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.


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.


A neutral Internet may not be the best idea for India

ShreedharSasikumarMost consultation papers go straight from the printer to the archives but the latest from India’s telecommunications regulator, the TRAI, on a regulatory framework for over the top (“OTT”) services, has prompted strong dissent.

Let us get this out of the way early. The paper is a terrible piece of public policy. It reads as if written by a lobbyist for Airtel and the synopsis could well be, “Internet publishers like Google and Facebook are making a boatload of money using our (Telecom Service Providers) networks and we want a bigger cut”.

Most of the ‘angst’ expressed by telecom service providers (“TSPs”) is directed at messaging services (like Whatsapp) and Voip services (like Skype), which are ‘free-riding’ on TSP networks. These OTT services provide customers an alternative to TSP services like SMS and international calls. Since OTT services are exempt from the various quality and consumer protection regulations placed on TSPs, the paper argues that OTT services deprive ‘licensed operators and governments of their legitimate revenues’. The paper then continues on to twist itself in loops to expand the definition of OTT services to services offered by YouTube, Facebook and Flipkart, that is, pretty much any service on the Internet that makes any money (TSPs cant really charge messaging and Voip services because they have infinitesimal revenue). The paper ‘asks’ whether OTTs should be regulated and if there is ‘a justification for charging differential prices for data access’.

top_bannerAnd it is this point on ‘differential pricing’ that has attracted the ire of advocates who warn that if TSPs are allowed to charge publishers, TSPs and deep-pocketed publishers (but not consumers) will decide what Internet services the public will access. To their opponents, zero-rating plans like and Airtel Zero presage a fragmentation of the Internet in to gated playgrounds, in short, the death of the open and free Internet.

‘What is ‘Net Neutrality’?

‘Net neutrality’ might be (simplistically) summarised as the principle that the ISPs have to treat all data on the Internet equally. Customers pay ISPs for unrestricted access to all the data on the Internet. So ISPs should not be able to make agreements to favour one Internet service or the other.

Under net-neutrality principles, Airtel cannot allow the Indian Express to pay to have its webpage load faster than that of the Times of India. Nor can Vodafone charge data fees for videos watched on Hulu while foregoing data charges for YouTube users. Net-neutrality principles create a ‘firewall’ between the creators of Internet content and the middlemen, the ISPs. Customers remain the sole arbiter of which Internet website or service or app they want to access.

Why publishers are not entirely sure about a neutral Internet

Large Internet publishers like Google, Amazon, and Facebook are usually supportive of net-neutrality principles. They want to avoid having to pay ISPs to reach Internet users and they want to prevent their products from being blocked by an ISP, while the ISP offers a competing service of its own. Google’s struggles in launching Google Wallet even as telecom companies were working on their competing product, Softcard, illustrate this.

However net-neutrality is not always in the interest of established or deep-pocketed publishers. On the Internet, the kid in a garage can (in theory) compete with Google as long as he has a better algorithm, the last true meritocracy. However in a world without net-neutrality, Google could pay ISPs to make sure their pages load quicker through a dedicated line, leaving the garage genius’s algorithmic brilliance defenceless against Google’s cheque-book. Why would any Reliance user now try a new social network like Ello, for which they have to incur data charges to use, unlike Facebook, which is free to access on Reliance’s network?

If ISPs can make direct arrangements with publishers for favorable access, it creates a ‘pay to play’ system. In such a world, the successful Internet services will be the ones that pay the ISPs the most, not the ones that create the most customer value. ’Net-neutrality’ therefore, is central to keeping the Internet a level playing field.

What neutrality without the Internet?

In the developing world however, the primary challenge for Internet publishers is the fact that users are not connected to the Internet. Most of Africa seems to have Internet penetration rates of less than 10 per cent of the population. Less than 20 per cent of the Indian population is connected to the Internet.


The unconnected represent a veritable ocean of potential ad-clicks and e-commerce, giving Internet companies a powerful incentive to assist in getting the world online. This is especially true of Google and Facebook whose revenues on any given day are essentially a function of how many people are online to see ads. This is to some extent the motivation behind initiatives like or Android zero-rating. Amazon, Flipkart, Uber, India Today, and really any publisher whose profit-per-user is higher than the data costs, has an incentive to participate in programs like ‘zero-rating’, that subsidise a customer’s Internet use. In turn, guaranteed payments from publishers give TSPs and ISPs a strong incentive to build network capacity in underserved rural areas rather than run risk of their expansions going unused because subscriber incomes are too low to afford Internet services. So if Facebook wants to pay your Internet bill, why not let them?

Because, unless you believe that Internet publishers are altruists, Pandora is not going to pay for streaming Spotify, nor is Ola going to support the use of Uber. ‘Zero-rating’ will create Internet corners where only a subset of services are available. This means a fragmented Internet and a steep uphill slope for new Internet publishers. Any consumer benefit from ‘free’ data could also be short-lived. Over the long-term, publishers might pass the data costs back to consumers, either though more ads or higher usage fees for the Internet service.

But what is the point of a ‘neutral net’ if 80 per cent of the public cannot get online? Bing might be a terrible search engine, but it is still better than the offline alternative of the local library. An Internet restricted to publishers who can subsidise data costs might be better than no Internet at all.

Safety in nuance

Net-neutrality (like most public policy) does not need to be a ‘one size fits all’ policy. Countries like South Korea (or the US) where a high proportion of the population is connected can afford a strong net neutrality regime since access is not a constraint. Countries like India might want to prioritise investments in access over competitiveness and progressively adjust their net neutrality regulations over time as greater proportions of the population come online and can afford their own Internet access.

ethernet-cableNet-neutrality could also be rendered ‘moot’ in markets where there is a high level of competition between local ISPs or TSPs. If consumers have their choice of ISP, they will punish any attempts to restrict access to their favorite websites by switching providers. Unfortunately, the high fixed investments mean that there are very few markets have more than two or three viable ISPs.

All net-neutrality laws are not created equal. We can almost universally agree that ISPs should never be allowed to restrict consumer choice by blocking content. But ‘blanket-bans’ on any publisher-ISP relationship is not necessary. An example of compromise between access and competition might be to cap the amount of data that can be zero-rated, that is, say a company can at most subsidise 100 MB of data to ensure the subsidies mostly flow to those who could not afford the data otherwise. In the net-neutrality debate, it is the details that will make the difference between throttling or freeing the Internet.

Regulations that prevent differential pricing but are silent on whether ISPs can charge for direct connections and other types of preferential access would be worse than useless. Such a situation would allow preferential access to powerful publishers without even the benefit of subsidies to consumers as in zero-rating plans. One could argue that this is the situation the US finds itself in despite being considered a ‘net neutral’ country. Netflix already pays ISPs for direct access to their network. Google sends hard-disks with popular YouTube videos to ISPs so that they be cached and delivered faster than any other video service. Even the newly proposed FCC regulations are largely silent on the matter of ‘inter-connection’ fees, leaving open the prospect for ISPs to price discriminate by charging for ‘direct access’ to their networks. The specific implementation of net-neutrality matters.

iLaw_InternationalCoursesNet-neutrality questions have engendered passionate discussion across continents these past two years. The dimensions of the question are far more complex than a single article like this can encompass. For example, we have spoken little about inter-connection fees between ISPs, publishers becoming ISPs, or governments restricting content and these questions might be even more crucial to Internet openness than differential data pricing.

Given these complexities, applications of net-neutrality principles must be tailored to the context. Knee-jerk support, both for and against, is terrible public policy. The truth in public policy is that the right answers depend on calibrating any regulations to the needs of the given context and time.

(Shree is a wandering economist who has changed his address fourteen times in the last fourteen years. At one of those addresses, he worked for Google. He has few ideas except those opposite to who he is talking to.)

Human Rights Supreme Court of India

On Shreya Singhal: Section 66A is too broad, vague, and will chill free speech

GautamBhatia_SupremeCourtofIndiajpgIn the second half of December 2014, the Supreme Court began to hear a series of challenges to various provisions of the Information Technology Act of 2008 (“IT Act”). Hearings will commence again when the Court reopens in January after the winter break. The batch of petitions, clubbed under Shreya Singhal v. Union of India, impugn – inter alia – the constitutional validity of Section 66A of the IT Act.

Section 66A has attained a degree of notoriety in recent times, having been used to arrest people for posting (and liking) Facebook comments, for critical political speech, and so on. Section 66A is largely borrowed from the English Communications Act (the scope of which has been severely curtailed after allegations of abuse), and was originally intended to tackle spam and online harassment. It hardly bears repeating that its implementation has gone far beyond its objective. Beyond poor implementation, however, there is a strong case for the Court to hold at least part of Section 66A unconstitutional, on the ground that it violates the freedom of speech guarantee under Article 19(1)(a) of the Constitution.

Among other things, Section 66A criminalises the sending, by a computer resource or a communication device, any information that is “grossly offensive” or has a “menacing character” (S. 66A(a)), as well as the sending of “any electronic mail or electronic mail message for the purpose of causing annoyance or inconvenience.” The components of the offence, therefore, include online speech that is “grossly offensive”, “menacing”, or causes “annoyance” or “inconvenience”.

Legitimate restrictions permitted on the fundamental right in Article 19(1)(a)

The State’s authority to legitimately restrict speech can be sourced to Article 19(2) of the Constitution, which allows for the State to impose, by law, “reasonable restrictions on the freedom of speech in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.” S. 66A’s restrictions might be connected with three of these concepts: public order, decency or morality, and defamation.

In a series of cases, the Supreme Court has made it clear that the connection between “public order” and a free speech restriction ought to be proximate, like that of a “spark in a powder keg”, and not far-fetched or remote. Clearly, while certain forms of offensive or menacing speech might, at some point, lead to a public order disturbance, the connection is anything but proximate. Similarly, the “decency and morality” prong has been invoked to deal with cases of obscenity, where the offending work appeals solely to the prurient interest, as seen from the point of view of the reasonable, strong-minded person. And lastly, the ingredients of defamation are highly specific, and much narrower than causing offence or annoyance – they are limited to lowering the reputation of the plaintiff in society (subject to certain defences).

Over-breadth and disproportionate restrictions

IMediaLawst is therefore clear that certain terms of Section 66A suffer from the vice of “overbreadth”, that is, they authorise the restriction of expression that the government is entitled to prohibit, as well as that which it is not. In Chintaman Rao v. State of Madhya Pradesh, the Supreme Court, while striking down certain restrictions on agricultural labour under Article 19(1)(g) of the Constitution, held that “the law even to the extent that it could be said to authorize the imposition of restrictions in regard to agricultural labour cannot be held valid because the language employed is wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting the right. So long as the possibility of its being applied for purposes not sanctioned by the Constitution cannot be ruled out, it must be held to be wholly void.” In other words, as far as fundamental rights are concerned, over-breadth is constitutionally fatal to a statute. This conclusion is further buttressed by the fact that in State of Madras v. V.G. Row, the Supreme Court also held that a “reasonable restriction” under Articles 19(2) to (6) would have to satisfy the requirements of proportionality: “the nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.” Proportionality and over-breadth are closely linked: if a statute proscribes conduct that is much broader than what is permitted under Article 19(2), on the ground that there is some – tenuous – connection between the two, there is good reason to argue that the restriction is disproportionate.


In addition to over-breadth, the provisions of Section 66A suffer from an additional problem: that of vagueness. “Menacing”, “annoyance”, “inconvenience” and “grossly offensive” are all highly subjective, and open to numerous varying interpretations depending upon individual and diverse standpoints. Their scope and boundary are both large and ill defined. Consequently, they create a zone of uncertainty for Internet users. What kind of speech might land you in trouble? It is hard to tell.

Vagueness is constitutionally problematic. In Kartar Singh v. State of Punjab, the Supreme Court – citing American precedent – observed that “it is the basic principle of legal jurisprudence that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws offend several important values… laws should give the person of ordinary intelligence a reasonable opportunity to know what is prohibited, so that he may act accordingly. Vague laws may trap the innocent by not providing fair warning. Such a law impermissibly delegates basic policy matters to policemen and also judges for resolution on an ad hoc and subjective basis, with the attendant dangers of arbitrary and discriminatory application.” Thus, the twin problems of uncertainty and impermissible delegation to the executive, are inextricably connected with vague statutes.

Image is from Tyler Menezes’ photostream on Flickr. CC BY-SA 2.0.

Vague and over-broad statutes are especially problematic when it comes to free speech, because of the chilling effect that they cast upon speech. As the Court put it in Kartar Singh, “uncertain and undefined words deployed inevitably lead citizens to “steer far wider of the unlawful zone … than if the boundaries of the forbidden areas were clearly marked”.” When faced with uncertain, speech-restricting statutes, citizens are likely to self-censor, in order to ensure that they steer well clear of the prohibited line.

In the Shreya Singhal petitions, the Supreme Court will be faced with the choice of striking down Section 66A, or reading it down and (perhaps) issuing guidelines aimed at checking abuse. There is no doubt that the objectives of preventing scam and protecting Internet users against cyber-harassment and online bullying are important. But there are other parts of Section 66 that can be used to curtail such activities. If the Court is not minded to strike down Section 66A in its entirety, it ought to at least sever the words that have the greatest and most unbounded catchment area, and are most prone to abuse, and excise them from the statute.

(Gautam Bhatia blogs at Indian Constitutional Law and Philosophy.)