This article is written by Aparimita Pandey, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Aatima Bhatia (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).
Introduction
With the technological advancements in the world and usage of electronic mediums of communication and working, various changes came into being. A new era requires a new system of governance. As society changes and cultures evolve it develops a need for the legislation to be at par with the changing times. One such example is the use of e-signatures in documents.
What are e-signatures?
Every official document in order to be admissible before law needs to be signed, attested or authorised by any person or parties associated with that document. Signatures play a very vital role in the matters of daily transactions and affairs. A document without the signature of the bearer is not valid before the law. As technology advanced, various sectors of the economy and governance shifted to a paperless system of working. This aided the process of functioning while making it smooth and efficient at the same time. Hence, this brought into the picture the concept of e-signatures. In India, electronic signatures are regulated by the Information Technology Act, 2000 (IT Act) and certain rules such as Digital Signature (End Entity) Rules, 2015; Information Technology (Use of Electronic Records and Digital Signature) Rules, 2004 and Information Technology (Certifying Authorities) Rules, 2000. Section 4 of the Information and Technology Act, 2000 gives legal recognition to electronic records. Section 5 of the Information Technology Act, 2000 provides legal recognition to electronic signatures wherein it is stated that if any law provides that any document should be affixed using signatures of the bearer such authentication would be considered valid if it is done through digital signature in a manner as prescribed by the Central Government. Section 10A in the Information Technology Act, 2000 gives validity to contracts formed through electronic means.
The Indian Evidence Act, 1872 recognises the validity of e-signs as proof of presumption to an electronic agreement. It recognizes electronic records as documentary evidence. Section 65-B of the act makes the e-signature admissible in Courts. Section 67 A of the Indian Evidence Act, 1872 propounds that the signatory has to prove that the e-signature belongs to him/her in any case wherever the dispute regarding e-signatures arises. As per the Section 3A of the Information Technology Act, 2000 which is based on Article 6 of the United Nations Commission on International Trade Law (UNCITRAL) the basic requirement for an electronic signature to be valid are that it must be reliable and that it may be specified in the second schedule.
Types of e-signatures that are valid
The term E-signatures and Digital signatures are often used interchangeably; the only difference between the two is that e-signatures do not require a particular technological process to be followed while digital signatures require a specific technology to be generated. These cannot be tampered with easily and are more reliable.
The Information Technology Act, 2000 recognises two types of valid e-signatures:
- An electronic signature that facilitates the signing of a document through online services. It can be done by people having an Aadhaar Card number which has a unique identification number for every individual issued by the government of India. The e-signature services integrate with an app interface which can then be used by users to apply e-signatures to any online document by confirming their identity through OTP using the eKYC service. The e-signature services work in accordance with guidelines provided by the government.
- Digital signatures require a specific technology called a hash system or asymmetric cryptosystem in order to be generated. It requires a two-way cryptographic protection system which is a pair of private and public keys. It is unique for each user and can be used to develop signatures. Users obtain a reputed Certifying Authority in the form of a digital certificate.
Conditions for validity
- The signature creating data and the authentication data should be linked to the signatory or the authenticator and not to any other person.
- The data for generating the e-signature should be at the time of signing in the control of the signee.
- Any changes or alterations that are made after affixing the e-signature or data are detectable.
- It is issued by a Certifying Authority based on e-authentication specified in Form C of Schedule IV of the Information Technology (Certifying Authorities) Rules, 2000.
The electronic signatures as per section 1(4) of the Information Technology Act, 2000 are not applicable for the following:
- A negotiable instrument other than cheques as defined under section 13 of the NI Act, 1881.
- A Power of Attorney as defined under section 1A of the Power of Attorney Act, 1882.
- A trust as defined under section 3 of the Indian Trust Act, 1882
- Any contract of sale, lease or conveyance of immovable property or any interest in such property.
- A will as defined under section 2 (h) of the Indian Succession Act, 1925 including any other testamentary disposition.
Government use of e-signatures
There are various departments of the government that accept electronic records authenticated with digital signatures. Such departments are the Ministry of Finance, Department of Revenue, Ministry of Corporate Affairs, etc. Digital signatures are a preferred mode of execution in the case of e-filings with the Ministry of Corporate Affairs. Even the RBI has allowed certain small fiancé banks and payments banks to rely on electronic authentication for the purpose of acceptance of the terms and conditions of the bank. The Electronic Signature or Electronic Authentication Technique and Procedure Rules, 2015 brought a drastic change into the validity of e-signatures to be used in India. It gave more power to the Controller of the Certifying Authority and made it capable of regulating and governing the procedure for using e-authentication methods. The Central Government is the sole authority for proving validity to e-signatures. It holds with it the power to formulate the various technical and reliable aspects of an e-signature to be valid.
Digital Signature Certificate (DSC)
In order to prove the authentic nature of an electronic document, the Central Government has appointed a Controller of Certifying Authorities who has the power to grant the license to the Certifying Authorities to issue digital signature certificates to the users. Such a digital Certificate comprises the owner’s name, public key, date of expiration of the public key, serial number, digital signature as well as the name of the issuer. The creation of digital documents that is done only through the certifying authorities is considered trustworthy since it is regulated by the Central Government.
Such Certificates are of various types which could be used for only signing, encryption or signing along with encryption. Any person that wishes to avail of a Digital Signature Certificate can file for an application to the certifying authorities for issuance of an Electronic Certificate along with the prescribed fees.
Conclusion
As the world has advanced to a new medium of functioning where e-signatures are now a part of every other transaction or affair and where such a new system of working is duly recognised by the government through legislations a proper understanding of the procedures and laws for the common public has become essential. The Information Technology Act, 2000 defines and elaborates upon e-signatures profoundly. There is still a need for development in the system of authentications in order to make it an easier process for the general public. Methods that are less prone to fraud and tampering should be used and any glitches that leave a scope of risk should be avoided while transacting through e-signatures.
Since e-signatures are binding and have a similar legal effect it is essential for users to be cautious while using them. A wider scope of usage of e-signatures opens up a possibility of efficient working mostly in the sectors of finance, banking and legal matters. It is a hassle-free method of authentication and thus has a very wide scope for the coming future. The world has shifted to the online medium wherein professionals and users are using e-signatures on a daily basis, it is important to have an efficient system of authority tackling the loopholes of the presently functional laws and regulations. Electronic encryption is more or less a modern phenomenon and hence remains to be a complex process. It further specifically defines where these e-signatures can be used and where they are not admissible which further showcases a clear picture of India’s stand towards the legality of the e-signatures. Considering the current times where the virtual way of being has become a necessity for every individual proper caution and guidelines regarding the consequences of using e-signatures should be provided in professional setups. E-signatures possess the possibility to represent the biggest opportunities to accelerate a shift towards digitization. India’s vision of Digital India can be aided through a better mechanism of authentication and frequent use of e-signatures. Mandating usage of e-signature authenticated via certifying authorities in places where physical signatures are unnecessary can work as a way forward. It would further make the process of transaction remote and efficient in nature for both the signatory and other authorities involved.
References
- https://www.adobe.com/content/dam/dx-dc/pdf/uk/electronic-signatures-in-india-uk.pdf
- https://lunarpen.com/blog/electronic-signature-law-india/#Suitable_Use_Cases_for_E-Signatures
- https://blog.ipleaders.in/digital-electronic-signature/#DSC_under_the_Information_Technology_Act_2000
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