Karnataka High Court Rejects Ride-Hailing Apps’ Challenge, Upholds 5% Service Charge Cap for Auto Rickshaws

The Karnataka High Court dismissed petitions filed by ride-hailing companies Uber, Ola, and Rapido challenging the state government’s cap on service charges for auto rickshaw rides. This ruling upholds the 5% service charge limit implemented in November 2022.

Clarification on Service Charge Collection

The court order clarifies that these companies can only collect a 5% service charge on top of the fixed fare, effectively rejecting their arguments for a higher commission.

Minister Welcomes Decision, Citing Passenger Benefit

Karnataka’s Transport Minister, R Ramalinga Reddy, praised the judgment, highlighting the potential benefit for thousands of Bengaluru citizens who rely on auto rickshaws for daily commutes.

Previous Dispute and Temporary Relief

The controversy arose in November 2022 when the Karnataka transport department imposed a 5% service charge cap on app-based auto bookings. Ride-hailing companies contested this decision, citing Motor Vehicle Aggregator Guidelines that allow them to charge a 20% commission and implement surge pricing up to double the base fare. In January 2023, the Karnataka High Court issued a temporary stay on the service charge cap, allowing these companies to charge a 10% convenience fee while the legal dispute was ongoing.

Current Status and Impact

With the High Court’s recent ruling, the 5% service charge cap for app-based auto rickshaw rides in Karnataka remains in effect. This is expected to lead to lower fares for passengers using these services.