Ola, Shuttl, Zipgo, Uber stuck between contract and stage carriage permits

(Photo: Reuters)
Technology may be an enabler for bus and taxi aggregators but despite an amended law in the making, companies such as Ola, Shuttl, Zipgo, and even Uber have faced a clampdown by the local and state governments. It is their bus shuttle and polled taxi services that have lately been facing the heat.

The problem arose out of government officials reading the rule book to these companies on the kind of permit they should be operating under. On the face of it, the issue appears to be more procedural since these services are catering for the ever-growing working population, which finds them more affordable than conventional taxis. It is also believed that since bus aggregators eat into the business of government-owned transport corporations, the state transport undertakings work behind the scenes to lobby against these services.

Bangalore Metropolitan Transport Corporation, for instance, influenced the transport department to stop shuttle services in the city since they were impacting its revenue in high-value areas.

Officials in the Delhi government, however, say that vehicles running under these platforms wrongly operate under the contract carriage permits. The Motor Vehicles Act, 1988, defines contract carriage as a motor vehicle that carries a passenger or passengers for hire or reward. It is engaged “under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorised by him in this behalf on a fixed or an agreed rate”. The existence of a contract, along with the names of passengers, is what primarily differentiates it from the stage carriage permit, which allows carrying more than six passengers.

Besides, contract carriage is hired for a period with or without reference to a particular route or distance. It moves from one point to another without stopping to pick up or drop passengers not included in the contract. It does not allow hailing. Stage carriage allows hailing with vehicles stopping at designated places.

An executive of an app-based aggregator says that availability of passenger lists is not an issue with them. “We are a subscription-based business, so at any time in the journey it is known that who is boarding. The passenger list and from where they (passengers) are boarding are available. Besides, even in cases of school and company buses, they stop at designated places to allow boarding and de-boarding,” he says.

The Delhi government is now planning to come up with two policies: One replacing the 2015 City Taxi Scheme, which, officials say, has not worked well. This policy will allow taxi aggregators to work under the contract carriage permit. In the case of pool taxis, where there is ride sharing, hiring by the first passenger will be considered as a contract. “This, however, cannot work in the case of buses,” says an official. A different policy for bus aggregators, therefore, is in the works.

The Delhi government will ask bus aggregators to work under the stage carriage permit. This, officials say, is required for the safety and uniformity of service. Besides specifying the kind of buses that are to be used, the companies will be asked to specify the number of buses plying under their platforms. 

The state is planning to carve out routes and put them on offer, ensuring in the process that there is no excessive competition. Pricing services will also be regulated and capped, which is where the companies may not be comfortable with the stage carriage permit.

The proposed policy will not be in line with a Union government committee report on urban mobility that came out last year. The report calls for liberalising bus permits. “Just as All India Tourist Permit (AITP) taxis are being used by app-based service providers, AITP/ contract buses should also be enabled and encouraged to provide services to the commuters on a shared basis through app-based aggregators,” says the report. The companies, on their part, say  the law is behind the technology curve.

Section 2 of the Motor Vehicles Act


  • A motor vehicle which carries passengers for hire or reward and is engaged under a contract
  • Such vehicle as a whole carries specified passengers under the contract on a fixed or an agreed rate 
  • Contract, if on basis of time whether or not with reference to any route or distance
  • Vehicle moves from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract 
  • A motor vehicle constructed or adapted to carry more than six passengers, excluding the driver for hire or reward 
  • Fares paid separately for individual passengers, either for the whole journey or for stages of the journey

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