Nov 16 2024 | theoutcastcollective
Introduction
The Karnataka High Court, in its recent judgement involving cab aggregator Ola, decided on September 30, 2024, addressed the scope of the Prevention of Sexual Harassment (POSH) Act’s applicability to platform-based companies. ANI Technologies Private Limited & Ms. X & Others (WA 1493/2024) has the potential to impact how platform companies handle sexual harassment complaints and their obligations towards user safety.
Background and Facts
On August 23, 2018, a female passenger in Bengaluru booked a ride at around 6:30 a.m. through the Ola platform, to her office place, a journey that she takes every day. However, this routine journey took a dark turn. During the ride, she was subjected to persistent staring by the driver. Later, she also discovered that the driver was watching pornographic material on his phone, positioning the phone for her visibility while engaging in masturbation while operating the vehicle. Feeling uncomfortable and unsafe, she made urgent requests to the driver to stop the cab, however, the driver refused her requests and insisted he would only drop her off at the destination.
Upon reaching her destination, the Petitioner immediately reported the incident to OLA. Despite initial assurances of investigation, OLA’s response was limited to “blacklisting” the driver and proposing counselling and training measures. Unsatisfied with this superficial resolution and frustrated by OLA’s attempts to persuade her to withdraw the complaint, the Petitioner escalated the matter by filing a formal police complaint at Cubbon Park Police Station, Bengaluru on August 25, 2018.
Later on, during the police investigation on September 7, 2018, the Petitioner positively identified the driver and provided her statement. OLA representatives stated that the driver in question was not their registered partner but it rather a case of “driver swapping.” Driver swapping refers to a practice where a registered Ola driver allows an unregistered person to use their account and drive their vehicle to pick up passengers. In this case, the driver who committed sexual harassment was not officially registered with Ola. Instead, he was using a registered driver’s account and vehicle without Ola’s knowledge or approval. Ola admitted this was not an isolated incident; they were aware that some registered drivers were letting unauthorized drivers use their accounts, leading to multiple sexual harassment cases.
OLA has put in place several remedial measures to tackle the threat of driver impersonation. Such as an intermittent identification check by the requesting drivers-subscribers to provide their selfies and providing enlarged photographs of the drivers-subscribers at the mobile application of OLA to ensure that a passenger can easily identify whether the original driver-subscriber has arrived in the taxi at the time of pick-up.
The Petitioner then pursued formal legal channels, serving OLA with a legal notice on September 21, 2018. The notice demanded two specific actions:
- proceedings against the driver under the POSH Act; and
- evidence of OLA’s compliance with the Karnataka on Demand Transportation Technology Aggregator Rules, 2016.
OLA’s response dated September 27, 2018, hinged on a jurisdictional defences, claiming inability to investigate as drivers were classified as independent contractors rather than employees. Furthermore, it highlighted the issue of driver swapping, as the driver who had committed the crime was not a driver registered with OLA.
The matter took a more complex turn when the Petitioner attempted to engage OLA’s Internal Complaints Committee (ICC) under Section 9 of the POSH Act on September 30, 2018. Her email complaint was unsuccessful due to company-imposed restrictions, with respect to independent contractors. Following this technical issue, she escalated the matter to OLA’s senior management, including the CEO and Director of Legal Affairs, on October 1, 2018, demanding immediate intervention.
The ICC’s response on October 9, 2018, revealed their consultation with external counsel regarding jurisdictional authority. This was followed by OLA’s definitive stance via email on October 11, 2018, where they doubled down on their position that drivers’ status as independent contractors placed them outside the ICC’s investigative purview under the POSH Act, refusing to initiate any formal inquiry into the incident.
Aggrieved by the same, the victim filed a writ of Mandamus in the Karnataka HC. Through this writ petition, she asked the court to compel OLA to fulfil its legal obligations and properly address her sexual harassment complaint.
Legal Arguments
Complainant’s Contentions
The complainant’s argument centered on establishing OLA’s platform as a “workplace” under Section 2(o) of the POSH Act, asserting that the company exercises control over working conditions and decides the rules of engagement and operational parameters. Regarding liability and responsibility, the complainant argued for vicarious liability of the platform for the driver’s actions, maintaining that the company’s duty extends beyond mere deactivation.
OLA’s Defense
OLA’s primary defense was with respect to challenging the jurisdiction by asserting that drivers are independent contractors, not employees, making the POSH Act inapplicable to their platform-based business model. They stated the absence of a traditional employer-employee relationship. Regarding responsibility limitations, Ola maintained that the platform merely facilitates service connection and cannot be held vicariously liable for an independent contractor’s actions. They argued that they already maintain adequate safety measures.
Single Judge Bench Order
The Karnataka High Court’s single judge bench delivered a ruling on September 30, 2024 that addressed several aspects of platform liability and workplace harassment. The judgement was structured around five key issues:
- Jurisdiction and Public Duty
The court established that both OLA and its Internal Complaints Committee (ICC) fall under the High Court’s writ jurisdiction under Article 226. Generally, High Courts primarily oversee government bodies through writ jurisdiction under Article 226 of the Constitution of India. However, this ruling extends that oversight to private entities like Ola when they perform public service functions. This was based on their public duty obligations arising from the Aggregator Rules, 2016, and the POSH Act.
- Employment Relationship Analysis
In an interpretation, the court understood through OLA’s contractual terminology of ‘driver-partner’ and ‘independent contractor.’ Despite OLA’s attempts to maintain distance through contractual language, the court found that there is control exercised by OLA over drivers’ operations, which effectively created an employer-employee relationship under the POSH Act. The court also noted OLA’s extensive control over service delivery, routing, and driver behavior.
- Platform Role Beyond Intermediary
The court rejected OLA’s claim of being merely an intermediary, noting that the vehicle involved belonged to OLA Fleet Technologies Private Limited, a subsidiary company. This ownership structure, combined with the extensive control mechanisms in the subscription agreement, led the court to conclude that OLA’s role extended beyond that of a simple intermediary.
- Statutory Violations
The court found serious breaches of statutory obligations by both OLA and its ICC. It criticized their ‘complete and intentional disregard’ for the seriousness of the situation and their failure to implement their own ‘zero tolerance policy.’ The court particularly condemned the ICC’s refusal to accept the complaint based merely on external counsel’s advice, finding this practice neither permissible nor contemplated under the POSH Act.
- Relief Granted
The court ordered substantial monetary compensation:
- Rs. 5,00,000 to be paid to the Petitioner by OLA and ICC for violating her fundamental rights
- Rs. 50,000 toward litigation expenses
- Rs. 1,00,000 to be paid by Karnataka State Transport Authority to the Karnataka Legal Service Authority
Additionally, the court noted OLA’s operation without a renewed license under the Aggregators Rules, 2016, and criticized the Karnataka State Transport Authority’s inaction in enforcing statutory obligations.
Significance and Implications
This landmark order effectively expanded the scope of the POSH Act to cover platform companies and established significant precedent for platform liability in cases of sexual harassment, emphasizing the need for robust safety mechanisms in the gig economy. Looking forward, the case highlights the need for specialized legislation that addresses the unique characteristics of the platform economy while ensuring user safety. It raises questions about balancing protection with innovation and the evolution of workplace safety in the digital age.
Current Status
The case remains pending before the Division Bench, with the stay order in effect, until the next hearing, with arguments yet to be heard. The judgement of this case could set a precedent for how similar incidents are handled across India’s growing platform economy.