Ola gets banned in Bengaluru for 6 months, cannot operate cabs, autos or bikes

Ola may have 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.

In a letter on March 18th, the Regional Transport Department issued a notice to ANI Technologies, Ola's parent company, asking it to suspend its app-based cab services in the city.

The two page letter states that the ride-hailing app has been illegally operating the bike-taxi services through alleged 'fake licences'. It also said that the transport department will be suspending the company's license for the next six months, thus in effect banning all its services. The department's notice also stated that the app-based services are against the Karnataka Motor Vehicles Act.

Also read: Ola confirms Rs 400 Cr funding for EV unit Ola Electric led by Tiger Global, Matrix Partners

Responding to this notice, Ola issued a company statement saying:

"Ola is a law-abiding company that has always worked with the Government to develop livelihoods, improve mobility, and enable a new technology industry. We are evaluating all options to find an amicable solution wherein hundreds of thousands of driver-partners in the state of Karnataka can continue to work and serve the mobility needs of our citizens.

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."

On Tuesday, Ola and Hyundai Motor Group announced a strategic partnership, where Hyundai and Kia Motor Corporation, both part of the same group, will make a combined investment of $300 million in the ride sharing platform.

Last month, it raised Rs 650 crore in funding from Sachin Bansal, Co-founder of Flipkart. In January, Sachin had invested Rs 150 crore in the company, and committed additional funding. The ride-hailing aggregator has already raised $74 million led by Steadview Capital as part of its larger $2 billion round.

Late last month, auto major Mahindra & Mahindra entered the ride-sharing business with its electric car hailing service Glyd. Media reports said the company flagged off its first batch of 10 e-Veritos in Mumbai recently. 

Also read: Exclusive: Sachin Bansal and Bhavish Aggarwal talk about the biggest domestic investment in a desi internet venture