The Karnataka High Court on Friday refused to stay the operation of the State's gig workers welfare law [Internet & Mobile Association of India v. State of Karnataka].

However, the Court granted Zomato, Swiggy and four other petitioners (aggregators who engage gig workers) interim protection from any coercive action under the said law, subject to them depositing a welfare contribution due under the new law.

The Court issued the direction after rejecting the petitioners' request to furnish a bank guarantee instead of depositing this contribution.

Justice M Nagaprasanna also rejected the submission that such a deposit would adversely affect the companies' financial statements.

"The amount is not being demanded by the State as a charity. It is demanded in terms of a promulgation of a legislation," the judge said.

The petitioners before the Court include Internet and Mobile Association of India (IAMAI), Eternal Ltd (Zomato), Zepto, Swiggy, Urban Company and Valmo Transportation.

The Court proceeded to order that the amount due for the second quarter of this year be deposited before the court within three weeks.

"In the light of the aforesaid direction and direction to deposit before the Court, no coercive steps will be taken against the petitioners till the next date," it said.

The Court opined that such an interim arrangement was necessary to balance the rights of the petitioners, the State and the gig workers who may ultimately become entitled to the welfare benefits.

The Court passed the interim order on petitions challenging the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Act, 2025.

The Court also directed the State government to file its statement of objections by July 30 and posted the matter for further hearing on August 14.

During the hearing, Justice Nagaprasanna also questioned the resistance shown by the aggregators over the payment of what he described as a nominal welfare contribution.

"I have passed this order. It's all right. You challenge it or whatever. I am seriously thinking, why are you fighting? Say for fifty paise?" the judge remarked.

"50 paise into (multiplied by) what is the question," replied Senior Advocate Dhyan Chinnappa, representing the petitioners.

Among other arguments, the petitioners contended that the State's gig welfare legislation introduces a parallel law that contradicts welfare legislation already put in place by the Central government.

Senior Advocates CK Nanda Kumar and Dhyan Chinnappa, appearing for the petitioners, today contended that the State's law is repugnant to the Code on Social Security, 2020 (CoSS), enacted by Parliament, and therefore falls foul of Article 254 of the Constitution.

They said that the Central code already comprehensively covers gig workers, platform workers and workers in the unorganised sector, and that virtually every provision of the State Act mirrors the Central legislation.

The petitioners further argued that although the State Act came into force on September 11, 2025, its implementation was not insisted upon immediately, during which period several representations were made requesting the State to reconsider the legislation.

They sought a stay on the Act or at least on all consequential notices and demands issued under it.

Additional Solicitor General Arvind Kamath also supported the petitioners' stance that the State law directly conflicts with the provisions of the Code on Social Security enacted by the Central government. He added that the State's law should not be implemented while its constitutional validity remains under challenge.

Representing the Karnataka government, Advocate General K Shashi Kiran Shetty strongly opposed the petition. He said that there is no inconsistency between the Central code and the State legislation.

He argued that the petitioners had actively participated in consultations before the enactment of the law, including discussions relating to the welfare contribution payable for each ride. Therefore, they could not now contend that the legislation is unconstitutional, he argued.

The Advocate General further submitted that similar welfare legislations have already been enacted by the States of Rajasthan, Bihar and Telangana. This assertion, however, was disputed by the petitioners, who stated they were unaware of any such implementation.

On the welfare contribution mechanism under the State law, the Advocate General added that aggregators are required to contribute ₹50 paise for every two-wheeler ride, ₹75 paise for every three-wheeler ride and ₹1 for every four-wheeler ride towards the welfare fund for gig workers.

He argued that staying the enforcement of such a welfare law would prejudice thousands of delivery partners and riders.

The Bench eventually ordered that the welfare contribution due from the aggregator platforms will have to be deposited before the Court.

During the hearing, the Court also observed that companies such as Zomato and Swiggy essentially operate digital platforms without owning the vehicles used for deliveries.

"For illustration, Zomato and Swiggy do not own anything except a building and an app. They don't own the vehicles; everything belongs to somebody else. You facilitate that. Where are you making money? So you're an aggregator. You are aggregating money?" the Court remarked.

Responding to the observation, Senior Advocate Dhyan Chinnappa referred to Amazon's early business model, submitting that aggregation platforms often incur losses for several years before becoming profitable.

"When Amazon started aggregation, for the first ten to fifteen years it did not make a single rupee. It lost money on every single order. That is the case with every aggregator until a certain point when they possibly can make money," he argued.

A team from Trilegal led by Partner Anuj Berry, and comprising Anusha Ramesh, Utkarsh Srivastava, Parimal Kashyap, and Nia Susan Chaly represented IAMAI, Zomato, Swiggy, Meesho, Zepto, and Urban Company.