Ola cabs banned  –  6 months – shame/timing

Ola cabs banned – 6 months – shame/timing

Ola cabs ban – Implemented in Bengaluru for 6 months.  The Karnataka Transport Department on 22nd March 2019 suspended the  licence of online cab operator Ola for 6 months in Bengaluru. 

This ban comes in the wake of old running its bike taxis while possessing a licence only to run four wheelers. 

Ola had a great start to the year – funding, getting the likes of Flipkart Co-founder Sachin Bansal on its board, but it’s legal issues just doesn’t seem to end.

Ola cabs :

Ola Cabs, is an online transportation network company developed by ANI Technologies Pvt. Ltd.  As of December 2018, Ola was valued at about $5.7 billion. A variety of venture capitalists including Softbank have large stakes in the company.

Ola Cabs was founded on 3 December 2010 as an online cab aggregator in Mumbai, and is now based in Bengaluru.  As of 2018, the company has expanded to a network of more than 10,00,000 vehicles across 169 cities. In November 2014.

Ola diversified to incorporate autorickshaws on a trial basis in Bengaluru.  After the trial phase, Ola Auto expanded to other cities like Delhi, Pune, Chennai and Hyderabad starting in December 2014.

History of Ola cabs :

On March 2014, Ola Cabs acquired Bengaluru based taxi service Taxiforsure for approximately Rs.1,394 crore (US$200 million).  From 25 June 2015, Ola users gained access to TFS cabs via the Ola mobile application. In November 2015, Ola acquired Geotagg, a trip-planning applications company, for an undisclosed sum.

In December 2017, Ola acquired  Foodpanda’s business in India. In April 2018, Ola made its second acquisition with Ridlr (formerly Traffline),  a public transport ticketing app.

In August 2018 Ola financed Series A funding of the scooter rent startup Vogo, and in December, Ola invested another $100 million.

In March 2019 Ola raised another $56 million (Rs.400 crore) from Tiger Global and Matrix India.  Later Ola raised another $300 million from Hyundai and Kia.

Ola cab banned – licence cancellation :

The Transport  department issued an order dated March 18, to Ola operator ANI Technologies on 22nd March.  The order stated that its licence in Bengaluru was cancelled for 6 months for violation of conditions under which the permission was granted. 

The ola cab ban order was issued for violating the Karnataka On-Demand Transportation Technology Aggregators Rules, 2016.

With this order from the Government, the ola cab’s and autos will be off the roads for 6 months. 

Ola’s response to the ban :

Ola is evaluating all possible options to find a solution to ban so that its driver-partners will not suffer and continue to work in Bengaluru. 

The company was running bike taxis in Bengaluru  city which was reportedly illegal given the lack of a policy framework. Ola confirmed the development, but claimed that it had halted operations of its bike taxis “weeks ago”.

Statement by Ola on cab ban :

Ola cab issued a statement stating, “We have been closely working with the authorities on this topic, responding to queries and making proactive representations to the ministry. Despite other companies continuing to operate illegally, Ola halted our bike taxi experiment weeks ago, instead seeking the state’s cooperation to develop a legal framework for a pilot that will continue to take advantage of emerging opportunities in the mobility economy. 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 raised money :

The development takes place within days of the company announcing that it had raised $300 million in funds from South Korea’s Hyundai Motor Group in a strategic deal.

The company claims to have over 1.3 million driver partners across the country. Although it doesn’t give a city-wise breakup, Bengaluru is expected to be one of its top markets.

Sanchin Bansal – Investment in Ola :

Bansal has taken up 70588 fully & compulsorily cumulative series J preference shares.  The face value of the share is Rs.10 at a premium of Rs.21240 per share.

Ola has raised Rs.520 crore from existing investor Steadview Capital.  Sanchin Bansal is also setup up a $1 billion fund, has invested in ola cabs in his individual capacity. 

This investment is to be one of the biggest of Sachin Bansal.  The investment comes at a time when ola is competing with the global rival Uber in India.

Bengaluru – largest market for Ola :

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. 

This isn’t the first run-in for a ride hailing firm with the Karnataka authorities. 

The state had banned Uber in December 2014 following the rape of a woman passenger by her cab driver in Delhi. Karnataka asked cab-hailing firms to take their vehicles off Bengaluru roads in May 2016 until they were granted licences to operate in the state.

Currently, bike taxis in Karnataka are illegal due to lack of policy framework and are also strongly opposed by the Ola TaxiForSure and Uber Drivers’ Association for fear of loss of business.

Recently, Ola and other cab aggregators which operate bike taxis have been facing the heat from the Transport Department. In February, transport officials seized close to 500 such bike taxis for operating illegally.

260 vehicles impounded – ola cab ban :

The officials confirmed that the enforcement wing of the transport department impounded close to 260 two wheelers attached with Ola in Bengaluru in the last one month.

The department had directed the RTOs to enforce the rules if Ola continued to operate taxis in Bengaluru by ignoring the order.

It is noted that Ola had received licence from the department to operate taxis in Bengaluru from June 2016 to June 19, 2021.

Latest News about OLA updated on 25.03.2019 :

On Friday the Transport department suspended the licence of ola for 6 months in Bengaluru. But on 24.03.2019 according to Social Welfare Minister Pryank Kharge the ola cabs will run as usual.

According to Priyak Kharge, “Technology has been ahead of policy because of fast-paced innovative experiments. There was no provision for aggregators in the Motor Vehicles Act, 1988, but governments formed policies after Ola and Uber arrived”.

The ban had been revoked according to the directions of the State Government. According to the Transport Minister Thammanna he has not aware of the ban imposition on OLA.

People in Bengaluru are confused about what is happening??? News of the ban led to a huge uproar and backlash on social media from public.

Ola moves High Court:

The Ola’s  parent company ANI Technology had filed a petition against the Karnataka transport department after the ban of old cabs and bikes in Bengaluru.

ANI Technologies, which owns and operates Ola, has filed a petition in the Karnataka High Court against the state transport department for non-issuance of a licence to operate two-wheeler taxis in Karnataka, a week after the state fined the company Rs.15 lakh for operating its bike taxi service.

The court has directed that a single company cannot be pulled out for offering bike taxi service while the co’s rivals continue to operate.

Justice S.Sujatha has noted that keeping in mind the right to equality enshrined under Article 16 of the Constitution of India, no person or aggregator can be singled out in the business  activities when the rival competitors are allowed to continue their such business or vice-versa.

The petition alleges inaction on the part of the state transport department against other bike taxi operators while Ola’s aggregator licence wassuspended for a period of 6 months in a notification sent to the company on March 18. The suspension order was reversed on March 25, after the company agreed to pay a fine of 15 lakh.

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