Introduction
The Karnataka High Court has refused to stay the operation of the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, while directing platform aggregators, including Zomato, Swiggy, Blinkit and Zepto, to deposit the second-quarter gig workers’ welfare fee with the Court Registry within three weeks.
The Court passed the interim order while hearing petitions challenging the constitutional validity of the State law, which mandates welfare contributions for platform-based gig workers.
Case Background
The petitions were filed by the Internet and Mobile Association of India (IAMAI) along with major platform aggregators. They challenged the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, arguing that it conflicts with the Code on Social Security, 2020 enacted by the Union Government.
The petitioners also sought to quash the notification constituting the Karnataka Platform-Based Gig Workers Welfare Board, the Government Order implementing the welfare fee mechanism, and the notification directing platforms to establish Internal Dispute Resolution Committees.
Under the State’s February 2026 notification, aggregators must contribute a welfare fee of 1% on every transaction, subject to prescribed caps. For ride-hailing services, the contribution is capped at ₹0.50 for two-wheelers, ₹0.75 for three-wheelers and ₹1 for four-wheelers. Food and grocery delivery services are also required to contribute up to ₹0.50 per delivery.
Petitioners’ Stand
The petitioners argued that the State legislation is unconstitutional because it occupies a field already covered by the Central Code on Social Security, 2020. They contended that the Central law comprehensively governs social security for gig workers, platform workers and workers in the unorganised sector, making the Karnataka Act repugnant under Article 254 of the Constitution.
They further submitted that depositing the welfare fee would adversely affect their profit and loss accounts. As an alternative, they requested permission to furnish an unconditional bank guarantee instead of depositing the amount with the Court.
The petitioners also argued that no welfare scheme has yet been framed for distributing the collected funds to gig workers, making the contribution merely a payment into a welfare fund rather than a direct benefit.
State’s Stand
The Karnataka Government opposed the petitions, arguing that there is no conflict between the State Act and the Central legislation. The State submitted that the petitioners had actively participated in consultations before the Act received the Governor’s assent and were aware of the proposed welfare measures.
The State also informed the Court that similar legislations exist in Rajasthan, Bihar and Telangana, where platform aggregators are complying with welfare contribution requirements.
The Advocate General argued that staying the law would prejudice gig workers who are intended to receive social security benefits through the welfare fund.
High Court’s Observations
The High Court observed that, at first glance, the challenge based on repugnancy appeared arguable because the Central Government had already legislated on social security. However, the Court questioned whether both laws could operate harmoniously if the State legislation provided additional welfare benefits to gig workers.
The Court remarked that if the State’s contribution directly benefited gig workers, harmonious construction between the Central and State laws could be possible.
During the hearing, the Court also questioned whether delivery workers, who often work in difficult weather conditions, should not receive additional welfare support despite platform companies charging customers service fees.
Interim Directions
Refusing to stay the operation of the Act, the Court directed all petitioners to deposit the welfare fee for the second quarter with the Court Registry within three weeks.
The Court rejected the request to substitute the deposit with a bank guarantee. It also directed the State to file its objections by July 30, 2026, and listed the matter for further hearing on July 31, 2026.
The Court further ordered that no coercive action should be taken against the petitioners while the matter remains pending, subject to compliance with the deposit direction.
Final Verdict
The Karnataka High Court declined to suspend the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025, at the interim stage. Instead, it directed Zomato, Swiggy, Blinkit, Zepto and other platform aggregators to deposit the second-quarter welfare fee with the Court Registry while the constitutional validity of the legislation is examined.
Case Title: Internet and Mobile Association of India (IAMAI) & Ors. v. State of Karnataka & Ors.
