Introduction
We have all seen movies where the parties are deceptively made to sign a document and thereby fraudulently made to deliver their property. Well, even though the procedure is much more complicated in real life, signatures play an essential role in all types of agreements. The Cambridge Dictionary defines ‘signatures’ as “your name written by yourself, always in the same way, usually to show that something has been written or agreed by you.” Even though the definition is not necessarily entirely correct, it gives a basic idea about what signatures are and why they are essential. Basically, a signature can be defined as some word or pattern affixed by a person on a document to show that he has agreed to the document. A signature is necessary because it proves the fact that the signer agrees to the conditions of the document, which becomes essential while determining the enforceability of a contract. Like everything else in the world, the information technology revolution also left its marks on contracts and signatures. With all the different types of activities being conducted online, it is evident that online contracts have started to become more and more popular. Especially during the COVID-19 pandemic, as people were reluctant to accept physical objects, electronic contracts became the new normal. However, such a system also gives rise to a new problem – the problem of signing these electronic contracts. As signatures have become necessary to prove the validity of contracts, we need a new system of signing these online contracts. Electronic signatures are a form of online document signing adopted in India. The article will deal with the different aspects governing e-signatures in India. It will include all the nuances related to e-signatures and also dissect their enforceability in the Indian context.
Online Contracts and Traditional Signatures
Before going into the technicalities of e-signatures, we need to understand why we can’t sign an online contract by converting traditional signatures into photos or any other digital forms. First of all, the Indian Contract Act doesn’t even need a signature to prove a contract’s validity. Section 10 of the Act states, “All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.” Nowhere is it mentioned that a signature is needed for the formation of a valid contract, a signature is needed. But as mentioned earlier, a signature becomes essential for the purpose of evidence, and in many cases, a signature signifies that the contract has been made with the free consent of the party signing. Returning to our original problem, it is possible to sign an online contract by uploading an image of the signer’s signature and pasting it. However, this method is not even a bit reliable as it would be easy to copy the image of such a signature and forge another online document. Therefore, in order to reliably sign electronic contracts, we need a method that provides a unique signature to the signer that can’t be copied or forged and whose validity can be publicly checked. Electronic signatures meet all these requirements, making them very reliable and secure to sign electronic contracts.
Electronic Signatures in India
Before understanding how e-signatures work, we need to understand what they are, and for that, we can look into the UNCITRAL Model Law on Electronic Signatures. As per Article 2(a) of the Model Law, “Electronic signature means data in electronic form in, affixed to or logically associated with, a data message, which may be used to identify the signatory in relation to the data message and to indicate the signatory’s approval of the information contained in the data message.” The definition provides a pretty good explanation of electronic signatures, i.e., a data message that can be used to identify the signatory and to indicate his approval. In India, the Information Technology Act defines ‘electronic signature’ as “authentication of any electronic record by a subscriber by means of e-authentication technique using Aadhar or other e-KYC services or e-authentication technique and procedure for creating and accessing subscriber’s signature key facilitated by a trusted third party.” Even though this definition seems too complicated, it basically denotes that e-signature refers to the authentication of electronic records by Adhaar or another e-KYC service, i.e., as Adhaar or other e-KYC services like Pan Cards are unique to every individual and are highly secured, they can be used as a method of e-signing of documents. It is done by linking the Adhaar card or other service to one’s mobile phone and then by signing by using OTP or biometrics. Second, the authentication can also be done by a special token issued by a trusted third party, which also facilitates the verification of such token or key. The third party will provide the signer with a unique key that can be used to sign the documents, and the signature can be verified by the third-party responsible for providing such a token. The difference between the Indian law and the UN model law is that the Model Law provides that the data set used for verification constitutes the e-signature, while as per the Indian law, the verification or authentication in itself constitutes the e-signature. The IT Act in India also allows the usage of electronic signatures and authorises the use of electronic signatures to fulfil legal signature requirements. However, Section 1(4), along with Schedule 1 of the Act, prohibits the usage of electronic signatures in the following documents: 1) A Negotiable Instrument as defined in Section 13 of the Negotiable Instrument Act, 1881, 2) A power-of-attorney as defined in Section 1A of the Powers-of-Attorney Act, 1882, 3) A trust as defined in section 3 of the Indian Trust Act, 1882 and 4) A will as defined in section 2(h) of the Indian Succession Act, 1925. Another type of document initially present in the first schedule but removed in 2022 was ‘for the transfer of immovable property.’ The removal of this entry is a welcome step, as without it, e-signatures would not have been used, and their application would have been quite restricted.
As mentioned earlier, electronic signatures must be reliable to provide a proper alternative medium for signing documents. Section 3A of the Information Technology Act, which has adopted Article 6(3) of the UNCITRAL Model Law, lays down some tests to determine whether an electronic signature can be considered reliable. As per Section 3A(2) of the IT Act, an e-signature can be considered reliable if: 1) The e-signature creation data is linked to the signer or his/her authenticator and to no other person; 2) Such data was in the control of the signer or the authenticator at the time of signing; 3) Any change made to the signature after signing is detectable and 4) Any change made to the document in which the signature is affixed can be detected after signing. Tests 1 and 2 ensure that the e-signature is not affixed except by the signer or any authorised person. Further, tests 3 and 4 prevent the alteration of the contract and the signature after signing. Therefore, all these prevent forging or altering the document, which is essential.
Finally, moving to our last issue: Are electronic signatures admissible in Court? The answer is yes; they are admissible. In this regard, we can look at Section 67A of the Indian Evidence Act, which says, “Except in the case of a secure electronic signature, if the electronic signature of any subscriber is alleged to have been affixed to an electronic record, the fact that such electronic signature is the electronic signature of the subscriber must be proved.” First, this Section indirectly points out that electronic signatures are admissible in the Court, but it needs to be proved that the e-signature is that of the signer. However, no such proof is required for secure electronic signatures, which, as per Section 3 of the Act, are to have the same meaning as defined in the IT Act. But as the term ‘secure electronic signature’ has not been defined anywhere in the IT Act, we can assume that the term relates to e-signatures which meet the requirements of Section 3A. Further, as per Section 85B of the Evidence Act, the Court shall presume that the secure electronic signature has been affixed by the signer with the intention of approving the e-record and that it has not been altered. The provisions in the Evidence Act align with Section 3A of the IT Act as the Section ensures proper authenticity of the electronic signatures, and therefore, it is obvious that such signatures should be taken as evidence.
Conclusion
As mentioned in the beginning, e-contracts and e-signatures have started to become the new normal, and therefore, properly regulating them is essential. The IT Act, which was enacted almost twenty years ago, effectively deals with this. But the main problem with technology is that it evolves much faster than the minds of our lawmakers. A good example of this is special contracts, which are, in layman’s terms, an evolved version of electronic contracts. With such evolutions happening all the time, it becomes necessary for lawmakers to remain updated. Cyber fraud and other types of cyber crimes are also increasing with the adoption of technology. We need to understand that these criminals are always trying to find loopholes in our existing laws, and with new technologies, they might even have better chances of doing so. So, our cyber law should always remain updated to deal with such issues. Even a bit of delay can cost somebody his entire life savings, and saving innocent people is what the purpose of law really is.
