UPDATE: Man arrested over bashing of Melbourne taxi driver

Police have arrested a 21-year-old Essendon man in relation to the robbery and assault of a Melbourne taxi driver last night.

The man was taken into police custody this morning and is assisting investigators with their enquiries.

Police believe a man and woman hailed the victim's taxi in York Street in South Melbourne around 11.30pm.

They were then driven to Fitzgerald Road in Essendon where they allegedly argued over who would pay the taxi fare.

The pair continued to argue as they walked away from the taxi without having paid the driver.

When the driver called out to the pair to pay the money they owed him for the journey, the man returned and seriously assaulted the driver.

The man punched the driver a number of times, ripped his turban from his head and pulled his head and beard.

He then dragged the victim to a nearby fence and pushed him over it head first, before kneeing the driver in the shoulder and repeatedly punching him.

The man then stole money from the driver's shirt pocket before the man and woman walked away on Fitzgerald Road.

The victim suffered a dislocated shoulder as well as swelling and bruising.

He was treated by paramedics at the scene of the incident.