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Carpooling apps and the car owners who use them violate the law. And their passengers have no insurance cover.

Carpooling apps and the car owners who use them violate the law. And their passengers have no insurance cover.

vijayaraghavannarasimhamA concept that is now being commercially exploited through mobile apps, “carpooling” is the practice of people who want to travel on the same route or to the same place sharing their cars for convenience and to share costs. It is not new. Employees of the Bhilai Steel Plant for example, have consistently shared their cars in this manner.

But the new startup enterprises that have launched mobile apps to facilitate carpooling are on a sticky legal wicket. They “pool the cars of various owners” and form a “corpus of cars” that are then readily available for sharing by the users of these apps. Obviously, the  pooled in this manner are registered as private cars and would also be carrying insurance policies as private cars. This falls foul of the Motor Vehicles Act, 1988 (“the Act”).

While it is perfectly legal for individuals to pool their private cars for mutual benefit, a cloud-based solution to pool private cars and commercially exploit them contravenes Section 66 of the Act.

No owner of a motor vehicle shall use or permit the use of the vehicle as a transport vehicle in any public place whether or not such vehicle is actually carrying any passengers, save in accordance with the conditions of a permit granted…authorizing him the use of the vehicle in that place in the manner in which the vehicle is being used.

Under Section 2(47), “transport vehicle means a public service vehicle…” and under Section 2(35), “public service vehicle means any motor vehicle used or adapted to be used for the carriage of passengers for hire or reward…

Clearly, a vehicle registered as a private car and without a permit to “carry passengers for hire or reward”, cannot be “carpooled” to run “for hire or reward”. People, who offer their private vehicles for such a purpose, are permitting the use of their vehicles in a manner that is prohibited by Section 66 of the Act. The transport authorities would have a duty to seize these vehicles and prosecute their owners and even the startup enterprise for facilitating such illegal use. Commercial carpooling therefore, can only be legal if the vehicles are already registered as transport vehicles and have a permit to carry passengers for hire or reward.

CarpoolingApps
Some carpooling apps

In addition, under Section 3(1), the drivers of such vehicles need an endorsement authorising them to drive a transport vehicle. This means that even if private cars are somehow allowed to operate on commercial lines, their drivers may not possess the necessary endorsement because the vehicles registered as private vehicles do not need such endorsements.

Moreover, insurance policies available for private vehicles do not cover their use to carry ‘passengers for hire or reward’. Insurers can easily cry breach of the “limitations as to use” clause in the insurance policy and avoid liability for the passengers travelling in carpooled cars.

It would therefore appear that as an enterprise, carpooling  has to deal with serious regulatory issues. Meanwhile, they can either carpool using only transport vehicles and not involve private cars or hope that the motor vehicles regulator is looking the other way. They will also need specialised insurance covers for pooled cars.

Vijayaraghavan Narasimhan is an advocate practicing at the Madras High Court.

1 comment

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  • Hello Sir,

    Request you to share your number or mail id so I can get in touch with you to discuss the point which you have explained here. If as a user I am paying ONLY COST to car owner then why am I not covered under Insurance?

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