Some years back, only the traditional wet-ink signatures enjoyed the legal acceptance; however, the situation now is changing. While different countries and states have passed relevant legislation to monitor and certify the authenticity of electronic signatures, India has been keeping up with the technology and standards.
Through the Information Technology Act, 2000 (IT Act), Indian was able to recognize the use of electronic signatures. With the aim of improving the ease of doing business; rationalizing the way documents are stored, and improving the safety, and cost-effectiveness of records, the Indian Government has greatly advocated for the use of digital technologies by its citizens and corporations.
Presently, it is safe to state; there has been a significant increase in adoption of electronic signatures all over India. This can be partly attributed to the government’s emphasis on facilitating electronic transactions using Aadhaar (a distinctive identification number provided by the government to all Indians nationals).
With that said, in India, electronic signatures must satisfy a few conditions before they can be relied upon.
Requirements for validity
The Information Technology Act, 2000 provides for the adoption of e signatures and acknowledges two forms of e-signs as having similar legal acceptance as pen-and-paper signatures. These forms specifically acknowledged under the IT Act include:
- E signatures which incorporate an Aadhaar ID with an electronic Know-Your-Customer (eKYC) method.
- Digital signatures which are created by an “asymmetric crypto-system and hash function”. For such signatures, the signer is usually issued a long-term certificate-based digital identity number, stored on a USB token, which is used to place a sign on a document.
For the above forms of electronic signatures to be legitimate, they must satisfy these further conditions.
- The signatory of the e signature must be unique
- At the point of signing, the signatory should be in control of the data employed to generate the e-sign.
- Any tamper with the signature, or the form to which the signature is placed, must be easily detectable.
- There must be an audit trail of procedures followed during the signing process.
- Signer certificates should only be granted by the Certifying Authority.
If all these conditions are followed, then there is an obvious legal belief in favor of the legality of any document signed using e-signatures.
Brief about combining electronic signatures with Aadhaar eKYC
The Aadhaar eKYC is a paperless procedure in which the signer’s identity is confirmed using the Aadhaar authentication procedure of the Unique Identification Authority of India. The controller of Certifying Authorities (CA) initiated this form of service to bring about simplicity and safety in the signing of electronic documents. Signatures produced using the Aadhaar eKYC technique nowadays, are coming out as the most preferred types of e-signs among Indian nationals and organizations. These signatures perfectly replace the need to acquire a certificate-based digital identity number. And since they are tied to the national ID system, signers need not produce a mound of documents before getting their digital identity number.
However, it is good to note; this service works with few selected accredited service providers who offer validation services that conform to government guidelines. E signature platforms, like eSign Genie, are among the top digital solutions that have been allowed to partner with accredited service providers to offer Aadhaar eKYC experiences to Indian nationals.
Use case of electronic signature in India
- Commercial agreements between companies, including procurement documents, sales agreements, NDAs and more
- Consumer agreements, including sales contracts, service contracts, new retail account opening contracts and more
- HR documents including new employee onboarding contract, employment contracts, benefits contracts and more.
- Certain types of real estate contracts
Indian Government use of electronic signatures
Lately, the Reserve Bank of India allowed small payment banks and finance banks to use electronic authentication for verification of the terms and conditions, in regards to banking relationship. More so, it permitted a one-time passcode based eKYC procedure, for onboarding clients by all regulated entities.
Government ministries such as the Ministry of Finance, Ministry of Corporate Affairs and the Department of revenue now accept electronic records signed using e signatures. It is clear that the government is greatly relying on Aadhar-based eKYC procedures as a means of proving identity and delivering services. And, the above cases point out plainly how the government is playing a big role in adopting electronic signatures.
Documents that Indian law prohibits to be signed electronically
The government of India has held that e signatures cannot be adopted on all types of documents. The following documents cannot be signed online and should be executed with the typical pen-and-paper signature to be considered legally acceptable.
- Any document listed by the government of India on the official gazette
- Power of attorney
- Trust deeds
- A will and other forms of testamentary disposition
- Negotiable documents such as bills of exchange, drafts, promissory notes and more
- Documents involving any sale of immovable property such as real estate
Other factors to consider when signing a document electronically in India
Validity of other types of electronic signing
Documents, executed using an electronic process other than an electronic signature as outlined in the IT Act are not technically invalid. For instance, a document which is executed via an email as the initial verification method or that incorporates the second aspect of verification, such as a phone pin or password, may be legitimate under the Indian law, provided it conforms to the IT Act requirements. However, contracts that are completed through one of those processes are not viewed the same as contracts executed with wet signatures.
Requirement to stamp
In India, some documents should be stamped prior to or at the time of completion. Presently, no laws in India stipulate a technique of stamping electronic documents. Companies or individuals must always consult with legal experts whether a certain type of document requires to be stamped before executing it electronically.
The government of India has greatly focused on digital infrastructure and seeks to make India a paperless economy. The introduction and acceptance of Aadhaar eKYC by a range of renowned sectors promote the increasing adoption of electronic signatures in India.
For organizations adopting e-signatures however, it is advisable to use only e signatures that are recognized by the IT Act to avoid any enforceability and admissibility related risks.