Electronic Signature: Are they legally binding in India ?

Signatures in electronic form have been recognized by law in India since 2000, with the passage of the Information Technology Act. 

Also, we have aligned a learning series for you to understand the use cases to digitise your business processes:

eSignature Legality Summary

Under Indian law, a written signature is not necessarily required for a valid contract - contracts are generally valid if legally competent parties reach an agreement, whether they agree verbally, electronically or in a physical paper document. The Information Technology Act, 2000 (IT Act) specifically confirms that contracts cannot be denied enforceability merely because they are concluded electronically. To prove a valid contract, parties sometimes have to present evidence in court. Leading digital transaction management solutions can provide electronic records that are admissible in evidence under Section 65B of the Evidence Act, 1872, to support the existence, authenticity and valid acceptance of a contract.

Use Cases for Standard Electronic Signature (SES)

Use cases where an SES may be appropriate include:

• HR documents, including employment contracts, benefits paperwork and other new employee onboarding processes
• commercial agreements between corporate entities, including NDAs, procurement documents, sales agreements
• consumer agreements, including new retail account opening documents
• certain forms of real estate documents, such as certain lease agreements, purchase and sales contracts, and related documentation for residential and commercial real estate

Use Cases That Are Not Typically Appropriate for Electronic Signatures or Digital Transaction Management

Use cases that are specifically barred from digital or electronic processes or that include explicit requirements, such as handwritten (e.g. wet ink) signatures or formal notarial process or registration with Registrar or Sub-Registrar that are not usually compatible with electronic signatures or digital transaction management.

• Handwritten - negotiable instrument, other than a cheque (IT Act not applicable)
• Handwritten - power-of-attorney (IT Act not applicable)
• Handwritten - trust deed (IT Act not applicable)
• Handwritten - will or any other testamentary disposition (IT Act not applicable)
• Handwritten - Any contract for the sale or conveyance of immovable property or any interest in such property (IT Act not applicable)

[1] A ‘Digital Signature’ is the authentication of an electronic record by means of an electronic method or in accordance with the procedure as set out in the IT Act. The subscriber of such an electronic signature may authenticate an electronic record by affixing his electronic signature, stored on a private key. Such authentication is effected by the use of asymmetric crypto system and hash function. The electronic record can be verified by any person who has a public key of the subscriber. The private key and the public key are unique to the subscriber and constitute a functioning key pair. An ‘asymmetric crypto system’ refers to a system of a secure key pair consisting of a private key for creating an electronic signature and a public key to verify the electronic signature.

[2] A QES is a specific digital signature implementation that has met the particular specifications of a government, including using a secure signature creation device, and been certified as ‘qualified’ by either that government or a party contracted by that government. Any person who possesses the prescribed identity card issued by the Government of India (Aadhar) may avail of the eSign Electronic Signature Service for secure signing of electronic documents. There is no requirement to obtain the physical dongle that is often required for the AES. The eSign Electronic Signature Service is an online electronic signature service which may be integrated with service delivery applications via an open application programming interface to facilitate an Aadhar holder to digitally sign a document.

Local Technology Standards

While technically a Tiered eSignature Legal Model Country, India has not created specific technical requirements, procedures and practices to implement a QES (Qualified Electronic Signature, or 'Secure Electronic Signature' in the Indian legal definition) system. Therefore, no practical application of QES in India exists. In practice, a hard requirement for a theoretical QES would only apply to the limited use case exceptions already discussed if such a signature type existed. The Government of India has introduced a new QES whereby the person who has an official identity card issued by the Government (Aadhar) is able to authenticate a document using the Aadhar eKYC services. Through the interface provided by the Application Service Provider (ASP), users can apply electronic signatures on any electronic content by authenticating themselves through biometric or OTP using Trusted Third Party (TTP) Aadhaar eKYC services through an eSign Service Provider. The interfaces are provided to users on a variety of devices such as computer, mobile phone etc. At the backend, the eSign service provider facilitates key pair generation and the Certifying Authority issues a Digital Signature Certificate. The eSign Service Provider facilitates creation of the Digital Signature of the user for the document which will be applied to the document on acceptance by the user. 

Court- Admissible: A basic measure of eSignature legality in a country is whether courts will admit eSignatures as evidence in court. In most countries in the world, an eSignature cannot be rejected simply because it is electronic, meaning that it should be admissible, subject to proof. Learn more about how DocuSign helps you prove an eSignature validity in court, below.

General Business Use: While there are exceptions for very specific types of transactions, eSignatures, independent of the underlying technology, may be used for the majority of general business transactions in most countries. Issues that may restrict general business use include local technology requirements or other restrictions on special transactions types. Learn more about specific transaction types, below.

E-signature legal model: Tiered. ‘Tiered’ countries recognize Qualified Electronic Signature (QES, or the locally named equivalent) as a distinct type of eSignature. In these countries, a QES has special legal status in the form of presumed authenticity, and may be legally required for a few, specific transaction types. In spite of this, a non-QES eSignature can still be submitted as evidence in court even in Tiered countries, so long as the party presenting it has sufficient evidence to prove that it is valid. Countries imposing QES standards often struggle to promote electronic business transactions, especially across country borders. ‘Open’ countries have no such technology requirements or eSignature types that receive special legal status.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing electronic signature may change quickly, so DocuSign cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

References:

1. Adobe eSign
2. Docu Sign

Last updated: November 01, 2019