The Vicious Cab Cancelling circle: Legal perspective

August 24, 2022
Cab Cancelling Saga

By Nihit Nagpal and R.K. Gupta

The Cab Cancelling Saga!

Successfully booking a cab and reaching their destination on time has become a colossal task for most passengers nowadays. Passengers first often have to face quizzing and bargaining regarding their destination and mode of payment before the driver decides whether or not he fancies taking the ride. From wasting passenger time while the driver obstinately roams around, refusing to cancel the request themselves, to drivers straight away declining the calls, the consumers are pushed to cancel the booking and incur a penalty. Thus, contrary to their claims of providing an affordable and hassle-free solution, almost all cab agencies have become a source of annoyance and inconvenience for daily commuters.

Relevant provisions for holding cab aggregators responsible

Although we do not have explicit provisions that deal directly with liabilities of cab aggregators, there are many provisions under different laws through which ride availing services provided by companies like Ola, Uber etc. can be held responsible for their poor services. These provisions may be briefly summarized as below-

  • Motor Vehicle Act, 1988- The Motor Vehicle (Amendment) Act of 2019 introduced a new set of definitions including the meaning of aggregators which means “a digital intermediary or a marketplace for passengers to connect with a driver for the purpose of transportation” thereby implying that online based taxi service agencies would come under the purview of Motor Vehicle Act,1988. Moreover, according to Section 178(3)(b) of theAact if a carrier of contract carriage refuses to ferry the passengers, a penalty of Rs. 500 will imposed. Such a fine will be levied by the police directly on the vehicle.
  • Consumer Protection Act, 2019- With the enforcement of the new Consumer Protection Act, 2019 the scope of protection granted to the consumers has increased and so has meaning of service providers. Cab aggregators and the passengers commuting with the help of such taxi services now fall under the ambit Consumer Protection Act, 2019 and thus, if such taxi services fail to provide seamless services to its consumers, a complaint can be lodged before the Consumer Forums established under the Act.
  • Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021- Under the ambit of the newly introduced Intermediary Guidelines of 2021, cab aggregator platforms also come under the ambit of “intermediary” and are therefore subject to the purview of the guidelines under which they may be held accountable.

It is pertinent to note that due to the lack of any explicit laws or rules, these online based platforms are governed in accordance to their own terms and conditions which are drafted in such a manner to protect them from any kind of liability which may arise due to the misconduct of the drivers. The cab aggregators treat the drivers hired by them as ‘independent contractors’ and not as ‘employees’ which means that the aggregators cannot be held responsible for any mishap caused by the driver during the course of his employment

However, the judiciary is changing their stance regarding cases where the cab aggregators look to escape liability with the excuse that their drivers are independent contractors and they are nothing but an intermediary platform who merely connects the riders with the self-employed drivers.

Employee v. Independent contractor

Before moving ahead, it is important to understand the difference between independent contractors and employees. When we refer to a person being an ‘employee’, it simply implies that such a person works under the direct supervision of his employer. Arising from the principle of vicarious liability, if the employee commits an illegal act, the employer will be held responsible. However, this is not the case when we talk about independent contractors. An employer has no authority over independent contractor, thus giving a lot of space to the independent contractor to act without any fear of supervision.

In a relation between the employer and employee, there exists a ‘contract of service’ which means that the employer, having full authority, instructs the employee with the tasks that are to be undertaken and the manner and mode in which they are executed. Whereas, when it comes to independent contractors a ‘contract for service’ operates where the employer only tells the employee what tasks are to be completed and the employee is at full autonomy to decide the manner and mode which he will use to complete the work.

Vicarious Liability – Vicarious liability imposes legal responsibility upon the employer for the unlawful acts committed by his/her employee during the course of employment. The doctrine of vicarious liability holds one party responsible for the act of another, even if it was not involved in inflicting the harm. Also denoted as imputed liability, the concept of vicarious liability provides that if a party shares an authoritative legal relationship with another, then the party in authority will be responsible for all the actions of another provided that such actions are committed during the course of employment.

For eg. ‘A’, a driver works for a taxi service agency ‘K’ and during his course of employment while taking passengers, he hits ‘B’ a pedestrian due to his negligent driving. In such a case taxi agency ‘K’ will be responsible for the act committed by its driver.

If the doctrine of vicarious liability is imputed to cab aggregators and their drivers, it can be safely deduced that if any offence is caused by the drivers under the term of his employment against any passengers, the aggregators can very well be penalized and charged for such offences caused by their drivers.

Relevant Judicial Precedents

In Erik Search v. Uber Technologies, Inc.1, District Court of Colombia applied the Duck Theory to the facts of the case where an Uber driver had stabbed a rider. According to the test, “if one quacks, walks, swims like a duck, it will be termed as a duck.” The rationale that emanates from the theory is that the principal can be held responsible if through his actions or words he makes a third party believe that his agent has acted on behalf of him and according to his terms. The Court while observing the functioning of Uber stated that the riders were under a reasonable belief that the driver was its employee and asked Uber to pay damages.

The Highest Court of France i.e the Cour De Cassation in Uber France v. MAX2 was of the opinion that the drivers are the employees of the company and not self-employed agents. The Court evolved a test to determine whether a person will fall under the category of self-employed or employee and laid down that if person is able is to develop his own client base along with fixing of tariff and setting up of terms and conditions, he will be viewed as self-employed. However, in case of an Uber driver, the driver follows the orders of the company and the relationship between them is of subordination and thus, held that drivers hired by Uber are its employees.

Recently, on February 19, 2021 the Supreme Court of U.K. in Uber B.V. and ors. v. Aslam and ors.3 ruled that Uber drivers belong to the category of “workers” and not “independent contractors” due to the significant amount of control and influence exerted by the company over their drivers.

As stated above, there are no specific rules in India that holds the cab aggregators responsible for the harassment meted by the riders due to the negligent act of their driver. The Courts pays no heed to these ‘intermediaries’ even when heinous crimes like sexual harassment is committed by their drivers. The Delhi High Court in Shiv Kumar Yadav vs. The State of NCT of Delhi4 convicted an Uber driver for the offence of rape, but did not hold the company liable for the act committed by their driver. Such instances are testament to how cab aggregators are not held responsible for the acts done by their drivers even during their tenure of (what is essentially) employment.


With ride hailing services becoming a quotidian for daily commuters, a new targeted policy with new set definitions of employer, employee and independent contractor, and their respective legal liabilities must be introduced as it is the imperative need of the hour.

It is commonplace for consumers not to read the contractual terms and conditions to which they agree automatically to avail the services of mobile applications, and wherein the cab aggregators disclaim all liability for the fault of their drivers and service providers. Thus, there cannot be any ad ideam in such agreements. Such contracts can be termed as unfair agreements and even if we say that the consumer can be put at fault for not reading the entire agreement, it still cannot be negated that the contract is essentially unilateral and unfair. The contract still puts the aggregators in a dominant position and protects them in entirety against all acts of its drivers. Such agreements can be declared void by the Indian Courts on the ground of being unfair.5

Indian courts, in the interest of justice for innocent consumers must evolve a policy in line with the principles established by foreign courts to punish the aggregators for their deficient services.

With the increase in such application-based cab services the safety of and service to the passengers must be prioritized over all else and it is high time that the cab aggregators were saddled with the responsibility of properly serving and protecting their own customers.

1Civil Action No. 15-257 (JEB)
2Ruling n°374 – 4 march 2020 (Appeal n° 19-13.316)
3EWCA Civ 2748
4CRL.A. 471/2016
5Section 2(46) of the Consumer Protection Act.

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