Ban On Rapido In Maharashtra Continues, SC Dismisses Relief In Appeal by Rapido

The Supreme Court on Tuesday refused to entertain Rapido’s petition against the Maharashtra government’s refusal to grant the company a two-wheeler bike-taxi aggregator license.

However, the bench of Justices led by Chief Justice DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala granted the company liberty to approach the Bombay High Court challenging the State government’s notification dated January 19, 2023, which prohibited the use of non-transport vehicles (2,3, or 4-wheelers) for aggregation and carpooling.

At the outset, Senior Advocate Mukul Rohatgi, appearing for Rapido, submitted that certain conditions, which were necessary to obtain a license were “impossible to achieve”. Furthermore, he stated that the state of Maharashtra did not have a scheme for two-wheelers, so Rapido’s application was wrongfully rejected.

He added, “The central policy states that each state must have a policy unless there are justifiable reasons for no policy. I say that the ban is illegal. They claim that the application contains flaws. However, those flaws can’t stand if no policy is in place.”

Per contra, Solicitor General Tushar Mehta, appearing for the State of Maharashtra, submitted, “We don’t say we don’t have a scheme. We’re saying we’re looking into whether or not to have two-wheelers for safety and traffic reasons.”

While dictating the order, CJI DY Chandrachud noted, “By amending the statute, the marginal note for Section 93 of the MV Act was substituted. The amended provision has the effect of prohibiting anyone from acting as an aggregator without a license from such authority and subject to the conditions prescribed by the state government.”

The bench also noted that, following the amendment of provisions of the Act of 2019, which provide that “while issuing the license to one aggregator, the state Government may follow such guidelines as may be issued by the Central Government,” the Union Government formulated the Motor Vehicles Aggregator Guidelines 2020. The aforementioned guidelines have been issued as the “guiding framework for State governments” for license issuance. Clause 15 of the guidelines states that the central and state governments shall persue the aim of reducing traffic conjunction and pollution.

The court determined that in the current case, the petitioner’s license application was denied because it did not comply with the terms and conditions of the 2020 guidelines. The petitioner had challenged this at the Bombay High Court, which, while rejecting the challenge, also stated that the 2020 guidelines leave a certain degree of latitude to the state government and that there was no policy of the State government at the present time on which the petitioner would have unrestricted right to obtain a license.

The court also noted that the Pune RTO had denied Rapido’s license application in December 2022. However, while hearing an appeal against it, the Bombay High Court noted that the State lacked a policy governing the licensing of bike taxis. Following this, the state of Maharashtra formed a committee comprised of senior IAS and government officers to investigate the matter, and the state issued a notification on January 19 prohibiting the use of non-transport vehicles for aggregation.

The bench noted today, “The state government’s notification overshadows the RTO’s order correction. The state government stated that the issue of whether non-transport vehicles should be used as transport vehicles needed to be addressed. The use of non-transport vehicles for aggregators was prohibited by the state government. We are not inclined to entertain a challenge to the notification dated January 19, 2023, because the petitioner will be free to seek alternative relief in the High Court. The correction of RTO, Pune’s order dated 21 December 2022 will stand subsumed by the State government’s larger decision.”

The bench issued the following instructions in deciding the petitions:

1. Granting liberty to petitioner to move to High Court afresh to challenge the state government’s notification dated January 19, 2023.

2. High Court shall consider the challenge without consideration to previous order.

3. Once the state government has made a final decision, the petitioner may seek legal remedies.

4. The state government must make a final decision on the matter before the committee by March 31, 2023. The committee must make a decision by March 15th.