Karnataka HC: No Stay On Gig Workers Act, Orders Zomato, Swiggy, Zepto To Deposit Welfare Fee

The Karnataka High Court on Friday refused to stay the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, but directed food and ride-hailing aggregators including Zomato, Swiggy, Blinkit, and Zepto to deposit the welfare fee for the second quarter with the court registry, even as it examined whether the state law conflicts with the Centre's Code on Social Security, 2020.

Justice M. Nagaprasanna passed the interim order while hearing petitions filed by the Internet and Mobile Association of India (IAMAI) along with the major platform aggregators, challenging the constitutional validity of the state legislation on the ground that it encroaches upon a field already occupied by the central code.

At the outset, the court made clear it would not grant a blanket stay while the constitutional validity of the Act remained under challenge. It initially asked the companies to keep the first quarter's welfare fee in a separate account and share those details within a week. However, when the petitioners pressed that depositing funds directly would hit their profit and loss statements, the court revised its approach and instead ordered that the amount due for the second quarter be deposited with the registry itself within three weeks.

"The amount is not being demanded by the state as a charity. It is demanded in terms of promulgation of a legislation," the court observed, adding that the deposit was meant to "balance the interests of the petitioners, the State, and those persons who are likely to get those amounts or not."

The court fixed July 30 as the deadline for objections and posted the matter for further hearing on August 14, clarifying that no coercive action would be taken against the companies in the meantime. A request by senior advocate Dhyan Chinnappa, appearing for the petitioners, to allow an unconditional bank guarantee instead of an actual deposit, was turned down.

Under the state's February 2026 notification, aggregators must pay a welfare fee of one per cent per ride, capped at 50 paise, 75 paise, and Rs 1 for two, three, and four-wheeler deliveries respectively, with a similar one per cent levy, capped at 50 paise, on food and grocery deliveries.

During the hearing, the petitioners argued that the state Act mirrors provisions already covered under the Code on Social Security, making it directly repugnant under Article 254 of the Constitution. Additional Solicitor General Arvind Kamath, appearing for the Centre, supported this stand, submitting that the state law is a replica of the central code and cannot survive in the face of the Constitution.

Advocate General Shashi Kiran Shetty, representing the state, countered that there is no real conflict between the two laws, pointing out that similar legislations exist in Rajasthan, Bihar, and Telangana, and that the petitioners had themselves taken part in consultations before the Act was passed.

The court repeatedly probed whether harmonious construction of both laws was possible, remarking, "If the state has come up with some welfare measures that straightaway goes to them, then harmonious construction of statutes could be there... Don't these delivery boys deserve something like this?" It also observed that if the welfare fee never reaches the gig workers, it could reconsider its approach: "If it's not going to gig workers, I will stay the Act immediately."

Chinnappa maintained that while gig workers may eventually benefit, no scheme for disbursal exists yet, and that the fund, as structured, flows to the state government rather than directly to workers. The court, acknowledging this, said it would ensure the fee reaches the workers it is meant to protect.

Besides the repugnancy challenge, the petitioners have also sought quashing of notifications constituting the Gig Workers Welfare Board, the government order operationalising the welfare fee mechanism, and the notice directing platforms to set up Internal Dispute Resolution Committees under the Act.

Case Title: Internet and Mobile Association of India (IAMAI) & Ors. v. State of Karnataka & Ors

Date of Hearing: July 3, 2026

Bench: Justice M. Nagaprasanna