Is electronic signature legally binding in India?

Businesses in India are encouraged to make as much business transactions online as possible as part of the Digital India initiative. This push for digitization has its advantages – according to a report by KPMG, Google, digital businesses grow twice as fast than offline companies.

Companies are adopting e-signature options as one way to embrace the digital revolution. This acceptance hasn’t been as rapid as it should have been. At its core lies the false belief that eSignatures are not legal in India.

E-signatures are legal in India since 2000, when the Information Technology Act was passed. E-signatures were granted the same legal status and rights as handwritten signatures.

What are the requirements to be valid for e-signatures

Two types of esignatures are recognized by the IT Act:

  • E-signatures combine your Aadhaar number and an electronic Know Your Customer method (eKYC). Methods that are part of an eKYC include, among other things, one-time passcodes or OTPs.
  • Digital signatures are created using an asymmetric cryptosystem and hash function. In this scenario, each signer receives a secure pair of keys, a private and public one. These keys are given to them for a long time (1-2 years), and then they can sign documents.

What conditions must esignatures meet to be valid?

To make an e-signature valid, five criteria must be met:

  • They must be unique for each signatory and directly linked to the person signing the document. This condition is often met by e-signature solutions that offer a digital certificate-based ID.
  • Signer must have complete control over all data used to create the e-signature. Signers can attach their e-signature directly to the document to meet this condition.
  • Any modification to the affixed signature or to the document to which it is attached should be obvious and easily detectable. This requirement can be met by encrypting the document using a tamperproof seal.
  • It is necessary to have an audit trail that documents the signing process.
  • Signer certificates should be issued by a Certifying Authority (CA). The IT Act’s Controller of Certifying Authorities (CCA) should recognize the CA.

What documents can e-signatures not be used with?

Some documents must be notarized or registered with a Sub-Registrar or Registrar, according to the IT Act. These documents cannot be signed by hand. These documents are:

  • Attorney power
  • Trust deed
  • Wills and other temporary dispositions
  • Instruments that can be used to negotiate, such as promissory notes or bills of exchange other then a cheque
  • These include sales and lease agreements.

I hope you find this helpful!

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