MTP ACT-THE NEED TO AMEND

Abortion laws in India are contained in the Medical Termination of Pregnancy Act, 1971, and the provisions in relation to the procedure are governed by the Act. The Act has been widely requested to be amended owing to the changed medical and social circumstances, but the Amendment Act has been pending since 2014, while many aggrieved women have been forced to approach the courts to seek remedies that are not available in the written laws.

THE MEDICAL TERMINATION OF PREGNANCY ACT

The Act lays down situations where a pregnancy may be terminated, and the conditions to be met thereunder. Termination is permitted if the continuance of the pregnancy would involve a risk to the life of the pregnant woman or of grave injury physical or mental health; or if there is a substantial risk that if the child is born, it would suffer from such physical or mental abnormalities, but categorization of the level of medical judgment required is done on the basis of gestation period completed:

·         Up to 12 weeks – One Medical Practitioner

·         12-20 weeks – Atleast two Medical Practitioners

The anguish caused by a pregnancy arising from rape is regarded as a grave injury to the mental health; and similarly a pregnancy arising from the failure of protection or contraceptives in a married couple will be regarded as grave mental injury.

In case of minors or lunatics, the written consent of guardian is essential to terminate the pregnancy; but the specific requirements relating to the length of pregnancy do not apply where the Medical Practitioner has formed an opinion in good faith that the termination of such pregnancy is immediately necessary to save the life of the pregnant woman.

THE AMENDMENT BILL OF 2014

The Amendment Bill that has been pending for the past 3 years purports to introduce certain changes in the provisions of the Act:

·         To substitute “Registered Medical Practitioner” with “Registered Healthcare Provider’ in the long title of the Act.

·         The ambit is widened to include Homeopathic practitioners, Unani, Sidhha, and Ayurveda; or nurse or auxiliary nurse midwife who possesses an authorized registration under their respective category.

·         S.3 pertaining to the conditions to terminate pregnancy to be modified in favor of women and their will; up to 12 weeks of gestation, MTP may be conducted upon request of the woman.

·         MTP allowed upto 24 weeks instead of 20.

·         S.5A to be introduced, to protect privacy of the woman.

THE NEED OF THE HOUR

With the incidents of rape victims becoming pregnant, unwanted pregnancies and unprotected intercourse on the rise, it is expedient for the Govt to take up steps to ensure reproductive health of women. The data from the Sample Registration System (2001-03) under the Registrar General of India, unsafe abortions contribute to about 8% of the total abortions happening in the country. The reasons for this are multifold, with women attempting to gain some amount of autonomy in deciding whether or not they want the baby, and the law continuing with the shackles it has placed on the freedom to decide. Apart from affording women a rightful opportunity to decide on the same, the law also needs to consider rape victims and child sexual abuse victims, who may be left helpless after 20 weeks of pregnancy. The current scenario requires such aggrieved victims to approach the Courts of law to interpret the clauses in a wide manner so as to accommodate their anguish in the terms “grave injury to her physical and mental health”.

In May, the Rohtak Court had granted permission to a 10-year old child to terminate her 18-22 weeks old foetus; while a similar matter is currently under the consideration of the Supreme Court. 

Relevant Case Laws (INDIAN KANOON)

·         Mrs. X and Ors. v. Union of India and Ors.

·         Meera Santosh Pal v Union of India

COMPENSATION TO STATES UNDER GST

The implementation of GST as the sole indirect tax in place of the earlier multiple taxation legislations has reasonably raised a probability of States losing a part of their revenue from tax, in response to which the Centre has enacted the Compensation to States Act[i] along with the principal Acts of GST.[ii] Here we analyze the provisions relating to the said Act, to get a brief picture of how the scheme will be put to effect.

The Act intends to provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services tax. For the purposes of calculation and determination of the compensation amount, the Base year revenue of the State is calculated in accordance with the Act. The base year revenue for a State is the sum of the revenue collected by the State and the local bodies during the base year, on account of the taxes levied by the respective State or Union net of refunds with respect to the taxes subsumed into GST such as VAT, Sales tax, Purchase Tax, entry tax, octroi, local body tax, etc. The projected revenue for any year in a State is to be calculated by applying the projected growth rate over the base year revenue of that State, and the projected growth rate has been fixed at 14%.

Compensation under the Act is payable to any State during the transition period, and the calculation and release is to be done at the end of every two months, and an annual final calculation is made at the end of every financial year by the CAG. Any excess amount released to any State during a financial year will be adjusted against the compensation in the subsequent financial year.

The manner of calculation of the loss of revenue is also elaborated as:

·         The projected revenue that could have been earned by the State in absence of the goods and services tax till the end of the relevant two months period of the respective financial year shall be calculated on a pro-rata basis as a percentage of the total projected revenue for any financial year during the transition period[iii].

·         The actual revenue collected by a State till the end of relevant two months period in any financial year during the transition period will be the actual revenue from State tax collected by the State, net of refunds given by the State; the integrated goods and services tax apportioned to that State, as certified by the Principal Chief Controller of Accounts of the Central Board of Excise and Customs; and any collection of taxes levied by the said State, under the Acts specified in sub-section (4) of section 5, net of refund of such taxes[iv].

·         The provisional compensation payable to any State at the end of the relevant two months period in any financial year shall be the difference between the projected revenue till the end of the relevant period and the actual revenue collected by a State in the said period reduced by the provisional compensation paid to a State till the end of the previous two months period in the said financial year during the transition period[v].

In case no compensation is due to be released in any financial year, or any excess amount has been released to a State in the previous year, the State is bound to refund the same to the Centre. Every taxable person making a taxable supply of goods or services or both is bound the pay the Cess and furnish Returns to the Authorities as required. The Cess amounts collected under the Act is to be deposited into the Goods and Services Tax Compensation Fund, which is a part of the public account of India, and all the payments of compensations under s. 7 are to be made from this Fund.

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INDIAN KANOON

[i] THE GOODS AND SERVICES TAX (COMPENSATION TO STATES) ACT, 2017 NO. 15 OF 2017

[ii] CGST Act (No. 12 of 2017), IGST Act (No.13 of 2017), Union Territory Goods and Services Tax Act 2017 (No. 14 of 2017)

[iii] Supra 1, S. 7 (4), (a)

[iv] Ibid, (b)

[v] Ibid, (c) 

GOLAKNATH CASE JUDGMENT

The Supreme Court in Sankari Prasad[i] and Sajjan Singh[ii] had upheld the power of the State to amend the Constitution, including the provisions relating to Fundamental Rights, thus conferring wide powers on the Parliament. In the subsequent case of Golak Nath, the Supreme Court took a different stand and upheld the sanctity of Fundamental Rights above the power of State to amend the same.

Title of Case: I. C. Golaknath & Ors v State of Punjab & Anr

Citation: 1967 AIR 1643

Coram:

·         K. SUBBA RAO (CJ)

·         K.N.WANCHOO

·         M. HIDAYATULLAH

·         J.C.SHAH

·         S.M. SIKRI

·         R.S. BACHAWAT

·         V. RAMASWAMI

·         J.M. SHELAT

·         VISHISHTHA BHARGAVA

·         G.K. MITTER

·         C.A.VAIDYIALINGAM

Matter: Whether Fundamental Rights can be amended – power of Parliament to amend the Constitution

Brief Facts: The Punjab Security of Land Tenures Act (1953) and of the Mysore Land Reforms Act (1962) were challenged under Art 32 of the Constitution by the petitioners who were deprived of a few acres of their land under the impugned legislations. The 17^th Constitution (Amendment) Act was also challenged as unconstitutional, as it enabled the inclusion of the impugned Acts in the 9^th Schedule of the Constitution.

More than a mere battle on property and land, the friction between the Court and the Legislature began to become evident from here on ahead.

Court’s Decision: The Court held that Fundamental Rights cannot be abridged by the Parliament under the procedure given in Art.368. The Court also clarified that an Amendment to the Constitution is 'law' within the meaning of Art.  13(2) and is therefore subject to Part III of the Constitution.

Relevant Portions of the Judgment:

“….Fundamental rights are the primordial rights necessary for the development of human personality…”

“…The Constituent Assembly, it so minded, could certainly have conferred an express legislative power on Parliament to amend the Constitution by ordinary legislative process…”

“……The Constitution (Seventeenth Amendment) Act, 1964, inasmuch as it takes away or abridges fundamental rights was beyond 'the amending power of Parliament and void because of contravention of Art. 13(2)...”

Relevant Statutes (Indian Kanoon)

·         Constitution of India

·         17^th Constitution (Amendment) Act

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[i] 1951 AIR  458 (Refer previous Post for detailed account)

[ii] 1964 AIR  464

SHANKARI PRASAD CASE JUDGMENT

Fundamental rights have always been regarded with great sanctity in the scheme of the Indian Constitution, and the same have been analyzed and expanded on various occasions to include more supplementary rights within its purview to widen its ambit. The Supreme Court is currently considering whether the right to Privacy falls under Right to Life, in the case related to Aadhaar Cards being considered by a 9-Judge Bench. In the light of the impending situation, we proceed to examine the series of Judgments in which the amendability of Fundamental Rights was considered by the Supreme Court, beginning with the Shankari Prasad Case. 

Title: Sankari Prasad Singh Deo v Union Of India and Anr. 

Coram:

• M. PATANJALI SASTRI

• HIRALAL  KANIA  (CJ)

• B.K. MUKHERJEA

• SUDHI RANJAN DAS

• N. CHANDRASEKHARA AIYAR

Citation: 1951 AIR 458

Matter: Power of Parliament to Amend Constitution

Facts in Brief: In order to abolish the Zamindari system widely prevalent in India, some State Govts enacted the Zamindari Abolition Act to acquire huge holding of land that lay with rich zamindars, and redistribute them among the tenants. But the same was challenged as being unconstitutional and violative of the Right to Property that was included in the Fundamental Rights. The Act was held unconstitutional by the HC of Patna but was upheld by the HCs of Allahabad and Nagpur; whereby eventually the matter was put before the Supreme Court. In the midst of this, the Union Govt brought forward the First Amendment to the Constitution, validating the Zamindari Abolition laws and limiting the Fundamental Right to Property. New Articles 31 A and B were included in the Constitution to validate the impugned measures. The Zamindars challenged the first Amendment in the Supreme Court, stating that it was unconstitutional and invalid. 

Decision of the Court: It was held that the power of the Parliament to amend the Constitution including the Fundamental Rights is entailed in Art 368 and is not violative of the provisions of the Constitution. The validity of the land reforms was upheld by the Court; as they do not curtail the powers of the High Court under Art. 226 to issue writs for enforcement of any of the rights conferred by Part III or of the Supreme Court under Arts. 132 and 136 to entertain appeals from orders issuing or refusing such writs. Articles 31A and 31B are were held not invalid on the ground of ultra vires; the Court declared that though the subject of ‘Land’ came under the State List, the power to enact amendments of the Constitution lay solely with the Parliament.

Relevant Portions of the Judgment:

“… to make a law which contravenes the Constitution constitutionally valid is a matter of constitutional amendment, and as such it falls within the exclusive power of Parliament..”

“…these articles [31 A and B] do not either in terms or in effect seek to make any change in Article 226 or in articles 132 and 136.”

“…We find it difficult in the absence of a clear indication to the contrary; to suppose that they [Constitution framers] also intended to make those rights [Fundamental Rights] immune from constitutional amendment…”

“……“law" must be taken to mean rules or regulations made in exercise of ordinary legislative power and not amendments to the Constitution made in exercise of constituent power, with the result that article 13(2) does not affect amendments made under Article 368….”

Relevant Statutes (Indian Kanoon):

• Constitution of India

• Constitution (First Amendment) Act, 1951

TERM SHEETS FOR START UPS

India has in the past one decade seen more start-ups than it did in the two-three decades prior to that, owing to the more liberal stance taken by the authorities, encouraging Govt policies, availability of funds, people’s willingness to invest in new ventures, but most importantly the passion held up by the youth to create something on their own instead of settling down in conventional job-posts. While it is great to be driven by dreams and propelled by hard work, a difficult task faced by all start-ups is obtaining sufficient funds to kick-start the venture and then get the boat to sail smooth. There are various funding sources through which start-up ventures could source investments, and the compliance requirement for each is different. In this post we discuss about Term Sheets that are required to be drafted and presented before the prospective investors to get them to trust your venture with their money. It must put forth a clear outline of the investment sought, the stake offered and the investment rights that may be made available to the angel investors.

The Term Sheet is an agreement that reflects the interests of both the parties (investor and the investee) in respect of the business and the concerns that either party has; it represents the basic relationship between the investor and the company. While framing the term Sheet, conditions and terms preferred by either party is to be negotiated and the two will have to settle at a point where the benefits and liabilities are mutually agreeable to both. Some typical items to be included in term Sheet are listed below:

·         Company Information: About the company, its promoters, business, etc. Vital information in relation to the company must be furnished to the investors to help them make an informed decision.

·         Valuation of Company: The Company may be valued pre-money or post-money, and this plays a major role in calculating the investor’s stake in the equity of the company.

·         Conditions placed on the Business: The investor may impose certain conditions on the business to be able to receive the funding, and the promoters must attempt to negotiate it to demarcate some terms as conditions subsequent to the infusion of funds into their business.

·         Types of Shares Offered: The investor might prefer to know the kind of shares that he will be receiving in return for the investment that he is making, such as whether he will have voting rights in respect of the same.  

·         Investors’ Rights:  The investor may seek to exercise some reasonable control on the company’s functioning, owing to the fact that they have put their valuable money into it. Some rights and modes of control that companies seek to possess over their investee are Participation Rights, Registration Rights, Board Representation, Information Rights, Voting Rights, etc.

·         Anti-Dilution Protection and Affirmative Rights: Anti-Dilution protection would mean that the business cannot offer its securities to any new investor at a rate lower than the price paid by the previous set of investors. An Affirmative Right is where it is agreed that decisions pertaining to matters affecting investors’ rights as shareholders or varying the valuation of shares would require prior written consent of the investors.

·         Governing Laws and Dispute Resolution Clauses (Indian Kanoon): The law that is purported to regulate the dispute resolution process or set out the arbitration agreement between the parties, decide on the clauses to be incorporated therein, and the applicable laws.

·         Time-Limitation and Exclusivity: The parties may agree upon a time period for which the agreement is valid, and the same may be subject to extension if both parties think fit to do so. Also, an Exclusivity provision prohibits the business from approaching any other investor during the time of subsistence of the Term Sheet.

In India, Start-Ups receiving funds from angel investors are mandated to abide by the Rules and regulations put in place by the Authorities such as SEBI (Alternative Investment Fund) Regulations. To receive angel investment, the Start-Up must be within 3years of incorporation, not listed on any Stock Exchange, and with a turnover less than 250 Million.

Sample Term Sheet

Presumptions:

·         Company: Start-Up

·         Requirement: Series A Financing

·         From: Angel Investor

Note: This is only a sample meant as informative content, and must not be used as a template to create a legally binding document. To draft a Term Sheet for your Company, get in touch with us at our Website Legal Resolved, where experienced and efficient corporate lawyers will assist you to draft a formal and fool-proof Term Sheet.

Sample Term Sheet

The following document intends to lay down the principal terms with respect to the proposed Series A Investment by __________ [Corp.] in the business venture by the name of _________ [Inc.], and does not constitute a legally binding contract to invest. This document is only a written proposal of investment spelling out the basic requirements of the financing that the former may provide to the latter, if it deems fit to do so, and does not amount to a legally binding undertaking to make the investment. In case the investment shall take place after due negotiations and correspondence between the parties, the terms and conditions hereinafter expressly stated as ‘binding’ shall come into effect from that point on.

Company:                                                                 [ABC] [Corp], incorporated under the laws of [country, law under which incorporated, etc.]

Type of Security:                                                    [Equity, other security, etc.; specify amount of shares; minimum to close the deal]

Closing Date:                                                           [xx-xx-xxxx]

Price per Share:                                                      [Specify Pre-Money and/or Post-Money Valuation; price per share as per the valuation adopted]

Investors:                                                                  [List the names of the investors targeted, and their necessary details]

TERMS OF INVESTMENT

Incentives to Investors:                                      [Specify any incentives that will be provided to the investors, such as discounts, warrants and stock options]

Liquidation Preference:                                     [The Series A Preferred shall receive an amount equal to one times (1x) the Purchase Price, in addition to any unpaid dividends; in priority over payment of any sums to any other equity security holders in the event of (i) a liquidation, dissolution, or winding up of the Company; or (ii) Change in Control]

Voting Rights:                                                         [Whether to vote together with Common stock Investors or as a Separate Class]

Information Rights:                                              [The right to receive financial information and Standard information with respect to the business; audited annual financial statements, unaudited quarterly financial statements, etc.]

Participation Rights:                                             [The investor’s right to participate in the business, on pro-rata basis or otherwise]

Conversion:                                                             [Power to convert the securities into Common Shares at the option of the investor holding the same, and terms thereof, if any]

Automatic Conversion:                                       [Whether or not, and if yes then how, the shares of investor will automatically convert into common shares, at the then applicable conversion rate upon either the closely of an underwritten IPO of Common Shares, or with the consent of the majority of holders of the outstanding Investor Shares]

Protective Provisions:                                         [Like requiring the consent of the majority of holders of the outstanding Investor Shares in order to alter the Articles of Association of the Company that may adversely affect the rights of the Investor, etc.]

Pre-emptive Rights:                                             [Major Investors may have a right to purchase the pro rata share of any offering of new securities by the Corporation, subject to certain exceptions; the right may terminate immediately prior to the Company’s first IPO].

Exclusivity:                                                               [Specify a certain date or incident like closing of the investment deal/formal termination of negotiation/consummation of financing between the parties, before which the Business is forbidden from approaching any other potential investor for finances].

Confidentiality:                                                      [Until the negotiation terminates or the finance is obtained, or based on any other eventuality, bind the parties to maintain confidentiality in respect of the transaction and negotiations.]

Statements or Clarifications:                            [Such as the conditions that are binding, and the extent to which it I so; disclaimer that the Term Sheet is not a description of financing; or that it is not a contract between the parties].

Expiration date:                                                     [Preferably fix a suitable date when the Term Sheet would expire, so that the business could absolve itself of the Exclusivity clause]

SIGNATURES AND DETAILS

On behalf of the Company                                On behalf of the Investors

[Name of Company]                                             [Name of Investor Group]

[Signature]                                                               [Signature]

[Name of Person]                                                  [Name of Person]

[Phone]                                                                     [Phone]

[E-Mail]                                                                      [E-Mail]

  Glossary:

·         Series A Financing: The first round of financing given to a new business by external investors when they are given company ownership for the first time. This is sought subsequent to the setting up of Seed Capital.

·         Angel Investors: Who invest in small Start-Ups and new ventures; they give a one-time investment to kick-start the business or may give money at intermittent intervals to help in difficult situations.

·         Seed Capital: The initial capital used to start up a business, often from the personal assets of founders.

THE RIGHT TO PRIVACY-WHY TODAY WILL BE DECISIVE

On a plethora of cases that have flooded various Courts in the country challenging the imposition of Aadhaar on citizens as a mandatory identity proof and linking the unique ID to almost all personal identification documents including PAN, Phone Number, Social Welfare Schemes, etc. and with the impending proposal of the Law Commission to link Aadhaar with the Compulsory Registration of Marriage[i], today’s 9-bench Supreme Court decision on the matter bears great relevance to the notion of privacy in India. Before the Bench decides on the matter, let us take a peep into the backdrop of the situation and analyze the earlier stand taken by Indian courts towards privacy of its citizens.

The Right to Privacy in India

The Constitution of India does not contain any express provision for protecting privacy, but on several occasions the question has been addressed under the Right to Life[ii], and the possibility of including the right in the purview of a broadened concept of Right to Life. The Supreme Court considered the question in the case of M P Sharma v Satish Chandra[iii], where an 8-Judge bench decided that “….search and seizure is an overriding power of the State for the protection of social security… Constitution makers have thought fit  not  to  subject  such  regulation to constitutional limitations  by recognition  of the  fundamental  right  to privacy.. there is no justification  for  importing  into  it,  a  totally different  fundamental right by some  process of  strained construction..”. The decision did not allow Privacy to be incorporated into the available Fundamental Rights, and upheld the State’s power to monitor social security.

Further, in Kharak Singh v State of UP[iv] the Court ruled that “the right of privacy is not a guaranteed right under our Constitution and therefore the attempt to ascertain the movements of an individual which is merely a manner in which privacy is invaded is not an infringement of a fundamental right guaranteed by Part III”.

In Rajagopal v State of Tamil Nadu[v], the Supreme Court held that “…..Right to privacy is not enumerated as a fundamental right in our Constitution but has been inferred from Article 21.” The Court also went ahead to state that “…any right to privacy must encompass and protect the personal intimacies of the home, the family, marriage, motherhood, procreation and child-rearing”.

The Aadhaar Issue with Privacy

Justice K S Puttaswamy (Retd.) v Union of India[vi] bears great relevance in this regard, as the Aadhaar Scheme was challenged in several petitions claiming that collection of such biometric data is violative of the “right to privacy. In the said case, it was pleaded by Attorney General and the other Senior counsel that “…to settle the legal position, this batch of matters is required to be heard by a larger Bench of this Court as these matters throw up for debate important questions..”

The Court identified two questions that need to be considered in arriving at a decision on the matter:

(i)                  Whether there is any “right to privacy” guaranteed under our Constitution.

(ii)                If such a right exists, what is the source and what are the contours of such a right as there is no express provision in the Constitution adumbrating the right to privacy.

The Court in the case declared that “…the cases on hand raise far reaching questions of importance involving interpretation of the Constitution. …. pronouncement made by larger Benches of this Court cannot be ignored by the smaller Benches without appropriately explaining the reasons for not following the pronouncements made by such larger Benches. to give a quietus to the kind of controversy raised in this batch of cases once for all, it is better that the ratio decidendi of M.P. Sharma (supra) and Kharak Singh (supra) is scrutinized and the jurisprudential correctness of the subsequent decisions of this Court where the right to privacy is either asserted or referred be examined and authoritatively decided by a Bench of appropriate strength.”

Subsequent to the havoc caused by the outpour of challenges against Aadhaar, Chief Justice Mr. K.S. Khehar has formed a Bench of Nine Judges who will bring a final settlement on the question whether Right to Privacy is a Fundamental right or not, and if so, then the Constitutionality of collecting and storing biometric and social data by way of Aadhaar will be examined.

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INDIAN KANOON

[i] 270^th Report of the Law Commission of India

[ii] Art.21, Constitution of India

[iii] 1954 AIR 300

[iv] 1964 SCR (1) 332

[v] 1995 AIR 264

[vi] WRIT PETITION (CIVIL) NO.494 OF 2012