The female passenger had fallen asleep while riding home only to wake up when the driver took her to a spot that was secluded and climbed into the back seat of the vehicle.
The driver had been detained previously for over 7 months on the suspicion of raping another passenger in 2011 in a situation that was similar, said law enforcement officials.
Uber, which gives users the ability to summon a taxi via an app on their smartphone or tablet, is based in the U.S.
It started operations last December in New Delhi. It has caught on at a very rapid pace amongst younger people living in the city, where finding affordable and safe transportation after it gets dark is quite difficult for women.
The police said that Uber failed to do a background check on the driver or to properly register his address. Uber allegedly did not register his vehicle as a cab or install a GPS in the vehicle, which commercial taxis are required to have.
A news release from the Transport Department in Delhi said the driver had an all India tourist permit that does not allow him to pick up local fares within Delhi and Uber therefore violated the 1988 Motor Vehicle Act, which regulates permits for taxis.
The Delhi government blacklisted Uber from any providing of transportation in the region of the capital in the future.
The driver’s permit was immediately suspended by Uber and the company pledged assistance to the police in investigating.
The COO of the company Travis Kalanick suggested the authorities in the capital bore some of the responsibility saying that Uber would work with them to establish clear checks on their drivers’ background, which is currently absent in the licensing programs for commercial transportation.
He added that Uber would attempt to use advance in technology to help make Delhi a city that was safer for women.