Nilekani-backed RailYatri booking app unlicensed: HC

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SME Times News Bureau | 19 Apr, 2019
The Delhi High Court has ruled the operations of RailYatri, a mobile application for train-travel bookings, is unauthorized. The application is backed by Nandan Nilekani, Omidyar Network, Helion Ventures, and other well-known angel investors, and it uses deep-analytics technology to make prediction regarding train bookings.

The travel app provides comprehensive information about trains, passenger amenities at stations, platforms and the speed of the train, in addition to personalized alerts.

Dismissing the writ petitions filed by Stelling Technologies, which owns and manages the mobile application, the court said: "on a deeper consideration of the methodology evolved by M/s Stelling, through its platform railyatri.in connecting the customer to the RSPs (Retail Service Providers) and booking tickets by collecting money in its wallet and earning revenue, is surely unauthorized."

The travel start-up is funded by some top angel investors, including Infosys co-founder and former chairman of UIDAI Nandan Nilekani. It had raised its first round of institutional funding in 2014, led by Blume Ventures, a US-based angel investor. In June 2015, the company announced a pre-series funding round led by Helion Venture Partners, along with Omidyar Network and existing investors Blume Ventures and Ujama. In 2016, Nilekani made an investment in RailYatri.

The Indian Railway Catering and Tourism Corporation (IRCTC) deactivated the access credentials of Retail Service Providers (RSP), or authorized agents to its site, who forged an association with the travel app. The IRCTC has empaneled scores of authorized agents and granted them access to its software for train bookings. Later, these RSPs associated themselves with RailYatri for train bookings.

Earlier IRCTC held monopoly on issuing railway e-tickets, but as demand grew, it floated various schemes for their sale. Under one scheme, IRCTC appointed several Principal Service Providers (PSPs) for booking railway tickets on its website. Each PSPs can engage several hundred agents as RSPs, and they are bound by rules mandated by IRCTC.

Nikhil Majithia, advocate for IRCTC, contended before the court that according to the IRCTC, the services by RailYatri were unauthorized, and the RSPs, by associating with it, had violated their contractual terms with IRCTC.

Stelling informed the court that that RailYatri was only an online platform, which acts as a facilitator between the customer and the RSP, the authorized agent of IRCTC. Stelling said that the ticket booking was done by the RSPs using their access credentials, and the site makes ticket booking easy and offers value-added services too, at a fee at the rate of 1.25% of the ticket fare.

Majithia pointed out that IRCTC is the only entity authorized by the Ministry of Railways to supply e-tickets, and that RSPs are delegated agents of the IRCTC, who cannot enter into further transactions with third party entities such as RailYatri.

"IRCTC received complaints from several customers about non-receipt of refund after cancellations of tickets booked through RailYatri. We carried out a probe, which revealed the unauthorized activities of RailYatri, and action was taken against the RSPs who were associated with the e-commerce portal," said Majithia rejecting RailYatri's claims in the court.

The court said: "The petitioner (M/s Stelling) is neither a PSP nor an RSP. It has no privity of contract with IRCTC. No money has been paid by M/s Stelling to IRCTC/PSP to be involved in the process of e-ticket booking or to be integrated in the network initiated/developed by the IRCTC, which according to this court is a prerequisite to be involved in any manner in the process of e-ticketing and for which integration fee and annual maintenance fee is required to be paid."

The Court noted IRCTC counsel's contention that if such activities are not controlled, huge amounts of public money would be susceptible to being siphoned/misappropriated. Majithia said that roughly 6.8 lakh e-tickets are booked through IRCTC's systems every day with the total amount in circulation being Rs 81.60 crore.

The court said Stelling can carry on its business only by fulfilling the IRCTC conditions.