In this article, Azmat Motiwala who is currently pursuing Diploma in Entrepreneurship Administration and Business Law from NUJS, Kolkata, discusses how is a PIPE transaction different from an ordinary private equity transaction?

Introduction

It can be very challenging for small and mid-sized public companies to raise money sometimes as they do not have the same level of access to capital markets as compared to larger counterparts. Lack of exposure to institutional investors, a dearth of analyst coverage and low trading float are some of the hurdles they face. Investment banks too tend to focus on easy prey.  The capital markets have attempted to provide such companies with access to needed capital by creating an increasingly popular financing technique commonly known as a “PIPE” (Private Investment in Public Equity)

Meaning of PIPE

In a private investment in public equity (PIPE), a private investment firm, a mutual fund or another qualified investors purchases stock in a company at a discount to the current market value per share for the purpose of raising capital.

A traditional PIPE is one in which common or preferred stock is issued at a set price to raise capital for the issuer, whereas a structured PIPE issues common or preferred shares of convertible debt. Owing to the hard time small- to medium-sized public companies have accessing more traditional forms of equity financing and to the fewer regulatory issues, this financing technique is more efficient than secondary offerings.

Publicly traded companies could utilize a PIPE when securing funds for working capital, expansion or acquisitions. The business typically obtains funding within two to three weeks, rather than waiting several months or longer, as with a secondary stock offering.

An example of PIPE is the May 2014 Platform Specialty Products Corporation $300 million PIPE. An additional 15.8 million shares of common stock were issued at $19.00 per share. The proceeds were used for general company purposes.

Types of PIPE Transactions

In a standard PIPE agreement, investors purchase stock in a private placement. PIPE investors purchase stock below the market price for protection against the price going down.

In a traditional PIPE agreement there is a pre- determined price and investors purchase common stock or preferred stock that is convertible to common shares. If the business is merged with another or sold in the near future, investors may be able to receive dividends or other payoffs. Therefore, traditional PIPEs are typically priced at or near the stock’s market value.

With a structured PIPE, preferred stock or debt securities convertible to common stock are sold. If the securities contain a reset clause, new investors are shielded from downside risks, but existing stockholders are exposed to greater risk of dilution in share values. For this reason, a structured PIPE transaction may need stockholder approval.

Difference in PIPE transactions

The transaction expenses that are lower than the expenses that an issuer would incur in connection with a public offering. Also, the issuer will expand its base of accredited and institutional investors. For fixed price transactions, investors will have less incentive to hedge their commitment by shorting the issuer’s stock. the transaction is disclosed to the public only after definitive purchase commitments are received from investors. Investors receive only very stream lined offering materials or information, including publicly filed Exchange Act reports and a transaction can close and fund within seven to ten days of receiving definitive purchase commitments. This is beneficial for the investor as he receives a discount to the current market price (in order to compensate for the initial resale restrictions).

However, in such transactions, investors will require a discount to market on the purchase price (in order to compensate for the initial resale restrictions) and there will be a limit on the number of “blackout” periods for the issuer while the resale registration statement is effective.

Investors generally limit their diligence investigation to discussions with management and the company’s independent auditors. Traditional PIPE purchasers generally do not negotiate for themselves ongoing negative covenants or covenants relating to information rights or corporate governance.

The price is set through discussions between the placement agent and the issuer, just as it is during the course of an underwritten (firm commitment) offering. Typically, PIPEs are priced at a modest discount to the closing bid price for the stock to compensate for the temporary illiquidity of the purchased shares. Often, in variable/reset transactions, the price is set based on a formula that relates to the average closing price of the stock over several days preceding the pricing.

In a fixed price transaction, the purchaser bears the price risk during the period from execution of the purchase agreement until the closing. In a variable/reset price transaction, the price risk is shared between the investor and the issuer. Usually, the investor will negotiate some price protection for itself

In the past, placement agents would call investors and advise them of pending deals.

While this information was supposed to be confidential, it became increasingly clear that potential investors, or friends of potential investors, were trading on the basis of this information, typically by shorting the stock of the issuer in anticipation of a PIPE being priced at a discount to market.

The SEC in US is currently investigating these trading practices and the expectation is that significant enforcement actions will soon be forthcoming. However, to their credit, most reputable placement agents have determined to clean up their own practices by requiring potential investors to sign agreements acknowledging that they may receive this market information in the future and agreeing not to trade in the related securities once they are made aware of a potential deal.

As PIPEs transactions have proliferated, they have become a favoured investment of short-term arbitrage investors. These investors purchase PIPE securities, not based on the investment quality of the company, but rather on market mechanics, such as the ability to borrow shares to sell short to hedge their investments and the amount of float in the marketplace.

These investors typically purchase PIPE securities and immediately sell a similar number of shares short. By doing so, they are able to “lock-in” a profit on the transaction because of the difference between the market price of the stock and the discount offered to the PIPE investors. As soon as they are legally able to do so, they unwind their hedge, in effect using the shares purchased in the PIPE to offset their obligation to deliver the shares sold short.Having locked in their profit on the transaction, the investor then is free to hold the warrants for whatever upside potential there may be in the underlying stock.

While short-selling is an important technique in maintaining the integrity of the financial markets, in a PIPEs transaction, this type of unchecked short-selling can spell disaster for the issuer. Frequently, investors have sold shares short without having located the shares they are required to deliver in the sale. As a result, there can be huge downward pressure on the price of an issuer’s stock as the investor is allowed to carry a “failed” trade until it is able to complete settlement using, in effect, the shares purchased in the PIPE.

Ideally, a PIPEs issuer would like all of its securities to flow to buy-and-hold investors. These investors need the same level of liquidity because of investment restraints and valuation issues, but are not typically active traders in the securities they purchase.

In some cases, investors have held their shares for many years, becoming a part of a stable investment base and a ready source of future financing. Placement agents know from experience which investors are short-term arbitrageurs and which ones are longer-term investors. However, depending on the quality and reputation of the placement agent, it may not have access to the “best” investors, or the more desirable investors may shy away from a deal because of the participation of “bad” investors.

A reputable placement agent will try to build an order book that best suits the needs of a particular issuer. However, there are plenty of placement agents that are active in this market who would sell the PIPE to anyone in order to earn a fee. Here again, counsel experienced in the marketplace can be quite helpful in steering deals to good placement agents and advising issuers with respect to particular investors. PIPEs issuers also need to understand and abide by the “rules of the road” for PIPEs investments.

While some deals will of necessity require stockholder approval, an issuer who needs capital is not likely to want to submit a deal to its stockholders if a change in structure avoids the obligation to do so. Further, because a PIPE transaction is a private placement of securities under federal securities laws, it is important to preserve the exemption. How the PIPE is marketed and what prior financing activity the issuer has done may significantly impact the issuer’s ability to do a PIPE transaction. Finally, an issuer that is quoted on the Over the Counter.

Conclusion

PIPEs have become an increasingly popular mechanism for small and mid-sized public companies to raise needed capital especially in the US. If it is done correctly, a PIPE can offer tremendous advantages to an issuer and can be an efficient and cost-effective way to raise money. However, PIPEs do have risk and can be exploited at the issuer’s peril if not done properly.

In this article, Aradhya Vats who is currently pursuing Diploma in Entrepreneurship Administration and Business Law from NUJS, Kolkata, discusses how to raise funds for a business online?

What is crowdfunding?

The internet has some powerful tools through which you can spread your message. Be it a creative idea for a startup or a social cause. The social media and various fundraising websites help you pitch your cause to the world. A number of people might come forward to help you with funding if your cause resonates with their ideology.

Thus we come to the technique that works out very well when it comes to raising funds online- “crowdfunding”.

Crowdfunding refers to collecting small amounts of capital from a large number of people typically via social media and online fundraising platforms. The people are investors who might be friends, family or mostly complete strangers. There are a number of crowdfunding websites such as ketto, Gofundme, Indiegogo etc.

Crowdfunding is very different in its approach as compared to traditional forms of raising capital for your business. The conventional or traditional method requires you to prepare your business plan, do your market research and then pitch your ideas to a limited, wealthy group of investors and shop around for takers of your idea. This limits your audience tremendously. On the other hand, using crowdfunding, you are gaining a very wide audience base for your idea. The capital contributed by the individual people of a crowdfunding website might not be that huge, but your reach and scope is widened.

Given all the above advantages, how do you decide which crowdfunding platform to go for? Well, it depends on which one suits your needs. You design your online campaign accordingly to make sure you meet your requirements.

Steps to raise funds online

Have a clear goal in mind

Have a clear cut idea about what is it that you require funds for. It may be a social cause, an innovative product launch etc. but you will have to explain your idea to the crowd in each and every detail. The reason you chose the idea, what benefits it will serve if it transforms into reality, what is the expected time frame in which you will be able to implement your plan and so on and so forth.

Having said the above, you must also be clear that your goal is crowdfunding and not the traditional way of raising funds. Both of them have their own shortcomings and advantages. For example, the mentorship and advice you would get via traditional investors cannot be obtained through crowdfunding websites.

Have a well thought out price plan

It is better to assess that how much money you would require at each stage of your venture. And aim towards raising that amount of money. Any more would disturb your math and any less will have you struggling halfway through the implementation. There are some crowdfunding websites which insist that you keep a minimum donation cap. Sometimes they assist you in the same as well.

Otherwise, you can also try suggesting an amount to your audience.

You can also incentivize people into funding by promising takeaways to them. A small gift or token of thanks like a t-shirt or a key-ring would do. This works even better when you are asking donations for a social cause. In that case you may also try giving ‘impact-driven’ rewards. For example, baskets made by underprivileged children for whom you are running the fundraising campaign can be given to the people who make donations.

Choose a crowdfunding platform and a payment gateway:

There are a number of crowdfunding platforms available online. But each one has its own terms and conditions. Also, the platforms are famous for a specific niche. For example, Kickstarter is considered the best platform for creative and innovative product launches. Whereas Rockethub and Quirky are generally used for raising funds for websites, music albums, books and construction businesses. There will be some platforms that will help you build your campaign while others will not.

Some websites will charge you a percentage of the money you were able to raise, while others might charge a one-time fee. There are some websites which will not let you keep the money unless the amount is greater than the minimum you promised to raise from the campaign, while others may let you keep whatever money you raise.

Nonetheless, if you plan your campaign on a credible website, you might leverage the brand name of the platform and us it to give weight to your idea.

As far as payment gateways are concerned, paypal is considered the best mode of transfer. A paypal button can be added to your website or blog and can work very well for simple donation transfers. These days, new payment methods like paytm and mobikwik are also gaining ground and becoming popular among users.

A special note if you are raising money for a non-profit venture

Givlet or Causes are platforms that give funding to non-profit organizations and ideas. They do not charge a fee upon the money raised and hence one should keep this in mind while pitching a non-profit idea.

If you are a startup looking for funds, then approach startup-specific funding platforms like Crowdfunder. If your idea is creation of a mobile application then you must go check out “appbackr” which holds the niche when it comes to funding for startups that are app-based.

This goes back to where we starter from- choosing an idea-specific platform to gain maximum benefits.

Another point to be noted is that if you believe that social media is the best platform to market your idea then consider platforms like Givezooks, Qgive, StayClassy and Crowdriser. They will provide you with tools with the help of which you can propogate your idea on social media platforms in return for a small monthly fee.

Design your Fundraising campaign

In case you want to raise money for a non-profit venture or a charity then there are a number of strategies you can adopt to ensure that you reach your fundraising goals. Set a deadline for the completion of the project and publicize it. People get excited when they see the deadline approaching and this may drive them to give funds. Also make a group of supporters to strengthen your campaign. There will always be a group of people who would rally behind your cause. Hold them tight.

You can use Facebook, Google and Bing for marketing your cause using search engine optimization and similar techniques. You may design the content of your website in a way that it contains a lot of keywords. Hence your fundraising page or website pops up when users search for similar words. Make sure that you payment link is present everywhere, be it your blog or website.

Apart from social media marketing and search engine optimization, you can also use Email marketing, bulk messaging and other techniques. It would be better that you make some partners and collaborations to make this arduous journey a bit simpler.

If your campaign has to do with a product launch then the rule of thumb is to set up a niche- a specific target market of your product. You will have to provide your audience the complete tale starting from the idea to the stage of execution. Remember to carry out your work swiftly so that your investors or supporters do not lose interest in your project. You can also garner interest and attention of audience by advertising the product before its launch. This can be done by publishing blogs, websites, newsletter, magazines etc. Your backers or supporters can be kept engaged by creating a reward system too. You can design a reward system where your backers would get the product you are about to launch at a lower rate or with a special discount offer for lifetime. Such incentives should be kept in place to ensure that your backers have held their ground and not shifted their attention to any other product (or worse a competing one!).

The above simple steps can be followed if you wish raise money online for your idea.

Apart from crowdfunding, we also see innovative techniques coming up these days. For example, if you are a startup wishing to raise funds online, and would consider options apart from crowdfunding, then a platform like “Somolend” might interest you. This website helps you build you garner funds through a debt based system rather than a donation based one. This means that if you qualify for funding you get a loan to fund your startup.

All in all, you can feel assured that the online space offers you a wide variety of options to pitch or market your idea. Starting from crowdfunding to social media to debt-lending, there are a variety of methods and procedures to garner funds online. It all depends on you that how thoroughly you know your idea that you can choose the optimal method and platform for pitching it.

In this article, Aishwarya Abhijit who is currently pursuing Diploma in Entrepreneurship Administration and Business Law from NUJS, Kolkata, discusses how is minimum alternate tax applicable to foreign investors?

Concept of taxes and MAT

To comprehend tax it is comprehensively characterized into two sorts in particular: Direct Tax and Indirect Tax.

Direct tax in lay terms is a tax on income that you need to pay; it can’t be moved to others. At the end of the day, coordinate taxes are those taxes which are straightforwardly exacted on people, partnerships and associations and gathered by method for income tax comes back to be recorded every year. Some of its structures incorporate income tax, riches tax, minimum interchange tax and so on.

An Indirect Tax is gathered by a go-between, (for example, a retail location) from the individual who bears a definitive monetary weight of the tax, (for example, the client). Circuitous taxes incorporate deals tax, benefit tax, esteem included tax, item exchange tax and securities exchange tax among others. From now on, in this article, we will comprehend on such sort of Direct Tax that is Minimum Alternative Tax and its consistency in residential organizations. “Household Company” implies an Indian Company which in regard of its income subject to tax under the Act, has made recommended course of action for presentation and instalment of profits inside India as per the Section 194. At that point, an Indian Company will be announced as a domestic organization.

Keeping in mind the end goal to wind up noticeably a domestic organization, it is fundamental that the said other organization may have made the endorsed courses of action for assertion and instalments inside India of profits out of such income. Subsequently, tax paid by the organizations are not adequate as the greater part of the benefits were given to the shareholders, additionally indicating less profits for income bringing on to roll out improvements in the Act.

Requirement for Minimum Alternative Tax (MAT)

Before, an extensive number of organizations indicated book benefits on their benefit and misfortune account and in the meantime dispersed colossal profits. Be that as it may, these organizations didn’t pay any tax to the legislature as they detailed either nil or negative income under arrangements of the Income-Tax Act. These organizations were indicating book benefits and announcing profits to their shareholders yet were not paying any tax. These organizations are prominently known as ‘zero tax’ organizations.

The Indian Income-Tax Act permits countless from aggregate income. Other than exclusions, there are a few derivations allowed from the gross aggregate income. Promote, deterioration admissible under the Income-Tax Act is not the same as required under the Companies Act. The last gives a lower rate to be specific, the I-T Act which processes a higher rate of devaluation.

The consequence of such exceptions, findings, and different impetuses under the Income-Tax Act as liberal rates of deterioration is the development of zero tax organizations, which notwithstanding having high book benefit can diminish their taxable income to nil. So as to bring such organizations under the I-T net, Section 115JA was presented from the evaluation year 1997-98. Presently, all organizations having book benefits under the Companies Act might need to pay a minimum substitute tax at 18.5%.

Minimum Alternate Tax (MAT)

One such tax is the minimum interchange tax (MAT). By and large, an organization is at risk to pay tax on the income registered as per the arrangements of the Income-Tax Act, yet the benefit and misfortune record of the organization is set up according to arrangements of the Companies Act.

Sec. 115J controls the arrangements with respect to Minimum Alternative Tax. Up to the evaluation year 2001-02, these arrangements were secured by Section 115JA, expressing that if income of an organization (perhaps Indian or Foreign) under ordinary arrangements is lower than 30 percent of “book benefit” might be considered as aggregate income of the organization though Section 115JB discusses the appraisal year 2001-02 onwards which says that if tax obligation of an organization (possibly Indian or Foreign) under typical arrangement is lower than 18.5 percent of book benefit ought to be esteemed as tax risk.

Brief history of MAT in India

The Minimum Alternate Tax (MAT) was presented in Indian tax law in 1987, a long time before India’s 1991 financial changes and the start of foreign portfolio interest in its capital markets in 1993. Before 1987, the situation was that now and again it happened that a taxpayer, being an organization, produced income amid the year, yet by taking the benefit of different arrangements of Income-tax Law (like exclusions, derivations, deterioration, and so on.), it decreased its tax risk or did not pay any tax whatsoever.

The goal of presentation of MAT by the Lawmakers was that there were many organizations which were unveiling enormous benefit in the records as laid in the Annual General Meeting (AGM) before the shareholder’s yet in the meantime these organizations were likewise demonstrating nil benefits or benefits that were somewhat above nil for the income tax reason. Change between benefits according to the Companies Act and according to the Income Tax Act was because of numerous divergent recompense or forbiddance in both the Acts e.g. contrast in strategy and rate of deterioration gave in both Acts. To put a conclusion to the pattern of increment in the quantity of “zero tax organizations”, MAT was presented by the Finance Act, 1987 as per which corporate element needs to pay minimum tax with impact from the appraisal year 1988-89.

Later on, MAT was pulled back by the Finance Act, 1990 and after that reintroduced by Finance (No. 2) Act, 1996, w.e.f. 1-4-1999.

MAT imposition and role w.r.t. Foreign investors

The current unforeseen development around the demand of Minimum Alternate Tax (‘MAT’) on foreign investors speaks to an inquisitive case. In spite of the fact that very not quite the same as the highly advanced Vodafone case, it has drawn parallels with the case and has raised a concern amongst the foreign investor group, particularly after the new Government’s affirmation of tending to, as they had named, ‘tax fear based oppression’ issues. This article tries to compress the issue and the key takeaways from the point of view of Private Equity (‘PE’) investors, in a “FAQ” design.

MAT was presented two or three decades back to require tax on “zero tax” organizations that uncovered benefits in their books of records however detailed NIL or immaterial taxable income by profiting tax exceptions, conclusions, motivators. Extensively, the arrangements try to tax organizations at an effective rate of 20 percent on their “book benefits”, to be figured as per the applicable arrangements of the Companies Act, subject to specific modification. MAT paid (well beyond consistent tax payable) can be by and large carted forward for set-away against typical tax risk (far beyond MAT) for a long time.

Saving per users from the details at the start, a refinement should be made between foreign investors/organizations that have a nearness in India, (for example, foreign banks that have branches in India) and foreign investors who simply hold interests in India, (for example, PE reserves). This article talks about pertinence of MAT to the last mentioned, who are organized as organizations.

While the arrangements of the income-tax law are framed generally and could be extended to translate that MAT applies such foreign investors, there are sufficient and more contentions to recommend that MAT can’t be reached out to such foreign investors.

For just about two decades, the Income-tax specialists have by and large, leaving aside stray examples, never looked for burden of MAT on foreign investors. Given the likelihood of opposite perspectives, in certain propel decisions, candidates looked for perspectives from the Authority for Advance Ruling (“AAR”) on materialness of MAT to foreign investors. Shockingly, the AAR articulated opposite decisions. A negative managing on account of Castleton Investments[1]escalated the matter and is currently broadly depended upon by the Income-tax specialists to demand MAT.

Sees for exact of MAT have been to a great extent issued by the Income-tax specialists to FIIs that are domiciled in non-bargain purviews.

MAT, if appropriate, could have been applicable for foreign PE Funds with regards to taxability of the increases/income earned by them in India, withholding tax at the season of leave, obligation as a ‘delegate assessee’, examinations on repayments.

To apparently ease the anxieties of foreign investors given the notification issued by the Income-tax experts, Budget 2015 initially proposed to cut out certain capital additions earned by FIIs from the exact of MAT.

By suggestion, MAT could have been exacted on

1. other foreign investors and
2. other income earned by FIIs.

Since the correction has been proposed with impact from 1 April 2015 (and, tragically, not review)

Be that as it may, at the season of moving revisions to the Finance Bill, cut out from impose of MAT has been stretched out to all foreign organizations qua capital picks up on exchanges in securities, intrigue, sovereignty and expenses for specialized administrations where such income is credited to the benefit and misfortune account and, is chargeable to tax at a rate lower than the MAT rate. In this manner, for the most part talking, with impact from 1 April 2015, income of a foreign PE Fund by method for capital picks up discounted of securities or intrigue, chargeable to tax at a rate lower than MAT, should not be subjected to MAT. This ought to be independent of the locale in which the Fund is domiciled.

The Government has quickly responded to unfriendly responses from the foreign investor group. The Central Board of Direct Taxes has issued correspondence to the Income-tax experts entreating them to arrange off settlement cases of FIIs speedily (inside one month of such claim). Encourage, the Government has constituted an abnormal state Committee to determine the issue for past years. The Board has likewise issued a guideline coordinating the Income-tax experts not to make any coercive move for recuperation of requests and not to issue additionally sees unless such notification are getting time-banned.

To finish up, as the Government “strolls the discussion” on issues, for example, giving a stable and non-antagonistic tax administration, this will help with enhancing the speculation atmosphere.

In this article, Aditya Arora who is currently pursuing Diploma in Entrepreneurship Administration and Business Law from NUJS, Kolkata, discusses how to write the perfect investment proposal?

How to write the perfect investment proposal?

Investment Proposals are slightly less formal than a business plan wherein you can provide the details of your venture and the way you intend to utilise the investments provided by the investor in order to achieve the desired financial results. Therefore, it is imperative to draft the investment proposal while keeping in mind the concerns that the investor may have while investing his money in a new venture.

What is a Business Proposal?

• A business/Investment proposal is a well-drafted document presented to the investors for pitching in investments by outlining the concept of the business and how you plan to make money out of it.
• The point of difference between a business plan and an investment proposal is that the former consists of an offer of a product or a service whereas the latter is an investment proposal in the form of a formal statement comprising of business goals while emphasizing on return on investment.
• In an investment proposal, the main highlight of the document is the possible problems in the business along with the proposed solution relative to the business and industry.
• While drafting an investment proposal, the first and foremost concern of an investor will be the return on investment. The only assurance that they seek for is the money that they get in return of pitching in an investment, which can done by drafting a convincing proposal.

How to Begin Writing a Perfect Investment Proposal

In order to make a well-drafted investment proposal, it is very important to have a plan prior to carving out the actual investment proposal. A prior research is important along with sketching an outline, making spreadsheets and studying other business proposals.

According to the Forbes Magazine, it states that “significant amount of time need to be dedicated while drafting a coherent and persuasive proposal.” It further states that “you should plan to spend weeks, if not months, perfecting it.”[1]

Merely copying other proposals will not render any success with the investors as the investors seek for specific action plan and not the general business idea. This also means that the investor you plan to present your business proposal should be relevant to the nature of your business.

Getting Started with the Investment Proposal

The most important thing to keep in mind is to develop an understanding of your own business before pitching in the idea to the investors. Along with the basic understanding, what you also need to know is the market and the competitors. A thorough and careful research on the target industry along with a detailed plan of the proposal could solidify your foundation which builds the confidence in the investors. At the end of the day, a careful thought out summary of the investment proposal is the key to raise money. For every claim made by you to the investors, they would expect it to be backed with research.

At the end of the day, a careful thought out summary of the investment proposal is the key to raise money. For every claim made by you to the investors, they would expect it to be backed with research.

Last but not the least, it is important to develop an understanding of the nature of investment you seek to raise as there is a clear nexus between ‘what you want’ and ‘how you want.’ Developing a flawless plan while specifying the money already invested in he company and how much more is required to go the next level will represent the investment proposal adequately. After all, even if the business idea is weak but is backed by solid research and is well thought of, its likely to receive more interest than expected.

What to Include in a Business Proposal?

The essence of the investment proposal should be to return the money back to the investors through your business. The main area of concern for an investor is the revenue model of the business. If you could state loud and clear how they are going to make money back and how much, this will put you at an advantage.

Executive Summary of Your Business

Start with a brief profile of your business which should be around 2 to 5 pages long. This will be a summary of the entire proposal that covers all of the pressing concerns including “what is it? How will it make money? Where will it be located? What investment is required? What will the investments be used directly for? Who is running the business and why are they the best person for the job? What are the short and long term business objectives?”

Overview of the Company

This section is particularly relevant if you are seeking investments in your business which is already in operation. If it isn’t, you may give a brief snapshot of the structure of your company, including financial statistics, variety of products or services offered, and any important history of the business that may concern or may be of relevance to the investors.[2]

Products and Services

This facet of your business plan can gain attention from investors and impress the business’ purpose. Once you have expressed what your products and services are, it is important to discuss the critical information including

What is your current inventory / future proposed inventory? What are your production costs per item? What is the potential to lower these costs and what are the consequences of doing so? What is the retail price of your product or service and how did you come to this price? Is it relative to comparable products? Is it one of a kind?

A brief sales forecast that is realistically derived from past sales or market research for the next 3 to 5 years based on your current business plan can be provided. Who are your suppliers and what are their credit terms? Where are your suppliers located? Have you worked with different suppliers in the past? Use of Funds?[3]

As previously stated, describe how investors’ money will be used to jumpstart your business. Once the investors are taken into confidence, the next course of business can be taken from since they are the expert in the market. It doesn’t have to be a five-year plan for the business, but since you’re asking for some investments, its better to provide them details on how you will spend it. Investors will want to know and possibly weigh in on your plan for their money.

Other things to keep in Mind

Having been elaborated above the most important aspects of an investment proposal, it is also important to know “Professional investors, such as venture capitalists and serious angel investors, do not have long attention spans.”[4] Therefore, you always have to begin with the most important information and keep your proposal and presentation brief when including these factors suggested by investors and business people alike.

Detailed marketing plan tailored to your business based on research of competitors and industry

The company’s management and staff; why they are in the position they are in; what qualifies them for this position? Owners and shares of the proposed business equipment, facilities, and technology currently being used, as well as future additions that may need to be made[5]

Financial Forecast, Financial references, Investment Exit Strategy

Forbes contributors strongly emphasize the importance of your exit strategy. This is the bottom line of “how the investor will make money (aka “the exit”) from investing in your business proposal.” It comes on high recommendation that you prepare to answer the obvious questions investors will have at the end of your pitch including how their investment will be monetized, which may include licensing agreements and strategizing a sale of your company to another, larger company.[6]

Reference

[1] http://www.forbes.com/sites/allbusiness/2013/07/09/8-mistakes-entrepreneurs-make-when-pitching-to-investors/

[2] How to Write A Killer Business Proposal and Attract Investors, available at:https://www.paperlessproposal.com/how-to-write-a-killer-business-proposal-and-attract-investors/

[3] IbId

[4] http://www.forbes.com/sites/iese/2013/09/18/presenting-your-proposal-5-ways-to-convince-investors-to-back-your-idea/

[5] ibid

[6] http://articles.bplans.com/how-to-pitch-to-investors-in-10-minutes-and-get-funded/

In this article, Mansi Bathija of UPES Dehradun discusses can a CA sue his client for non-payment of fees.

Role of a Chartered Accountant

• A Chartered Accountant helps in making financial reports, which is contrasted and the contender’s reports and administration utilize their bookkeeping administrations to survey the productivity of their operations.
• As commanded by state and government likewise, business needs bookkeeping and detailing administrations. Finance experts are in huge demand with fast development in the economy and changing statutory necessity.
• Chartered Accountants (CA) have increased greater popularity over the period and are in persistent demand in Industry. Lately, accountancy has turned into a famous career option.

Chartered Accountancy as a profession

Chartered Accountancy is a dynamic, testing and compensating profession. Every country has its own particular Accountancy Association which manages the procedure and educational programs of the people in this field.

Chartered Accountancy Course is an expert course in Accounting presented in our nation in 1949, with the enactment of the Chartered Accountants Act. Also, as indicated by the Companies Act, just CA in proficient practice can be named as auditors of organizations in India.

Accountancy in business helps shareholders make better business resolutions by giving financial data. Its primary thought process is to supply accurate data to its managers. It associates the administrators, proprietors, and speculators with intense data so as to assess the organization’s financial introduction. Financial bookkeeping incorporates balance sheets, pay statements, and statements of cash flows.

The vital legislations which govern the chartered accountants in India are Chartered Accountants Act, 1949, The Company’s (Indian Accounting Standards) Rules, 2015,Section 92e of the income tax act,1961,44ab of the income tax act 1961 and Companies Act, 2013.

Duties of CA under the Companies Act

The auditor has the following duties under the Companies Act:

1. To make special inquiries and investigations in connection with the matters related to loans and advances made by the company, transactions which are not prejudicial to the interest of the company, sale of shares, debentures and other assets, personal expenses charged to revenue accounts, cash transactions and its statement in books. (Sec. 227 (IA)).
2. To make the report of the balance sheet and all the profit and loss account to the shareholders. (Section 227 (2, 3 & 4)).
3. Duty to state the reasons for the answers in negative.
4. Duty to include in the report the matters as directed by the Central government. Section 227 (4A)
5. Duty to sign the audit report before submitting to the secretary of the company. (Section 229).
6. Duty to certify the Statutory Report. (Section 165 (4)).
7. Duty to declare the solvency of the Directors, (Section 488 (2) (b)),
8. Duty to give a report on the Profit and Loss Account and the Balance Sheet enclosed with the Declaration of Solvency. (Section 488 (2) (b)).
9. Duty to assist the Investigators (Section 240 (v) (b)).
10. Duty to assist the Advocate General.

Last resort – take legal action.

This should be your last resort and it is important to make sure that the cost involved will not exceed the amount that you are owed. You should also be aware that if you decide to pursue this option your relationship with this client will most likely be over.

Ways to take a Legal Action against the client

Send a legal notice

The prime motive of notice is to settle the issue without moving toward the court or to illuminate the grievance outside the court. Notice is likewise can be said as the last warning to look into the issue according to the legal provision and if that course is defended to make, correct or settles the case out of Court.

A Notice of Past Due Payment is a correspondence to someone else educating them that they have a commitment to make a payment as payment has not been gotten and is currently past due.

Obviously, the initial step ought to be to hire a lawyer who might serve a legal notice on the defaulting party but it is not mandatory, an individual can issue a legal notice too.The most evident strategy for recovery of a debt through the legal procedure is to record a recovery suit under the Code of Civil Procedure, 1908.

Legal notice is mentioned under section 80 of CPC &  sec 138 of Negotiable Instrument Act. The notice should be addressed to the defaulting party and should contain the cause of issuing a legal notice. It must mention the past communication between the parties too. The most important thing to keep in mind is to send it via a RPAD.^[1]

File a summary suit

A Summary suit is planned to encourage the expedient transfer of cases. The motive that underlies the summary procedure is to make preparations for postponing strategies that are enjoyed by a defendant, who may have no genuine defence. To keep it simple, the essence of summary suits is that the defendant is not, as in a ordinary suit, consequently invested with the privilege to guard a suit.

The right to exercise his defence will be allowed to the defendant just if the court is persuaded with regards to the validness of his cases. The summary suit is an effective weapon in the hands of a court to demoralise negligible defences. Provisions identifying with summary suits are found in order 37, Rules 1 to 7 of the Code of civil procedure.

CAs working as partners in a CA firm can sue and be sued in the name of the firm under order 30 of the code of civil procedure.

Right to lien

Right to lien is defined in the section 171 of the indian contracts act. A right of lien is a right to retain possession of property belonging to someone else, pending payment of an outstanding debt. Although it was considered unethical earlier in the case of RD saxena v Balram prasad^[2], it was later confirmed by the section 240.4F of code of ethics of ICAI that in the case of non payment of fees, the CA can exercise his right to lien and refuse to pass on the information unless the dues are cleared.

4. For other fee disputes the parties can opt to take up arbitration services. The icas fee arbitration scheme has been set up by the board to reach out to this particular issue.

Is the customer always right?

• Customer satisfaction is a promoting term that measures how items or administrations provided by an organization meet or outperform a customer’s desire.
• Customer satisfaction is essential since it gives advertisers and entrepreneurs with a metric that they can use to oversee and enhance their organizations.
• The possibility that the customer is constantly right is the main reason the customer assumes they are constantly right. It appears to give customers the conviction that they can be as inconsiderate as they need and say anything they please and it doesn’t make a difference since they are the customer.
• They can gripe about anything and hope to be given discounts or new things, regardless of if the issue is caused by them in any case. It is a strange thought to trust they are constantly right.

Ways to deal with difficult clients.

Build up standard procedures

Ground principles will set desires. Have strategies for missed arrangements without sensible reason, non-instalment of retainer and treatment of staff. A breach of these strategies can be a reason for ending the relationship. Likewise, set up telephone and email expectations.

Understand the client’s inspiration

During the admission, notwithstanding soliciting what the client needs, discover why they need it.

Comprehend why they are troublesome

A client might be troublesome for various reasons. When you have a thought of what makes a client troublesome, you can make an arrangement to manage it.

Educate them

The way to managing most troublesome clients is teaching them. Set aside the opportunity to converse with them and clarify the procedure and requirements, regardless of the possibility that you need to do it over and again. Report consistently as this will enable the client to comprehend their document and lighten worries that nothing is being finished. Instructing a client will construct a positive relationship that keeps going all through the record.

How to deal with clients for nonpayment of fees?

When a client refuses or delays your payment you must not just start threatening them, rather a better way to deal with such clients is to start by reminding them by sending the copy of the invoice with a letter. If even then the client doesn’t do the required or doesn’t contact you, nudge harder, continue to contact them via phone calls, emails or letters.

If the client has an excuse such as financial problems offer them some discount or alternative payment methods such as instalments. Do not forget to follow up. If it still doesn’t work, try to adopt other methods such as threatening. A sudden threat of legal action can persuade your client to pay their debt.

Under what circumstances is a CA liable and he cannot sue.

New auditor is required to take NOC according to Clause 8 of Part 1 of Schedule 1 of Chartered Accountancy Act. This is on account of if the undisputed expenses of the past auditor are not paid to him then no auditor can acknowledge the review of the organization.

In the event that there is no such reason than the new auditor can acknowledge the review even without getting the NOC from the past auditor. Yet, care ought to be taken that the new auditor must speak with the past auditor by Registered Post and should have the receipt with him in light of the fact that rebelliousness of CA Act would come about into unfortunate behavior by the new auditor and even his degree can be at stake. In such a case if the client is being troublesome in the payment of fees to the new auditor, he cannot sue.

Professional negligence: In the case of a negligent performance of an auditor, and nonpayment of fees by the client, the auditor cannot sue the client. In the case of Commissioner of Income-tax v. GM Dandekar, it was held that in the case of a known mistake in the audit report, it is the duty of the auditor to resend the corrected report to the concerned person. In the case of breach of such duty, the auditor is held liable. Damages for negligence are mentioned under section 35 of the companies act,2013.

Criminal liability such as fraud, wrongful gain, wrongful loss are mentioned under the section 447 of the companies act,2013. These are the cases under which an accountant shall be prosecuted.

Contract of engagement between auditor and client

An auditor can be held liable if he held a duty towards his client and failed to perform that duty. This makes it a case of negligence. If a loss has been incurred by the client because of the accountant, then the liability would be determined on the basis of the contract of engagement or a service legal agreement between them.  The agreement contains clauses regarding confidentiality of the information of client, payment, resolution of disputes and jurisdiction, termination of the contract etc.

Prevention is better than cure

It is always better to enter into a contract before taking up a professional job with someone or before hiring a client. Since the contract contains all the necessary clauses it is easier to avoid disputes and if they arise, it is easier to resolve them. However, there are guidelines set up by the institute of chartered accountants of India for the purpose of regulation of its members.

Keep in mind

If the client is denying or not willing to sign the contract, take it as an alarm and avoid such clients. If your client is honest enough to not be troublesome regarding payment, he will be comfortable getting into a contract with you.

Before taking any legal action against the client, one must keep in mind the odds that contentions may be made by him. Maximum professionals who sue their client for payment of dues get blamed for malpractices or misconduct towards the client. Hence, before you sue your client, be prepared to present your case and stay firm on your claim.

Relationship

^[1] RPAD stands for Registered Post with Acknowledgement Due.It is written on any postal article, for which the sender wants a proof or acknowledgement of delivery to confirm that it has been received by the addressee or his representative.

^[2] AIR 2000 SC 3049

In this article, Rajeev Kumar discusses laws regulating Financial Technology in India.

Financial Technology

A Financial technology is a disruptive technology, which made the banking and financial service more accessible, faster, efficient, time effective and easily perform and competing with traditional market in banking and financial services. It is totally eco-based system. In short form, Financial Technology is known as Fin Tech.

Financial Technology has made the revolution in the 21^st century in banking and financial sector in the global market and totally wiping out the traditional system. It is a new era of banking institution.

Credit Card, Debit card B2B payment, NEFT etc are example of financial technology. It not only made the peoples life easy but also saves the time and transaction of money from one country to another country takes a few of second is the example of implication of Financial Technology. ATM and credit card really change the concept of traditional banking services and quickly overtake the manual old banking service system.

Mobile Banking in India

Due to rapid growth of mobile users and wide coverage of mobile network in India, mobile has extended the user-friendly service in mobile banking as recognized by RBI. As per the press release of RBI, RBI issued the first circular in 8th Oct 2008 for Mobile banking transactions in India – Operative Guidelines for Banks. Time to time RBI further issued the circulars containing guidelines to enhance the modality of transaction of money through mobile banking. Statutory Guidelines issued by Reserve Bank of India is under section 18 of Payment & Settlement Systems Act, 2007, (ACT 51 of 2007).

RBI has issued the regulatory and supervisory issue in mobile banking as mentioned below:-

• Banks which are physically present in India and having the valid license and core banking solutions are allowed to provide the mobile banking services.
• Services are restricted to domestic in Indian Rupee and customer who is holding the banks/debit/credit cards issued as per the extant Reserve Bank of India guidelines and such services are prohibited to cross country transfer inward and outward.
• Banks may also use the services of Business Correspondent appointed in compliance with RBI guidelines, for extending this facility to their customers.
• The guidelines issued by the Reserve Bank on ‘Risks and Controls in Computers and Telecommunications’ vide circular DBS.CO.ITC.BC.10/31.09.001/97-98 dated 4th February 1998 will apply mutatis mutandis to Mobile Banking.
• The guidelines issued by Reserve Bank on “Know Your Customer (KYC)”, “Anti Money Laundering (AML)” and “Combating the Financing of Terrorism (CFT)” from time to time would be applicable to mobile based banking services also.
• Banks shall file Suspicious Transaction Report (STR) to Financial Intelligence Unit – India (FIU-IND) for mobile banking transactions as in the case of normal banking transactions.

RBI further regulate the wallet system, which are categories in three category Closed wallets, Semi-closed wallets and open wallets.

• Under the closed wallet system, which is issued by a company, a customer can do purchasing of goods from the company. Jabong, Flipkart, Amazaon etc are the examples of the closed wallet system. They don’t require any type of permission from RBI.
• Under the Semi-closed wallets, itcan be used to purchase goods and services at clearly identified merchant locations which have a specific contract with the issuer to accept the payment instrument. NBFCs can issue semi-closed wallets which need to be authorized by the RBI. Paytm and Mobikwik are the example of this.
• Under the Open wallets, a customer can do purchasing of goods and services, including financial services at any card accepting merchant terminal points. It can be also used for withdrawal of cash money at ATM. Prior approval is to be taken by Banks for issuing the open wallets.

The RBI has made slab system of pre-paid payment instruments into three categories

1. A customer can transact the amount up to Rs. 10,000 by providing the minimum details. Total outstanding transaction amount at any time and total reloads value per month should not exceed Rs 10,000. These instrument can only be issued in electronic form.
2. From Rs. 10,001 to Rs. 50,000 – Official valid documents is required as per the rules 2(d) of the PML Rules, 2005. However It is non-reloadable in nature and (iii) From Rs. 50,000 to Rs. 1,00,000-Full KYC is needed and It is reloadable in nature. Total cumulative amount should not exceed Rs. 1,00,000 at any time.
3. From Rs. 50,000 to Rs. 1,00,000-Full KYC is needed and It is reloadable in nature. The total cumulative amount should not exceed Rs. 1,00,000 at any time.

Online Payments in India

The national Payments corporation of India (NPCI) is was set up in April 2009 with the guidance of Reserve Bank of India and Indian Bank Association and it was incorporated as a section 25 company act 1956(now section 8 of company act 2013) and is objective to operate for the benefits of all the members of banks and their customers.

It brought the all details payments in a platform across the India.  Board for regulations of and supervision of payments and settlement systems (BPSS), which set up by RBI had given in principle approval to issue authorization to NPCI for operating various retails payments system in the country and granted certificate of authorization for national financial switch (NFS). ATM network is the boon of National Payments Corporation of India which started plays role from October 18, 2009. National Payments Corporation of India acting as an umbrella organization for all retails payments. As per the report of NPCI, during the last five years, organization has grown multi times from 2 million a day to 20 million transactions now. From as single service of switching of inter bank ATM TRANSACTIONS, the range of services has grown in cheque clearing, immediate payments service(24x7x365), automated clearing house electronic benefits and domestic card Ru pay to provide an alternative to international card scheme. Today NPCI not only brought the transparency but also create the satisfaction and easy mode of transaction of money to the customer.

From as single service of switching of inter-bank ATM TRANSACTIONS, the range of services has grown in cheque clearing, immediate payments service(24x7x365), automated clearing house electronic benefits and domestic card Ru pay to provide an alternative to international card scheme. Today NPCI not only brought the transparency but also create the satisfaction and easy mode of transaction of money to the customer.

The aims of innovation and technology of RBI is to deliver the products and services to customer though the available channel partners at low cost, secure and faster way.

Banking and Financial sector is one of sector of business where heavy transaction and operation taking place. Fin Tech application not only make greater and efficient transaction over the traditional system but also make the convenient to the customer. Even a large volume can be transferred by small one. A customer can make number of small transaction in big volumes in lieu of single large transaction. It is self-learning technology and no training is required; a customer can themselves analyze the risk of transaction.

Seeing the demand of Financial Technology in global market, premium B-School SP Jain has been started the course of Financial Technology.

Globally Financial Technology has increased drastically and given the fruitful result.

As per last year study report of consulting company Accenture – In the first quarter of 2016, Global investment in financial technology (fintech) ventures was reached $5.3 billion that is a 67 percent growth over the same period last year.

Comparing with global markets, India is still far behind the developed country like Canada, USA etc in implementing the financial technology, however It is seen that in Jan-March 2017 quarter, paytm became the 3^rd largest online transaction.

No guidelines and regulations have been set up the government of India. However RBI has issued some circulars time to time in this regards.  As per the press release of RBI dated 14^th July 2016, RBI sets up Inter-regulatory Working Group on Fin Tech and Digital Banking to review and appropriately reorient the regulatory framework and respond to the dynamics of the rapidly evolving Fin Tech scenario.

The terms of reference of the Working Group will be:

1. To undertake a scoping exercise to gain a general understanding of the major Fin Tech innovations / developments, counterparties / entities, technology platforms involved and how markets and the financial sector in particular, are adopting new delivery channels, products and technologies.
2. To assess opportunities and risks arising for the financial system from digitisation and use of financial technology, and how these can be utilised for optimising financial product innovation and delivery to the benefit of users / customers and other stakeholders.
3. To assess the implications and challenges for the various financial sector functions such as intermediation, clearing, payments being taken up by non-financial entities.
4. To examine cross country practices in the matter, to study models of successful regulatory responses to disruption across the globe.
5. To chalk out appropriate regulatory response with a view to re-aligning / re-orienting regulatory guidelines and statutory provisions for enhancing Fin Tech / digital banking associated opportunities while simultaneously managing the evolving challenges and risk dimensions.
6. Any other matter relevant to the above issues.

As per KPMG Pulse of Fintech Report, In India, payments and lending remained priorities with an increased interest in Artificial Intelligence (AI). The country witnessed a spike in Venture Capital invested in the first quarter in 2017, with Paytm attracting Asia’s largest funding round of $200 million.

Neha Punater, Head of Fintech, KPMG in India said “While payments and lending continue to drive most fintech investment in India, other areas are quickly gaining momentum. Artificial Intelligence (AI) and blockchain are receiving a lot of attention, while insurtech is poised to come into its own over the next few quarters. The government expected to release regulations for fintech, particularly related to peer-to-peer lending, which could lead to additional activity.”

Financial Technology in India in one way, will provide the opportunity and another way will face challenges while regulating it. Indian government is required to take concrete steps while framing the regulations. Hence while architecting the regulations India need to involve stake holders, Financial Institution, regulatory body of developed country etc apart from the RBI.

Some of the regulatory challenges are needed to be review while framing the regulations of fin tech in India

• Peer to Peer loans-lending (P2P) – It is the new of method of debt financing money, which allows to people to borrow and lend money without the financial institution. It will be boon for MSME and individuals who find difficult to access the finance, dependent on friend and relative. Country like India where getting loan is one of the difficult tasks from bank only a few percentages of people is having the institutional credit.P2P lending connects borrowers to investors faster. However, country like India where Indian regulations allow to intervene judiciary where Under Section 3 of the act, courts are empowered to intervene in cases where they find the interest of a loan to be excessive or the terms of the loan to be unfair.
• Apart from the above some of the major challenges are data and consumer protection issues, value based cost reduction, risk of exacerbating financial volatility and cybercrime.

In this article, Syeda Muneera Ali of KIIT School of Law discusses what are smart contracts and how do they work.

What are smart contracts?

• Unlike most legal or semi-legal concepts, the idea of a ‘smart contract’ is a fairly modern and undefined one. However, one might choose to simplify the understanding of a smart contract as, ‘a form of digital contract, that is able enough to implement itself, without the help of a middleman’.
• Basically, a smart contract is in the form of a software, that stores the rules for the negotiations of a contract, checks the contract to automatically verify it, and then executes it, based on what was agreed upon. It, therefore, eliminates the reliance of the transacting parties on a subsequent third party. This leads to an easy and quick way of transacting.
• It is coded as a programme, rather than a conventional legal document. However, what makes a smart contract similar to a traditional legal contract, is that both of these are capable of defining stricter rules and the consequences of a non-performance or undesired deviations.
• Smart contracts use information as input, process it by using certain codes of conduct and regulation, and take necessary action, that may be required to procure a result.
• There is a common misconception that a smart contract is not a legal one, as it does not involve lawyers at any point. This, however, is a myth. As long as there is a right, a duty, an obligation and a remedy, it is a legal contract.
• A smart contract fulfils all the conditions of contract law, and is, therefore, undisputedly legal. It works efficiently with the combination of a blockchain and cryptocurrencies, that act as a major part of the smart contract.

What are blockchains and cryptocurrencies?

To understand the concept of smart contracts, one must first understand what blockchains and cryptocurrencies are.

• A blockchain is a digital database that publicly records all the transactions that take place. It forms a backbone for cryptocurrencies, as ensures transparency and authenticity, without the risk of malpractice, theft or illegality.
• A blockchain is basically managed by a peer-to-peer network, that collectively adhere to a protocol that validates new blocks.
• By virtue of their design, a blockchain is implicitly resistant to any modification of data. Once recorded, the data in any given block cannot be altered, without the alteration of all subsequent blocks and the collusion of the network.
• Functionally, a blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.”
• A cryptocurrency is a form of currency that uses cryptography as a way of securing its transactions and thereby validating it.
• One of the most popular cryptocurrency at the moment is Bitcoin. Bitcoin became the first decentralised cryptocurrency in 2009, and subsequently, there have been several other cryptocurrencies that have developed.
• Though Bitcoin is legal in countries like the United States of America, Canada, Japan, Germany, etc., some countries such as Bolivia, Ecuador, Bangladesh, Malaysia, etc., have chosen to ban the same.

A smart contract can function by virtue of a cryptocurrency or a blockchain. Therefore, a successful contract can be executed by the means of the two, and one without the other renders useless.

How does a smart contract work?

A smart contract provides for an extremely simple and quick way of going through transactions or contracts, that are interdependent. To explain in a simplified manner, suppose that there is a car whose ignition is automatically stopped from starting if the owner fails to pay the monthly instalment. Such a situation, where one instance of the contract is interdependent on the other, without the chance of any disruption, is the example of a smart contract. Here, the running of the car is directly dependent on the payment of the instalment. Therefore, this minimises the risk of a breach of contract or an intended malpractice.

• A smart contract functions as a computer code. There are computer programs that are written, in the form of an executable code, that follows the principle of ‘do this, if that happens’. To explain this further, let us look at the following example:

Steve promises to pay $10000/month as rent for Anastasia’s condo, which has a code generated lock system. Following a smart contract, Steve would be able to access Anastasia’s condo with a unique code that is generated on the first day of each month. So, he could only enter his home, if Anastasia has been paid. In this example, it may be seen that there is a co-dependent relationship. If even one part of the contract is unfulfilled, the other is too. So, if Steve fails to pay the rent, he cannot access his condo.

Are smart contracts better than Traditional contracts?

A smart contract differs from traditional contracts because of several reasons.

• To start with, a smart contract is easily understandable and guarantees that no part of the contract remains unfulfilled. It ensures authenticity and prevents frauds.
• In a traditional contract, there is always a risk that the person who is getting into the contract with you, may not keep his/her end of the deal.
• There is always a risk that there would be unfulfilled promises and the struggle of dragging the matter to court, followed by years of litigation and losses. A smart contract ensures that this would not be the case. This is primarily because a smart contract follows their own system of security, whereby there is almost never a chance of fraud or cheating.
• Due to the simple fact that there is nearly never a chance of there being mistakes in terms of computer codes, there is rarely a chance of mistake in a smart contract. It is generally complete and free of loopholes.
• A traditional contract, on the other hand, is manually executed and drafted by another human being. Being physically drafted, there is always a chance of error or ambiguity that may lead to diverse forms of interpretations, with a high chance of manipulation. There is always a chance that a traditional contract would have a loophole that may be eventually used as an advantage for one of the two parties.
• Moreover, smart contracts are self-regulated, whereas a traditional contract may be regulated in court. A dispute arising out of a traditional contract has a greater chance of taking a longer time to get resolved, in comparison to smart contracts. This is primarily because a smart contract has its own way of ensuring fulfilment of the contract, whereas a traditional contract relies on the morality and character of the parties.
• It is also a known fact that a smart contract is cost effective and does not cost a fortune. On the hand, a traditional contract is often excessively expensive, given the fact that it involves lawyers, who are more often than not, expensive. The lack of third party involvement in a case of smart contracts leads to it being a cost effective mechanism.
• A traditional contract is usually time taking and its execution, as well as its remedy,  may take time. On the other hand, a smart contract is one that ensures a speedy execution as well as a speedy remedy. One of the main reasons behind this is the fact that a smart contract is self-executive and therefore, the question of a time taking process is null and void.

What is the current scenario of smart contracts in India?

• The concept and idea of a cryptocurrency and a smart contract are still vague. This is because they do not have a legal status in India. There is no definite definition of cryptocurrencies in FEMA, RBI Act or Coinage Act. There is also a long-standing ambiguity as to how a cryptocurrency may be taxed, and who may tax it.
• The ambiguity in terms of taxation, is one of the reasons, as to why smart contracts are not completely recognised in India.
• Furthermore, considering the fact that a smart contract is self-regulated, and takes place on the internet, it also raises questions on the jurisdictions of courts.
• There is also a prevalent fact that traditional contracts often release certain people of liability. In the case of a smart contract that becomes difficult. It is therefore desired that a legal smart contract consists of coded as well as natural language.
• The RBI, in recent news, has issued several warnings, stating that it will not be responsible for frauds or other crimes with regard to cryptocurrencies. It further stated that those transacting via the same shall be responsible for their own risks. This leads to an increased scepticism within the minds of people, who choose to transact using the same.

Conclusion

In a country like India, it is difficult to accept a smart contract as people are more inclined towards the use of verbal language and personal promises. It becomes difficult to execute a contract that is completely devoid of such desires. It will still take a while for people to adjust to the idea that a verbatim relationship is not necessary for a contractual transaction. And, even though it is still a far-fetched reality for people to switch from traditional to smart contracts, we can hope for it to happen sometime in the near future. Undeniably so, it would lead to a greater chance of successful contract executions and lessen the load of the Judiciary.

References:

1. https://bitconnect.co/bitcoin-information/8/legality-of-bitcoin-cryptocurrency
2. https://blockchainrndhub.com/en/887Z4HHV
3. http://www.blockchaintechnologies.com/blockchain-smart-contracts#smart-contract-definition
4. http://searchcompliance.techtarget.com/definition/smart-contract
5. https://bitsonblocks.net/2016/02/01/a-gentle-introduction-to-smart-contracts/

In this article, Priya Venkatesan of Tamil Nadu National Law School discusses can sexting a co-worker lead to sexual harassment charges.

What is sexual harassment?

With the advent of newer technologies, internet and various social media platforms, sending a text message to someone is just a touch away. Various texting platforms provide a very convenient user interface and it makes texting easier. Something as useful and important as internet, brings many dangers too. In the era of getting to know people and finding love over the internet, sexual abuse over it has increased multi folds. Internet provides for a platform where one can be a virtual person and reveal his monsters without revealing his identity. With online dating being a very common phenomenon, sexting, becomes all the more common. Sexting is sending or receiving of sexually explicit or suggestive images, messages, or video via cellphones or the internet. Sexting without one’s consent, can be one way to sexually harass a person over internet. That is where laws for sexual harassment over internet is required.

Sexual harassment essentially is making unwanted sexual advancements towards a person. Sexual harassment has been prevalent for ages now. Even in Mahabharata, Draupadi was sexually harassed at the hands of Kauravas. Though sexual harassment has been prevalent for ages, the ways to harass a person has been changing ever since.  Internet has become a convenient tool for those who want to harass a person. Sexual harassment is defined under Section 2 (n) Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 as:

“sexual  harassment ” includes  anyone or more of the following unwelcome acts  or behaviour (whether directly or by implication) namely :-

1.  physical contact and advances; or

2. a demand or request for sexual favours; or

3. making sexually coloured  remarks; or

4. showing pornography; or

5. any other unwelcome physical, verbal or nonverbal conduct of sexual nature.

With more number of women going to work, more harassment cases over workplaces are seen. To keep this in check Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013  was enacted.

Charges under which one can be prosecuted.

There were different ways in which a co-worker sexually harassed another co-worker. The increment in sexual harassment at workplace demanded a law at place. The laws which can be applied to people who engage in sexual harassment via text messages would be

1. Section 354A Indian Penal Code (IPC)
2. Section 67A Information Technology Act 2000
3. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Under the IT Act, Section 67A specifically deals with transmission of material containing sexually explicit act. This section can be applied in cases where sexting takes place.

Sexting: Is it freedom of speech?

Article 19 (1) (a) provides for freedom of speech and expression so would it mean when I sext a co worker, I am exercising this right?

No. Freedom of speech and expression comes with a reasonable restriction provided by Article 19 (2) which curbs such freedom in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. Morality differs from person to person, but somethings can be universally considered immoral. Court in Ranjit Udeshi State of Maharashtra, considered Hicklin’s test to check decency and morality. The test says that to check whether the tendency of the matter charged as obscene is to deprave and corrupt those whose minds are open to such immoral influences and into whose hands a publication of this sort may fall. In fact in “Director General, Directorate General of Doordarshan v. Anand Patwardhan, 2006 (8) SCC 433, this Court noticed the law in the United States and said that a material may be regarded as obscene if the average person applying contemporary community standards would find that the subject matter taken as a whole appeals to the prurient interest and that taken as a whole it otherwise lacks serious literary artistic, political, educational or scientific value.”

Sexting therefore can clearly be considered immoral. Sexting would not be protected by Article 19 (1) (a).

Who can prosecute?

Sexting a co-worker without consent of one of the parties.

The problem arises when one co worker starts sexting the other co worker when the other co worker has not consented. If one worker starts bothering other co-worker by sexting, it would amount to making sexual advances to that person. Aggrieved women may face such harassment in connection to the work she does i.e. she may be threatened about her progress in her career. She may also be forced into sexting or she may just receive lewd pictures or videos without her consent. All of this would not only amount to a crime under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, but would also amount to a crime under the IT Act.  Section 67A of the IT Act is as follows:

67 A Punishment for publishing or transmitting of material containing sexually explicit act,etc. in electronic form (Inserted vide ITAA 2008)

Whoever published or transmits or causes to be published or transmitted in the electronic form any material which contains sexually explicit act or conduct shall be punished on first conviction with imprisonment of either description for a term which may extend to five years and with fine which may extend to ten lakh rupees and in the event of second or subsequent conviction with imprisonment of either description for a term which may extend to seven years and also with fine which may extend to ten lakh rupees.

Exception: This section and section 67 does not extend to any book, pamphlet, paper, writing, drawing, painting, representation or figure in electronic form-

(i) the publication of which is proved to be justified as being for the public good on the ground that such book, pamphlet, paper, writing, drawing, painting, representation or figure is in the interest of science,literature, art,or learning or other objects of general concern; or

(ii) which is kept or used bona fide for religious purposes.

Laws specifically dealing with sexual harassment by the way of sexting is yet to develop in India. The need for such a law has arisen only lately. This does not mean one can get no protection from such an act. A person may not have direct remedies, but nevertheless, it is ensured that some remedies are present in such a matter. Therefore, although there is no law per se protecting a person from unwanted sexting, if anyone is bothered by such an act, they can get remedy under the said sections of the said law. One may be booked for sexual harassment if one pursues to sext  another person at his workplace.

Third party intervention

An aggrieved women so defined under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (also called SHWA) may file a complaint for sexual harassment as defined under SHWA if she receives sexting without her consent. In her absence, due to incapacity (mental/physical) her legal heir may file a complaint under the same Act.

Exception: Sexting a co-worker with consent of both parties

Sexting a co-worker when both the parties consent though can be brought under the purview of Section 67 of IT Act, it may still not be punishable. This would be because one’s right to privacy cannot be breached and unless one complains, it would not amount to sexual harassment. Consensual acts are not prohibited by the laws Nevertheless, one needs to be careful. Two workers may engage into a romantic relationship and it will not amount to sexual harassment till both the parties consent to it. Though it is a very risky affair, charging one with sexual harassment case becomes difficult if it is with the consent of both the parties. The risk here would be one of the parties blackmailing the other of leaking the pictures or making the pictures viral over social media. This then would constitute a crime.

Conclusion

It can be concluded that sexting a person (coworker) can make you liable for sexual harassment if the other person does not consent to it. The laws are in place to check no such crime is committed. One must be careful in what they are engaging into in the internet. Knowing the laws and being on the legal side is always preferable so that no such charge is levied against you. To save yourself the trouble, you can take up a course designed by National University of Juridical Sciences or take up a course about all that you should know about sexual harassment laws.

The Internet can be a scary place. It should be used very carefully and one may avoid engaging in such acts.

In this article, Hardik Khatri discusses the reasons why India needs a robust Space Law.

Introduction

Space law can be described as the branch of law which regulates all the space-related activities in the country. The question of Space Law began to arise after the launch of the World’s first artificial satellite (Sputnik) in the year 1957 by The Soviet Union. In the beginning of 1957 all nations had started the talks on how will the activities of space be regulated and it was the Bilateral discussions held between The US and The then USSR now Russia which had taken this point in the United Nation for a debate and as a result of which the UN constituted a committee named as United Nations Committee on the Peaceful Uses of Outer Space (UNCOPUOS) as a result of which two Subcommittees were again created which was the Scientific and Technical Subcommittee and Legal Subcommittee.

The UNCOPUOS has been the primary institution which has regulated the talks on the international agreements on the outer space and the talks also resulted in the formulation of certain treaties which will be discussed at a later stage.

As far as India’s position in Space Law is concerned it is very disheartening to know that there are no laws in this particular field. India being such a promising nation has made it among the top nations which are the supergiants in space-related activities and among other things the big giants such as the US, Japan, Russia, are having their domestic space legislations but yet India has no legislation whatsoever.

The revolution in Space-related activities in India dates back to 1963 when the first ever rocket was launched by India and then in 1975 with the launch of its first ever scientific satellite in space named as Aryabhatta. Then in the year 1994 India finally achieved the Indigenous satellite launch capability with the launch of Polar Satellite Launch Vehicle (PSLV) India has now specially made PSLV and GSLV (Geosynchronous Satellite Launch Vehicle). The credit should be duly given to two scientists namely Homi Bhabha and Vikram Sarabhai for their diligence in the research and finally to make this dream come true for the Country.

With the success that the country has achieved be it the successful missions of Chandrayan or MOM (Mars Orbiter Mission), it is right to say that India has come at par with the likes of Russia, US, Japan etc. And the world also expects the same kind of response from India but sadly the country has no laws regarding the same. So in the further article why the Domestic Space Legislation is the need of the hour for the country will be discussed in a more precise way.

Space law Internationally

The United Nations Committee on the Peaceful Uses of Outer Space (UNCOPUOS) has further formulated certain treaties onto the outer space and has regularly tried to bring clarity in Space related activities these are:

• The Outer Space Treaty, 1967
• The Rescue Agreement, 1968
• The Liability Convention, 1972
• The Registration Convention, 1975
• The Moon Treaty, 1979

The main point to note here is that India has ratified four treaties out of the five treaties mentioned above and the remaining one treaty India has signed but not ratified. But still, after 40 years of the treaties being ratified no actions have been taken by the Parliament to ensure the enactment of domestic laws onto those treaties. So the question arises how are the space activities being governed in the countries which are answered in the next Topic.

How are the space activities currently regulated?

Currently, the Space related matters are governed by the supreme law of the land (Constitution of India) and by also certain policies such as the Satellite Communications Policy, 2000 and the revised Remote Data Sensing Policy, 2011. Meanwhile, certain articles of the constitution also help in governing the space-related matters:

• Article 51 of the Constitution says that The State is under an obligation to (a)promote international peace and security, (b) maintain just and honorable relations between nations, (c) respect for International Law and Treaty obligation and (d) to encourage settlement of the International dispute by way of Arbitration.
• Article 73 says that the executive power of the Union extends to (a) the matter relating to which Parliament has the Power to make laws, (b) to exercise of such rights, authority and jurisdiction as one exercisable by the Government of India by virtue of any treaty or agreement.
• The Satellite Communication Policy 2000 only talks about what the government wishes to do and what are the future prospects of how to launch vehicles and regulation of equipment Industry related to Space activities in India.

Geospatial Information Regulation Bill, 2016

Though it is clear that India has no domestic laws on Space but the country has taken baby steps towards formulating the Space Laws. This particular bill grants license to individuals who want to obtain Geospatial Information and no one can get the Geospatial information illegally and can only obtain it with the prior permission of the Government. For the sake of clarity “Geospatial Information” means any information obtained by way of satellites, air crafts, balloons, unmanned aerial vehicles, maps, terrestrial photos etc.

Though it has become clear how the space related activities are governed in the country it is pertinent to note that with the developments made in Space Field it is very much the need of the hour to draft a more precise, simplified legislation onto the space-related matters as there are several reasons assigned to the same as well so what are the glitches which are making India’s approach towards the Space activities look unorthodox and why India desperately needs a Space law has been discussed below.

Reasons why India needs a robust Space Law

The recent developments made in the Space field such as Chandrayan, Mars Orbiter Mission and that 104 Satellites launched in one go frames a very important question as to why a Superpower country like India is not having its own Domestic Space Law because a Country which is overtaking lot of Countries in this Field would have to face lot of challenges as well, discussed below are the challenges which are faced or which will be faced in future if no Space Legislation is framed in the upcoming days. Since a well-drafted Space law will put the Government at ease as hence a legislation is needed.

Space debris

Space Debris is nothing but a wasteful collection of man-made objects that are there in orbit above the Earth and the objects can be any satellites, Rocket Stage etc. However, the Government doesn’t seem to worry about it and the recent move of ISRO launching a record 104 satellites has been praised all over the world but heavily criticised by G. Madhavan Nair, Former Chairman of ISRO. Mr Madhavan even went on to say that this could heavily impact the functioning of other satellites as collisions with other satellites can take place which may result in Damages being paid by India. So the point of discussion then arises as to who is under the liability of leaving so much junk. But do we address such issues no we don’t, Recently only because of Space Debris an Indian Satellite which was retracting back to Earth fell on a Japanese Village and under the Convention on International Liability for DamagCauseded by Space Objects, 1972 India has an absolute liability to pay compensation for the damages caused but who decides how much to pay a well established guidelines but sadly India has no law regarding it.

Space tourism

Though still in its baby steps this point is something which is predicted as the Future where Virgin Galactic is charging $250,00 for a trip to Space to exceed 100km in altitude, on the other hand, a trip to Mars could cost $200,000 while traveling with SpaceX. Among these things India has found itself in a perplexing condition because there are no laws which regulate these new concept of Space Tourism and the country is known for its cost efficient techniques so now major companies such as Blue Origin, SpaceX are looking to invest in India thinking that it could bring down the cost of Space Tourism as India did with Mars Orbiter Mission. So the future is bright for the Indian space agency and it is necessary that we address issues like these by enacting a domestic Space Law.

Space mining

Space mining is the extraction of valuable minerals from the objects of Space such as asteroids, Moon, Planets etc. In future there is going to be a whole new industry of Space Mining and the USA has started towards achieving that goal by the enactment of their Space Law, the law also recognises private players mining in the space bodies so India should not lag behind and should do the same as in the upcoming years the space is going to be exploited for minerals such as gold, platinum, diamond etc. And it is necessary that India is also getting the benefits. Meanwhile, USA is doing mining openly by the US Commercial Space Launch Competitiveness Act of 2015 which says that if American individuals or companies found any material on an asteroid or the moon it is theirs to keep and they can do whatever they want with it with which clearly shows that they are exploiting the Space bodies.

Space war

Due to the developments in Space activities the elite nations are expoilting and oppress the other countries and this might well lead to a Space war between the Elite countries an example of the same is Russia which has jammed GPS reception in Ukraine; China hacking the US weather satellites, North Korea which has jammed signals over the demilitarized zone. This whole concept of Space War was just a science fiction a few decades back but scientists claim that we soon may see countries fighting for territories in Space and so India which has made a big jump by overtaking a lot of space giants nations needs to think how the satellites launched by India can stay safe in Space.

Space Insurance

These matters are still dealt with the domestic insurance law that the country has and this approach has proven nowhere to be effective, considering the high cost that the activities of space incur it is the need of the hour that a well framed Space Law be enacted which addresses such issues and ensures that those satellites which fail are insured as per the law.

Outsourcing the private sector

The space agency of the country ISRO has opened the gate and has given the permissions to the private sector to enter the space markets so that the burden on ISRO’s shoulders is reduced. A high-tech defense Supplier from Bengaluru Alpha Design Technologies has been chosen as the first private Industry to manufacture two satellites for ISRO, such outsourcing to the private sector will require a comprehensive licensing and registration protocol to be followed which can only be addressed by the space legislation. Also Increased private participation in Indian space activities would allow ISRO to concentrate on cutting edge areas and they can research on deep space probes.

Cost effective

Recent impacts made by India in the Space sector shows that India is totally a reliable country as a launching pad for satellites and the cost effective space programs that India offers have attracted other countries and MNCs. They have also entered into agreements with India for executing their Space Projects and launching of satellites. So the need is for a well framed domestic law on Space so that such agreements can be governed comfortably.

Conclusion

These are some issues because of which there is an urgency in the country for a Space legislation. Therefore, having a legislation which will be broadly cover all these contemporary issues and matters related to space is the main requirement. The legislation on Space should cover all aspects such as implementation of space programmes, and regulation on the safety of launch and space flight, the question of transit of foreign space objects through national airspace, questions of liability. Moreso, it should also cover Responsibility, protection of IPR, Dispute Resolution, Protection of Environment and Ecology and International Cooperation as well.

Currently, there are only 22 nations all over the world that are having their own space legislation and India being such an Super power should strive for a National Space law as that will really boost India’s space activities and  therefore, a robust Space legislation is crucial for the development of the country and the absence of the legislation will only delay India’s growth in future.

In this article, Sachin Vats of RGNUL discusses the laws punishing online abuse of homosexuals in India.

Smartphones, email, social networking, online dating, chat rooms, online gaming, facebook, twitter, etc. have become an integral part of human life. Many people spend a significant part of their day interacting with others in this online world. All these online services have widened the dimension of sharing information and views with people in the global world. But, sometimes these online interactions become abusive and harmful due to many reasons. The target of online abuse most of the time is either women or LGBT people. They have experienced abuses due to their sex, gender identity or sexual orientation.

Online Abuse

When the act of someone causes harm or distress to others in any way, it is known as abuse. Any type of abuse that happens on the web, whether through social networks, playing online games or using mobile phones.

• The online abuse are done in the form of cyberbullying, grooming, sexual abuse, sexual exploitation or emotional abuse. Gay, lesbian and bisexual people face discrimination and abuse online which includes acts like revenge porn, stalking, domestic violence, blackmail, outing without consent and incitement to violence.

Cyberbullying or cyber harassment is a form of bullying or harassment using electronic forms of contact. It includes posting rumours about a person, threats, sexual remarks, disclose victim’s personal information or hate speech. Internet Trolling is a common form of bullying over the internet in an online community. The people get emotionally harassed due to some extraneous posts or messages regarding their sexual orientation by the internet trolling.  

Is Homophobia a Hate Crime

Homosexuality has not been yet accepted worldwide and illegal in many countries. Even where it is legalised, LGBT people have to face discrimination in social life. Negative attitude and feelings towards homosexuality or people who are identified or perceived as being lesbian, gay, bisexual or transgender (LGBT) is termed as “Homophobia”.

Homosexuality acts are legal in almost all western countries and any type of violence against LGBT people is classified as “hate crime”. An irrational fear or hatred of homosexuality is prevalent in both the developing and developed world. Heterosexual Psychologist George Weinberg coined the term “Homophobia” in the late 1960.

• Hate Crime is a criminal offence which includes the crimes which are motivated by homophobia, biphobia and transphobia. Hate crimes can affect people who are identified or even perceived as lesbian, gay, bisexual or transgender (LGBT). The punishment awarded in case of hate crime is very severe in many of the countries.

Laws preventing online abuse of homosexuals in the USA

The Gay, Lesbian and Straight Education Network conducted a survey regarding abuse of the LGBT youth on the online platform. It has been found in the study that the LGBT youth have experienced high levels of bullying and harassment online at greater rate than the non-LGBT peers.

• The findings in the report states that nearly 42% of LGBT youth have been harassed or bullied online. This statistics is three times more than the non-LGBT youth. It has also been seen that around 27% of LGBT youth feel unsafe and fear online.

One in every four LGBT youth said that they had been bullied or harassed online in the past year because of their sexual orientation or gender identity. One in five people have experienced similar type of harassment via text messages. One-third of LGBT youth had been sexually harassed online, four times as many as their non-LGBT friends in the community. LGBT youth also spent more time online with an average of five hours online per day which is forty five minutes more than non-LGBT.

It has also been found in the study that the grades, self-esteem and mental health of those who had experienced cyberbullying suffered significantly, especially those who faced both in person and online bullying by the people. The rights for LGBT people in the United States of America have evolved over time and considered as one of the most advanced in the world in present time. The Federal Laws have provisions for severe punishment against any case of hate crime based on the sexual orientation or gender identity.

Laws preventing online abuse of Homosexuals in the UK

The legislations regarding the rights of the LGBT people in the United Kingdom has evolved dramatically over the passage time. Today, LGBT citizens have most of the same legal rights as non-LGBT citizens and the legislations provide one of the highest degrees of liberty in the world for its LGBT communities. Online abuse has become very common on the social media across the globe. Abusive and discriminatory remarks are being made against the LGBT people. The are lot of cases regarding criminal offences which are committed by abusive action on online platforms.

The sending of messages which are grossly offensive or of indecent, obscene or menacing character using any public electronic communication network such as twitter or facebook  is a serious criminal offence under the Communication Act, 2003. Disclosing someone’s private sexual images online or offline without the consent to create distress in his or her mind is a criminal offence under the Criminal Justice and Courts Act, 2015. This is commonly known as revenge-porn.

If someone discloses the information about the gender identity or history of someone’s gender then it is a criminal offence under the Gender Recognition Act, 2004. There are a number of other offences which the police can investigate including harassments, stalking and other abuses under the Protection of Harassment Act, 1997.

• According to a report of the UK police, it has been found that  roughly 1% of sexually oriented hate crime offences are proved in the Court. The UK police recorded 7,016 homophobic and transphobic hate crimes in the year 2015-16. It was around 6,409 cases last year so there has been rise in the number of hate crimes related sexual abuse.
• England and Wales held 68 successful transphobia trials and 1009 successful homophobia trials during the year 2015-16. Northern Ireland has solved 41 successful cases of LGBT hate crime trials. Scotland solved 1020 cases related with homophobic crimes and 30 cases related with transphobic crimes.

Situation of Homosexuals in India

Homosexuals are not legally recognised in India. Same sex marriage is not legal and they cannot obtain a civil partnership under Indian Law. Section 377 of the Indian Penal Code, 1860 makes sex with persons of the same gender a punishable offence. So, any abuse against them cannot be heard by the administration as they themself are not allowed to be homosexual.

The Supreme Court in Suresh Kumar Koushal V. Naz. Foundation took the decision to criminalise homosexuality according to section 377 of the Indian Penal Code,1860 which states about Unnatural Offences.

• The supporters of the homosexuality state the decision of the government as the violation of the various rights which has been provided to them under the Constitution such as,
  • Right to Equality.
  • Right to not to be Discriminated on the basis of Sex.
  • Right to Life.
  • Right to Liberty.

Justice KS Radhakrishnan of the Supreme Court of India recognised the third gender that is neither male or female. Now, it is a class entitled to reservation in education and jobs from 15th April, 2014. It was decided in the case of National Legal Services Authority vs. Union of India and Ors. The Rajya Sabha also passed Right of Transgender Bill, 2014 which provide them reservations in education, jobs. It also provides financial aid and social inclusion of the transgenders.

The Hon’ble Supreme Court is hearing the Curative Petition on this issue and accepted the oral submissions made against it. The Apex Court is acknowledging the changing aspects of the society as it is very rare to hear the oral submission even after stating the decision over it. The Curative petition made against section 377 of the IPC is actually the last resort for the petitioners to get any fruitful and positive outcome on this issue.

Conclusion

The level of abusing of the lesbian, gay, bisexual or transgender (LGBT) community is increasing in every part of the world. The Government of Nations who are not ready to recognise them legally should think that they are also the assets or resource if the nation. The strategies and regulations against the abuse of homosexuals must be made by the respective legislative bodies of the countries. The formation of a safe environment for the LGBT youth is the need of hour. The physical and emotional safety of the LGBT youth makes them feel supported and the role of the society becomes important here. These people are part of the society but their way of life different. So, the people are free to choose the lifestyle they want to follow but it should not cross the limitations set up by the laws and regulations.

Most of the countries have not given Civil Rights to the LGBT community and hence they cannot take any legal actions against the violations of their rights. The voices are rising from different parts of the world for the safety of LGBT people and some significant changes are expected in this area.

Sexual Harassment in any form should not be acceptable. The only way to combat it is through knowledge and awareness. Know more about sexual harassment by taking up a course here or you can also learn more about sexual harassment at workplace by taking up this course by National University of Juridical Sciences.

References

Statistical Data have been taken from “ www.glsen.org”.

http://www.stoponlineabuse.org.uk

www.theguardian.com › Society › Cyberbullying

The Indian Penal Code, 1860.