Innovation happens by not accepting the norms

On April 4, the Hon’able Delhi High Court passed its judgement on RailYatri’s Agent-based Train Ticketing Marketplace by considering it as unauthorized and dismissed our petition. Ever since, I have received many requests to clarify RailYatri’s view. I felt that I should clarify more on a personal level – especially since many whom I have known for long and have been a big believer in RailYatri have asked my version. So here it is!

Before I get into the nitty-gritties, I must clarify upfront 2 important mis-reporting in media.

1. That the verdict was based on an IRCTC complaint. On the contrary, we (along with other IRCTC agents) were the ‘petitioners’, while IRCTC was the respondent. This is important because it reinforces that (a) we believed we were solving a genuine consumer problem, and (b) we always wanted to be on the right side of the law. We had approached the court to seek clarity about our business model.
2. The judgement was against the “Train Ticket Booking model” and not the RailYatri operations, which include multiple lines of business including Bus Ticketing, SmartBus fleet, Food-on-Train, Cabs and Hotels.

Now, coming back to my version. This starts with a simple acknowledgement. The court’s verdict went against us. We lost. Despite the disappointment (more on it below), we remain bound by the judgement. Before getting into the main issue of the case, allow me to describe our offering which caused such a friction that we had to go to the court.

As the readers of this post may already know – one important part of our business has been helping train travellers across India. We interact with millions of users every day and deal with significant data associated with train travel. In all this, one significant pain point of user-base which stood out was that these travellers did not have access to a trusted human agent network– which could help them traverse the complexity of confirmed train ticket booking. Point to remember here – every day about 1M train travellers across India go back home because their ticket does not get confirmed.

This is where we launched a service where the traveller could interact with an expert and get help in booking train tickets. For experts, we signed up significant number of authorized IRCTC agents (also called as Retail Service Providers - RSP) across country who were willing to talk and help information needy travellers for booking train tickets. We vetted these agents, legally bound them against any malpractices, trained them in several customer service aspects, and helped them with tech, telephony, payments, etc. Like any modern-day online Marketplace would do! In other words, we became a marketplace where we were simply connecting a traveller with an agent i.e. we became a lead generation mechanism. Like any Travel Agent, he/she would book the train ticket through their authorized agent ids and send it to the buyer

Important point to clarify here – the buyer would make payments to RailYatri’s escrow. The settlement of the amount between RailYatri and the Agent would happen only after proper train ticket is issued to the buyer. Similarly, in case of cancellations – the amount would be refunded to the user by RailYatri.

To be honest, when we launched this new way of booking train tickets, we were a bit sceptical ourselves. Why would an online user buy a ticket through an agent when other online train ticket booking options were available? In a way, it was also contrary to entire notion that entire commerce was going pure online. However, the use cases which seem to have attracted users to this format were as follows –

• Significant user-base were the travellers who saw a waitlist and wanted to talk with an expert to maximize their chances.
• Talking to agent and simply telling him/her the booking needs was less cumbersome for many rather than themselves doing the research and filling the forms.
• Getting personalized help which, these expert agents provided (choosing the train, getting the right discount, help with digital payments, understanding the rules and lingo etc.)
• Agent charging the meagre standard fee (Rs. 25 & Rs. 40 per ticket) as prescribed by IRCTC was almost unheard of in the offline world.
• We also learnt that human touch supersedes tech in several instances in life.

Within few months of the launch the service grew significantly, organically. The agents who were previously interacting with 8-10 customers in a day started handling nearly 300-400 requests from travellers across India. They themselves started hiring. Our sense is that nearly 200-250 jobs were created by these agents. We also started signing up agents who could talk in the regional dialect.

To make sure that there was no misuse of the system – like in any online marketplace – we only allowed users to pay through online methods. The system was also vetted through the guidelines provided by Ministry of Commerce for online Marketplaces.

Where did the friction start?

About a year after we started, we received a letter from IRCTC saying that we could not sell train tickets as we were not authorized by them. We were asked to turn off the train ticket service. Our belief – strongly driven by the guidelines provided by the Ministry of Commerce for Marketplaces – was that we were not the sellers. As the rules permits a Marketplace – we were simply an online intermediator between a buyer (traveller in this case) and a seller (RSP in this case). Very similar to Ola/Uber model!

Needless to say – both us and IRCTC did not agree with each other. We along with the RSPs who were related to us decided to go to the court to seek clarification. We believed that for a funded start-up like ours it was the right step to do.

Over the next 14 months - what happened in the court, what was argued, has been documented in the 98-page court judgement. Encourage all of you to go through that.

The final verdict went against our belief and understanding, based on marketplace policy guidelines. The Hon’ble Court wants us to work within the framework of IRCTC. We too want to work within the ambit of the law of the land.

Wider View: What does this Judgement imply?

As I mentioned earlier, while I accept the verdict, I also do have disagreement with the judgement because it left too many questions in my as well as people’s mind -

• The judgement gave us no guidance as to whether our business falls within the ambit of Marketplaces Guidelines as published by Ministry of Commerce. We believed that was the core of our hypothesis. We know that bus tickets, services, etc. can be sold that way – we never got the answer about train tickets.
• Does a lead generation platform need to have authorization from the end-product manufacturer?
• The Hon’ble Court considers RailYatri as a ‘seller’ since it took the payment from the buyer. With that logic can marketplaces or aggregators like Amazon/Flipkart/Zomato be considered as sellers? What is a marketplace then?
• If this is taken as a precedence, several questions loom large over a few dozen companies ranging from early stage start up to established giants. (Ex: A patient being mistreated by a doctor he found on a medical service aggregator platform) Several examples from everyday life such as the role of a passport agent does not equate to passport issuance fall flat on their face.
• Can’t SMB services like travel agents use modern day platforms like RailYatri, JustDial, Google, etc. to promote their services and attract customers?
• What happens if a customer gets duped via a Directory Listing platform like JD. There are several ‘payment done, service not rendered’ complaints listed. Here is an example, specifically dealing with a train ticket. I wouldn’t hold JD responsible for this at all but would love to know if someone thinks otherwise.
• The Hon’ble court also implied that since RailYatri is or was dealing with public money better checks are required. Don’t all the B2C companies deal with public money? Isn’t this presumption too broad and unwarranted? For what it’s worth, like any growing, private, direct-to-consumer company – we invested a lot in being answerable to our consumers. Refunds.railyatri.in – a dedicated portal to track the refunds in a detail, step by step way is just a manifestation of our commitment to maintaining transparency with our users.
• As pointed in the verdict, RailYatri may very well have undermined the role of some players in the eco-system but as long as it’s fitting within the legal framework, what good is a new business then if not for challenging the status quo. Think private courier companies vs India Post, Private Insurance Firms vs LIC etc.
• For the closing statement of verdict and I quote – “the present writ petitions are without any merit and the same are dismissed”, I still believe the case had enough merit to give some innovation and formulation ground to the judiciary but be that as it may…

I am hopeful though as new disruptive business models evolve, answers to many of my questions will come to the fore. In the meanwhile, however, I hope this post could address the many lingering questions which RailYatri’s friends and well-wishers had.

As for us at RailYatri – our focus to keep building out-of-the-box offerings for simplifying travel in India continues. Check out the unique RailYatri SmartBus, which we have recently launched across 8 cities to simplify inter-city travel demand. We will continue to innovate and keep building multi-modal intercity transportation network for BHARAT users.

Cheers to the spirit of building things new and useful!