The need for digitised India has always been considered as an efficient alternative to conventional means of documentation and verifications methods. However, in today’s era with the growing uncertainties in the market owing to pandemic strikes and social distancing measures, it becomes vital to consider digital means not just as an ideal alternative, but a central necessity to continue uninterrupted trading practices. As such, this article seeks to analyse the importance of Electronic- Signatures as a viable solution to contractual agreements and other business concerns and its validity under the Indian legal system.
Before 2008, the Information Technology Act (further, “IT Act”), did not extend recognition to electronic verification of documents. The only exception to this general rule was ‘digital signatures’. However, this position was altered through an amendment in 2008, wherein the term ‘digital signature’ was replaced with ‘electronic signatures’. The legislative intent behind the alteration was to inculcate a wider definition of electronic authentication than what was perceived in the initial section. This wider definition was adopted owing to the high-security features provided through electronic means of authentication as it was implemented through encryption and decryption methods.
Under the IT Act, two types of signatures are recognised. Firstly, Electronic Signature that combines Aadhaar with eKYC services and secondly, Asymmetric Crypto System. The former uses the unique identification number that is allotted to users of Aadhaar ID by the government of India to enable them to utilise automatically generated online signatures to authorise documents online. A Mobile App or Web App is used as an interface. The online signatures are integrated with Application Service Providers to enable this interaction. Further, an eKYC provider, like a One Time Password is sent through the app to validate their identity and apply their signature. The latter form is a set of keys which are secure and in the form of both public and private nature. These keys are unique to their users and can be utilised to develop e-signatures. A digital signature is developed for the user from a Certifying Authority and takes the form of a digital certificate which are recognised by browsers and operating systems.
Apart from the types of electronic signatures, there are numerous other factors considered while identifying the validity of the authorisation as per Section 3A (2) of the Act. These include, (i) the E-signature used must be linked only to the user, (ii) the user must have complete access to the data which is used to develop the signature, (iii) an audit trail has to be developed which tracks all the details and procedures used in developing the signature and (iv), the certificate verifying the digital signature must be generated by an authorised Certifying Authority under the IT Act.
The legitimacy of contracts utilising electronic signatures was widely disputed by the judicial body primarily in the issue contracts validated through such signatures. These questions arise when processes other than the widely recognised Aadhaar e-KYC are utilised. In the case of Trimex Trimex International Fze vs Vedanta Aluminium Limited, the Apex Court was faced with the question of whether an electronically authenticated contract, using means other than the Aadhaar e-KYC, is an enforceable contract when exchanged through electronic mails. The contention was that the said process does not include a statutorily recognised signature. From the judgement of the case, it can be validly deduced that as far as there exists no disputes or contingencies regarding the terms of the contract, any exchange of contract via electronic mail with electronic authorisation reflects the intent of the parties to enter into a valid contract. As such, it denoted the acceptance by both parties and the contract is valid. This decision was justified based on the principle enshrined within Section 10 of the Act which extends statutory recognition to the development of contracts via electronic means.
However, despite the reliability and efficiency of electronic signatures, the same is restricted inapplicability. The IT Act does not validate the use of such signatures in documents which mandate notarial processes or perquisites registration processes including Trusts, Negotiable Instruments and Wills.
