Written By Naveen Menezes & Alnoor Peermohamed, ET Bureau
BENGALURU: Ola’s licence to operate cab services in Karnataka is set to be restored after it pays a penalty levied by the state transport department, possibly as early as Monday.
The transport department has decided to lift the six-month suspension imposed on Ola on Friday for running “illegal bike taxi services” in violation of its licence after the chief minister intervened.
“I convened a meeting on the directions of chief minister HD Kumaraswamy. The chief minister wants the suspension order to be revoked and I have conveyed the same to the officials,” Karnataka chief secretary TM Vijay Bhaskar, who held separate meetings with the transport department and Ola representatives on Saturday, told ET. “It’s up to the department to decide on the penalty.”
Order has ‘Served its Purpose’
Social welfare minister Priyank Kharge said that neither he nor the chief minister could be part of the meeting with the transport department and Ola representatives due to the election code of conduct. “The issue has been resolved,” he said. “Ola has agreed to pay the penalty on Monday. Cab services will not be affected.”
The amount will be decided by State Transport Authority, a quasijudicial entity, on Monday. “I cannot decide (the penalty) on my own,” said transport commissioner VP Ikkeri. “The question of how much the penalty is going to be is like asking a judge what his judgement is going to be.” If Ola does not pay the penalty, the department will act as per the law, he said.
Ola declined to comment. On Friday, it said it would work with officials to resolve the matter. “Usually we levy a penalty of Rs 50,000 per offence,” said a senior transport department official who didn’t want to be named. “Since it’s a very different violation, we will have to study the number of offences Ola has committed. We may have to seek legal opinion too.” The transport department believes the suspension order on Ola had “served its purpose”, the person said.
“In spite of warning Ola multiple times over the last one month, they continued to operate illegal bike taxi services on their platform,” he said. “We had even seized two-wheelers, but in vain. It’s only when we warned them of withdrawing the licence that the company has removed bike taxi services on Friday.”
Ola will be keen on getting the suspension lifted as quickly as possible. “To an organisation the size of Ola, I would expect that any fine the government would levy would not be material,” said Vikrant Kumar, a partner at law firm L&L Partners. “What will really affect Ola is if the direction (suspension) is upheld, because the revenue loss over six months will be severe and will give a huge boost to its competitors.”
The transport department ordered the company to suspend all operations, including four-wheeler cabs, within the next three days in a letter sent to Ola parent ANI Technologies Pvt. Ltd. on March 18. “This notification is unfortunate, and we look forward to an opportunity to address these concerns directly with state officials to find a solution for our driver partners and millions of Ola users in Karnataka,” Ola had said in a statement.
The state transport department had issued a notice to Ola February 15, warning the company that it would suspend its aggregator licence if it did not comply with the ban on bike taxis. ET had reported this development on February 18, after which the state said it seized more than 400 bike taxis attached to Ola and rival Rapido.
“Regulatory run-ins for ride-hailing companies aren’t an Indiaspecific issue; this happens in many other markets including fairly advanced economies,” said Devangshu Dutta, chief executive of consulting firm Third Eyesight. “The constant gripe that traditional taxi players have is that they are forced to follow strict rules, whereas ride-hailing firms are not as strictly regulated, and this has created tension everywhere.”
Bengaluru, where Ola is headquartered, is also its single largest market in the country. The city is estimated to have 120,000 cabs, out of which around 65,000 operate on the Uber and Ola platforms interchangeably, state authorities and experts said.