ROPPEN TRANSPORTATION SERVICES PVT LTD versus UNION OF INDIA & ORS. on 7 February 2023

1. Permission to file the Special Leave Petitions granted.

2. Delay condoned.

3. Special Leave Petition (Civil) No 3006 of 2023 arises from aninterim order of the Division Bench of the High Court of Judicature atGBombay dated 7 March 2022. In Writ Petition (Civil) Nos 95 of 2023and 142 of 2023 under Article 32 of the Constitution, the petitioners seekto challenge the validity of a notification dated 19 January 2023 issuedby the State of Maharashtra. Special Leave Petition (Civil) Nos 3007and 3008 of 2023 arise from a judgment of the High Court of JudicatureHat Bombay dated 20 January 2023.

4. The Motor Vehicles Act 1988[1] was amended by Amending Act32 of 2019, inter alia, to comprehend aggregators within the scope ofits regulatory provisions. The expression “aggregator” has been definedin Section 2(1A) to mean a digital intermediary or market place for apassenger to connect with a driver for the purpose of transportation.Section 93 forms a part of Chapter V which deals with the control oftransport vehicles. Section 93 was also amended in 2019 to coveraggregators. Section 93, as amended, reads thus:

“93. Agent or canvasser or aggregator to obtain licence.-

(1) No person shall engage himself-

(i) as an agent or a canvasser, in the sale of tickets for travelby public service vehicles or in otherwise soliciting customfor such vehicles, or

(ii) as an agent in the business of collecting, forwarding ordistributing goods carried by goods carriages,

(iii) as an aggregator,unless he has obtained a licence from such authority andsubject to such conditions as may be prescribed by the StateGovernment.

Provided that while issuing the licence to an aggregator theState Government may follow such guidelines as may beissued by the Central Government:

Provided further that every aggregator shall comply withthe provisions of the Information Technology Act, 2000 (21of 2000) and the rules and regulations made there under.”

5. The effect of the amended provision is that no person can actas an aggregator without a licence. The licence is to be “from suchauthority and subject to such conditions as may be prescribed by theState Government”. In terms of the first proviso to Section 93(1), theState Government, while issuing a licence to an aggregator, “may follow”the guidelines issued by the Central Government. Section 96 confers arule making power on the State Government for implementing theprovisions of Chapter V.

1 “Act”

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A6. Following the amendment of the provisions of the Act in 2019,the Union Government in the Ministry of Road Transport and Highwaysformulated the Motor Vehicle Aggregator Guidelines 2020. The Guidelinescommence with a prefatory statement that they have been issued “asguiding framework for State Government for issuance of licenses totransport aggregators and for the purposes of regulating the businessBconducted by such aggregators”. The guidelines have been issued interms of the amended provisions of the statute, including Section 93,which stipulates that while issuing a licence to an aggregator, the StateGovernment may follow such guidelines as may be issued by the CentralGovernment. The Guidelines of 2020 contain diverse provisions; amongCthem:

(i) Clause 4 which deals with the eligibility of an aggregator;(ii)Clause 5 which provides conditions for the grant of a licenceto an aggregator;

(iii) Clause 7 which lays down compliances with regard todrivers; D

(iv) Clause 8 which enunciates compliances with regard tovehicles;

(v) Clause 9 which refers to compliances with regard toEaggregators’ apps and websites;

(vi) Clause 10 which stipulates compliances to ensure safetyamong other provisions; and

(vii) Clause 13 which makes provisions for the regulation offares.F

7. Clause 15 of the Model Guidelines is extracted below:

“15.Aggregatlon of non-transport vehicles by Aggregators:

(1) ln furtherance of the Central and State Government’sobjective of reduction in traffic congestion and automobileGpollution, and effective asset utilizations, non-transportvehicle pooling may be provided by Aggregator unlessprohibited by the State Government. Rationale for suchprohibition shalI be specified in writing and accessible onthe transport portal of the State Government.

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(2) ln addition to the compliances mentioned above in theseguidelines, as may be applicable, the following shall becomplied with by the Aggregator seeking to aggregate non-transport vehicles:

(a) A maximum of four ride-sharing intra-city trips on acalendar day and a maximum of 2 ride-sharing inter-citytrips per week shall be permitted for each vehicle with thedriver, integrated with the Aggregator.

(b) The vehicle integrated under this Clause 15 shall obtain aninsurance of at least Rs. 5 lakhs for the ride-sharers in thevehicle, other than the owner or driver integrated with theAggregator.”

8. Clause 15(1) stipulates that the Central and the StateGovernments seek to pursue the objective of reducing traffic congestionand automobile pollution as well as effective asset utilization. However,clause 15 also stipulates that the pooling of non-transport vehicles maybe provided by the aggregator unless prohibited by the State Government.The rationale for such a prohibition has to be specified in writing by theState Government and has to be accessible on its transport portal.

9. Government of Maharashtra has not formulated any rules inrelation to aggregators for the purpose of enforcing the provisions ofChapter V, more particularly, Section 93(1). The first proviso to Section93 stipulates that while issuing a licence to an aggregator, the StateGovernment may follow such guidelines as may be issued by the CentralGovernment. The Guidelines which have been issued by the CentralGovernment have a persuasive value. They are not mandatory. Whenthe State Government formulates rules in pursuance of its power underSection 96, it may also bear in mind the Guidelines which have beenframed by the Union Government in 2020. Both in terms of the firstproviso to Section 93(1) and the plain terms of the Guidelines, it is evidentthat while these Guidelines have to be borne in mind, the ultimate decisionis to be arrived at by the State Government while considering whether togrant a licence and in regard to the formulation of rules in pursuance ofthe general rule making power under Section 96.

10. In the present case, the first petitioner in SLP(Civil) No 3007of 2023 is an aggregator within the meaning of the amended provisionsof the statute. The case relates to the claim of the petitioners to providethe services of an aggregator for two wheeler vehicles across the State A

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Aof Maharashtra. The first petitioner made an application for the grant ofa licence. By an order dated 21 December 2022, the Road TransportOfficer at Pune[2], rejected the application on the ground that it did notcomply with various terms and conditions of the Guidelines of 2020. Therelevant part of the order of the RTO is extracted below:

B“Decision:

1. Two Wheeler Bike Taxi Aggregator License : ApplicantM/s.. Roppen Transportation Services Pvt. Ltd. for gettinghis two wheeler bike taxi aggregator license Applicationdated 30/11/2022 Important matters in Motor VehicleCAggregate Rules- 2020 viz. 4 (3), 5 (1), 5(2), 5(3), 7(1)(c),7(1)(1), 7(1)(g) ), 7(1)(h), 7(2)(a), 7(2)(b), 7(2)(c), 7(2)(h),7(2)(k), 7(2) (m), 8(2), 8(3), 8(5), 8(6), 8(10), 9(1), 9(2),9(3) and 13 are not complete. After verification, lack offacility of simulator and induction training, operation of appwithout agitator license, all submitted undertaking withoutDofficial signature and stamp, lack of sufficient experienceof vehicle drivers, registration of two-wheelers not intransport category, etc. have been found incomplete. Alsoamong the documents submitted are insurance certificate,fitness certificate, license, pollution control certificate, etc.Efor some vehicles. Legal documents are not attached (Pleasesee Table No. 1 on Page No. 5). Also in the State ofMaharashtra, no such scheme/ scheme of bike taxi has beenimplemented by the government or the state transportauthority. Also, the bike taxi type of license /license is notissued. Also, there is no fare structure policy for bike taxis.

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Therefore, for the above reasons the regional transportauthority decided to reject Rappen’s two-wheeler bike taxiapplication. The said decision should be informed to theApplicant (M/s. Rappen Transportation Services Pvt. Ltd.)

According to Sections 89, 90 of the Motor Vehicle Act,1988 and Rule 97 of the Maharashtra Motor Vehicle Rules,1989, an appeal can be submitted to the State TransportAppellate Tribunal, Mumbai (The State Transport AppellateTribunal) within 30 days.

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2. Three Wheeler Taxi Aggregator License : Applicant M/sARopan Transportation Services Pvt Ltd. His applicationdated 30/11/2022 for obtaining three wheeler taxi aggregatorlicense important points in Motor Vehicle Aggregator Rules2020 viz point No.4 (3), 5 (1), 5 (2), 5(3), 7 (1) (b), 7 (1) (c),7 (1) (d), 7 (1) (e), 7 (1) (f), 7 (1) (g), 7 (1) (b), 7 (2) (3), 7B(2) (b), 7 (2) (c), 7 (2) (h), 7 (2) (k), 7 (2) (m), 8 (2), 8 (3),8 (5), 8 (6), 8 (10), 9 (1), 9 (2), 9 (3) and 13 are not perfect.Absence of simulator and induction training facility afterapplication verification, App running without activatorlicense, All submitted undertaking without official signatureand stamp, Insufficient experience of drivers, No GPSCsystem in vehicles, approved by Regional TransportAuthority, Pune Information not provided as per fare basis,etc. imperfections have been found. Also, in the documentssubmitted, some legal documents such as insurancecertificate, vehicle license, fitness certificate, license, publicDtransport service badge, pollution control certificate, etc.are not attached. (Please refer Table No. 2 on Page No.9)”

11. The petitioners instituted a writ petition before the High Courtof Judicature at Bombay in order to challenge the legality of the decisionof the RTO. During the course of the hearing, the High Court wasapprised of the fact that on 19 January 2023, the State Government hadissued a notification bearing on the issue.

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12. The notification issued by the State Government on 19 January2023 is extracted in its entirety below:

“Home DepartmentMadam Cama MargHutatma Rajguru Chowk,Mantralaya, Mumbai 400 032.Dated the 19[th] January 2023.

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No.MVR-0821/C.R.95/TR-2 Whereas, the Government of Indiahas, vide Ministry of Road Transport and Highways (Transport),Letter No. F. No. 1601119/2019-T, dated the 27[th] November 2020,issued the Motor Vehicle Aggregator Guidelines, 2020 (hereinafterreferred to as “the said Guidelines”), under the proviso to sub-section (1) of section 93 of the Motor Vehicles Act, 1988 (59 of1988); G

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SUPREME COURT REPORTS

And whereas, clauses 11 and 15 of the said Guidelines providesfor ride pooling and aggregation of non-transport vehicles byaggregators, respectively. Sub- clause (1) of said clause 15empowers the State Government to provide ‘Rationale’ forprohibition of non-transport vehicles pooling by aggregators; A

And whereas, it is observed that, use of non-transport vehicles(including two wheelers, three wheelers and four wheelers) astransport vehicles is on the rise enormously and raises seriouspractical and security concerns of the passengers and which maycause serious threat to the road safety of general public andpassengers, at large; B

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And whereas, the number of vehicles registered in the non-transport category is very large, therefore the non-transportvehicles registered outside the State of Maharashtra may also beused for the purpose of vehicle aggregation and may affect theeconomic viability of the vehicles operating on valid permits in theState of Maharashtra; D

And whereas, the issue of whether non-transport vehicles can bepermitted to be used as transport vehicles, including for aggregationand ride pooling thereof requires detailed consideration regardingterms and conditions, framework and guidelines thereof. Therefore,the State Government has constituted the committee to study thesaid issues and to give recommendations thereof; E

And whereas, the Government considers it expedient to prohibitthe pooling of non-transport vehicles by aggregators in order toensure road safety of the general public and passengers at largeFin the State of Maharashtra; Now, therefore, the Government of Maharashtra, in pursuance ofclause 15 of the Motor Vehicle Aggregator Guidelines, 2020,hereby prohibits the use of non-transport vehicles (including twowheelers, three wheelers and four wheelers) for the purposes ofGaggregation and ride -pooling thereof.

By order and in the name of

the Governor of Maharashtra

(R.M. Holkar)

Joint Secretary to Government”

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13. By the above decision, the State Government has noted thatthe issue of whether non-transport vehicles ought to be permitted to beused as transport vehicles including for aggregation and ride poolingrequires consideration. A Committee was constituted by the StateGovernment on 12 January 2023. Pending the decision of the Committee,the State Government has prohibited the pooling of non-transport vehiclesby aggregators “in order to ensure road safety of the general public andpassengers at large” in the State of Maharashtra. The Committee whichhas been constituted by the State Government on 12 January 2023 ischaired by a former IAS officer consisting, inter alia, of the AdditionalDirector General of Police and representatives of the TransportDepartment and the Maharashtra State Road Transport Corporation.

14. The High Court adjudicated upon the challenge to the order ofthe RTO dated 21 December 2022. The High Court recorded that counselappearing on behalf of the petitioners informed the Court that they wouldconsider whether or not to challenge the notification dated 19 January2023 separately and at that stage, the challenge was confined to theorder of 21 December 2022 issued by the RTO. The High Court hasalso proceeded to observe that the Guidelines of 2020 leave a certaindegree of latitude to the State Government and there is no policy of theState Government at the present point on the basis of which the petitionerswould have an unrestricted right to obtain a licence.

15. Mr Mukul Rohatgi, senior counsel appearing on behalf of thepetitioners, submitted that many of the requirements of the Guidelines of2020 on the basis of which the application for a licence was rejected areunworkable. This has been seriously in contest since Mr Tushar Mehta,Solicitor General appearing on behalf of the State of Maharashtra, hasurged that the Central Guidelines are intended to ensure, above all, thesafety of the passengers and drivers for which purpose certainrequirements have been introduced.

16. The correctness of the order of the RTO rejecting theapplication for a licence on 21 December 2022 is now overshadowed bythe subsequent decision of the State Government arising out of itsnotification dated 19 January 2023. The State Government hascategorically taken a decision that the issue as to whether non-transportvehicles should be permitted to be used as transport vehicles includingfor aggregation and ride pooling merits detailed consideration. Pendingthe decision of the Committee, the State Government has taken a decision A

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Ato prohibit the use of non-transport vehicles for the purpose ofaggregation.

17. There was no challenge before the High Court to the notificationdated 19 January 2023. Two petitions have now been instituted beforethis Court under Article 32 of the Constitution for the purpose ofBchallenging the notification of the State Government. We are not inclinedto entertain the challenge to the notification dated 19 January 2023 ofthe Home Department of the State Government in proceedings underArticle 32 of the Constitution. The petitioners would be at liberty topursue the alternate remedy under Article 226 of the Constitution beforethe High Court. The correctness of the order of the RTO dated 21CDecember 2022 stands subsumed by the decision which has been takenby the High Court to entrust the examination of the entire issue by theCommittee, before it decides on the use of non-transport vehicles forthe purposes of aggregation and ride pooling.

18. During the course of the hearing, Mr Mukul Rohatgi submittedDthat while, on the one hand, the observations in paragraph 57 of theimpugned judgment of the High Court reserve liberty to the petitionersto challenge the notification dated 19 January 2023, the observations in asubsequent part of the judgment, namely, paragraph 59 would precludesuch a challenge.

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19. In order to allay the above grievance, it needs to be clarifiedthat while considering a challenge to the notification dated 19 January2023, the High Court shall not consider itself bound by its observations inparagraph 59. At any rate, the latter observations are only in the contextof the challenge to the decision of the RTO dated 21 December 2022Fwhich alone was a subject matter of the proceedings before the HighCourt.

20. In the above backdrop, we grant liberty to the petitioners tomove the High Court under Article 226 of the Constitution for the purposeof challenging the notification of the State Government dated 19 JanuaryG2023. The High Court shall consider any such challenge uninfluenced bythe observations contained in the impugned judgment and order dated 20January 2023.

21. The order of the RTO dated 21 December 2022 indicates thatit has been passed on the ground that the provisions of the Guidelines of2020 were not complied with. Once the State Government takes a finalH

decision on the submission of the report of the Committee, the petitionerswould be entitled to pursue their legal remedies after complying withsuch terms and conditions as may be prescribed in the decision of theState Government. The State Government shall take a final decision onor before 31 March 2023. The Committee shall take its final decision onor before 15 March 2023 so as to leave time to the State Government totake a considered decision by the end of March 2023.

22. The petitions are accordingly disposed of.

23. Pending applications, including application for intervention,stand disposed of.

Nidhi Jain

Petitions disposed of.

(Assisted by : Tamana, LCRA)

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