; (iv) chassis and engine numbers; (v) commercial insurance policy covering third party risks; (vi) pollution under control certificate; (vii) clearance of pending challans within a period of 2 months from the issuance of such challans. 

What should the Aggregator app and website look like? 

The app has to be designed in a manner according to the law, it has to be accessible in English and Hindi as primary languages for the rider. Along with this, there has to be one official language of the state, where the official language is not Hindi. App has to be accessible in a manner that is comprehensible to the driver. 

In-app vulnerabilities are informed to the response team set up by the MeitY. Data is to be stored within India, should be stored for a minimum period of 3 months, and can be kept till 24 months from the date on which such data was generated. No data related to the customers can be disclosed without their written consent. 

Ensuring that Aggregators have all the details related to the trips taken, the details of all the customers, origin & destination of the journey shall be undertaken by the Driver and the Rider on the app for a period of three months from the date of such trip. 

Ensuring that there is transparency in their operations including the functioning of the algorithm of the App. This would further include a feature where the live location can be shared and a picture of the driver with the aggregator app is displayed. Implementing a zero-tolerance policy on the use of drugs and alcohol by the driver should be implemented. A control room with 24*7 operations where assistance will be provided. Extending cooperation with law enforcement agencies. 

Aggregators should make sure that there is no discrimination when it comes to the vehicles that are not owned by the aggregator and all the vehicles are treated at par when they have been registered with the aggregator. 

Safety compliances

Aggregators should ensure: 

  1. That GPS is involved in the vehicle; 
  2. Driver plies on the route assigned on the App and in non-compliance of the same and makes sure that the driver knows about this fault;
  3. Ensuring the safety of women employees and drivers by implementing mechanisms stated under POSH, 2013; and 
  4. Ensuring that there are regular spot checks of vehicles integrated by the Aggregator. 

Compliance related to pooling

Aggregators should make sure that:

  1. Aggregators may provide pooling to details and KYC are available;
  2. Female passengers should have an option to pool with only female passengers; 
  3. Pooling should be available with certain kms of detour from the route assigned; and
  4. State government does have the power to relax these norms. 

Regulation regarding fares

The city taxi fare indexed by WPI will be taken as the base fare. The base minimum fare to be charged would be for 3 kilometers. This would include costs of the dead mileage and distance travelled and fuel utilized for picking up the customers. 

The Aggregator is permitted to charge a fare 50% lower than the base fare and a maximum price surge of 1.5 times the base fare. The driver is to get 80% of the fare applicable on each ride and the remaining charges can be taken up by the aggregator, which means 20%. 

It is also stated that the state government can also charge upto 2% over and above the fare for the maintenance of the aggregator services that will be required by the concerned state government. 

In cities where the base fares have not been defined, Rs 25/30 will be the base fare for the purposes of fare regulation. These fares shall only apply to cabs that are not exceeding 4 meters in length, of an engine capacity of 1500cc, and will not be applicable to electric cars. 

Nobody will be charged for the dead mileage and should only be charged for the distance travelled between the arrival point and the destination point of the customer.  

Cancellation of rides

On the cancellation of booking by a rider, a penalty of 10% can be levied. This penalty can not go upwards of INR 100. 

Suspension and Cancellation of Aggregator license

Suspension order can be due to: 

  1. The systematic failure of the safety of the driver or the rider; 
  2. Financial inconsistencies with regards to the fare; 
  3. Failure to comply with contractual obligations towards the drivers;
  4. Aggregator fails to comply with the guidelines; 
  5. Effect on health and safety of riders and drivers;
  6. Number of deaths or injuries caused due to safety standard violations; and
  7. Severity of financial dwindling.

A show-cause notice will be issued to the Aggregator for the cancellation of the Aggregator’s license if the Aggregator has more than 3 three suspensions in one financial year; has failed to receive its License and NOC pursuant to a second examination of the continuing suspension order or is responsible for a gross offense as categorized by the State government. The competent authority will give two days after issuing the show cause notice, provide an opportunity of hearing to the Aggregator and cancel the license. 

The Aggregator shall immediately stop all operations under the license. The security provided by the way of a bank guarantee will be forfeited. 

Appeal

The Aggregator aggrieved by the order of the competent authority within 30 days of the receipt of the order and appeal to the state government. The appeal has to be in the form of a memorandum and has to be accompanied by the requisite fee and the certified copy of the order passed by the competent authority. 

Comment

The Motor Vehicle Aggregator Rules of 2020 again proves that the government is trying to regulate the business in its own fashion. The capping of commission rates is trying to regulate how the business makes money. The 80-20% rate that has been set up by the government will only make the business lose money. 

There is the cancellation part where the government states that the cancellation fee will be borne by both the parties and cannot exceed 100 rupees. The female pool-ing also does seem like a good idea. But at what cost. The guidelines are regressive all over. These guidelines are trying to increase the cost of compliance for the business and extending the red-tapism and license raj in the startup space.

It leaves anybody analyzing or reading these guidelines with a lot of questions. 

Let us start with the health insurance bit. Even when the guidelines state that the drivers log in to different aggregators to drive the cars, is every aggregator expected to get their driver’s health insurance of 5 lakh rupees? 

Furthermore, the problems continue to come with the driving facility part where the aggregator is expected to let the driver log in 30 hours of driving and have a facility for the same. What is the point of a driving license if the aggregator has to make sure that it’s drivers know how to drive in the first place.

Moreover, the state government also having a share of 2% above the fare towards the state exchequer does not make quite a lot of sense. Why is the consumer being charged an extra tax just because he is using an aggregator and not haggling with the local taxi operator. 

There are a lot of holes that need to be plugged if these guidelines can be complied with and show the FDI behemoths who have invested in them that the 1 billion markets can actually deliver a good return on their investment. 


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…

LEAVE A REPLY