The use of electronic signatures in electronic contracts is on the rise in India, due in part to the government’s Digital India initiative which focuses on enhancing digital infrastructure and on transforming India into a paperless economy. Companies doing business in India are also increasingly utilizing electronic signatures to complete their transactions.
In India, electronic and certificate-based digital signatures are regulated by the Information Technology Act, 2000 (IT Act) and the following rules made under this Act:
The IT Act distinguishes between electronic signatures and certificate-based digital signatures, but both have the same status as handwritten signatures under Indian law. Digital signatures are preferred for certain government transactions such as e-filing with the Ministry of Corporate Affairs, and goods and service tax filings.
Valid electronic signatures must include an electronic authentication technique or procedure specified in the Second Schedule of the IT Act. The Second Schedule currently specifies the following e-KYC (Know Your Customer) authentication techniques and procedures:
1. Aadhaar e-KYC (see below for additional details);
2. Other e-KYC services (e.g. e-KYC using Permanent Account Number (PAN)).
Under Indian law, reliable electronic and digital signatures carry a presumption of validity compared to other “non-recognized” electronic signatures. However, in common with other jurisdictions, Indian law will not consider an agreement invalid solely on the grounds that it was formed with such non-recognised electronic signatures.
For an electronic signature to be considered reliable and presumptively valid under the IT Act:
1. It must be unique to the signatory;
2. at the time of signing, the signatory must have control over the data used to generate the electronic signature;
3. any alteration to the affixed electronic signature, or to the document to which the signature is affixed, must be detectable;
4. there should be an audit trail of steps taken during the signing process; and
5. The signer certificates must be issued by a certifying authority (CA) recognized by the Controller of Certifying Authorities appointed under the IT Act. A list of licensed CAs is available at http://www.cca.gov.in/licensed_ca.html.
For e-signing processes initiated in India, Adobe applies an electronic seal using digital certificates from eMudhra, which are recognized under the IT Act and thus carry the presumption of validity for the completed agreement.
Judges and magistrates are familiar with the law concerning e-signatures and e-contracts, although some local authorities insist on physical documents for keeping registers and records under statutes, and on the use of traditional “wet signatures” for authentication.
Using Aadhaar e-KYC as an e-authentication technique requires verification of the signatory's identity using his or her Aadhaar number. According to the Aadhaar and Other Laws (Amendment) Act, 2019, an entity may be allowed to perform Aadhaar authentication, with the voluntary consent of the Aadhaar number holder, only if the UIDAI (Unique Identification Authority of India) is satisfied that the requesting entity is:
Accordingly, authentication using Aadhaar e-KYC services is currently only being offered to private application service providers (ASPs) by the following two government entities:
Adobe has partnered with NDSL to provide Aadhaar e-KYC services to our customers worldwide. For more information, please see https://helpx.adobe.com/sign/using/adobesign-idp-aadhaar.html
Indian Stamp Act
The Indian Stamp Act, 1899, requires that certain documents be stamped at or before the time of execution. Currently no laws in India prescribe a method for stamping electronic documents. Some states such as Maharashtra, Karnataka and Delhi specifically extend the requirement for stamping to electronic records. When stamps are accepted electronically. Adobe Acrobat Sign can be tailored to meet those requirements.
Companies should always confirm with their internal legal team whether a document needs to be stamped before signing and executing the document electronically. If a document is signed and executed electronically and is required to be stamped, then the company should ensure that a physical copy of the document is prepared and stamped. If a document is not properly stamped, then penalties may be imposed.
Transacting with public sector entities
The IT Act allows the use of an electronic or digital signature for (i) filing any form, application or document with any government authority; (ii) issue of any license, permit or approval by the government authority; and (iii) receipt or payment of money in a particular manner, in electronic form. The government authority may create rules prescribing the manner in which electronic records and electronic signatures are accepted for these purposes. For instance, Rule 7 of the Companies (Registration Offices and Fees) Rules, 2014 specifies that every application, financial statement, prospectus, return, declaration, memorandum, articles, particulars of charges, or any other particulars or document or any notice, shall be filed in computer readable electronic form in pdf. Further, Rule 8 stipulates that an e-form must be authenticated using Digital Signature; and the Central Board of Direct Taxes have notified procedure for filing e-TDS/ e-TCS and other forms using digital signatures.
In addition, certain government authorities have initiated e-filing regimes and permit electronic signatures for the following purposes:
Electronic contract formation methods such as click-wrap, non-CA issued certificates etc. are not explicitly recognized under the IT Act but may be used for e-contract formation. Under Section 10-A of the IT Act, the formation of an agreement by electronic means would not be held invalid solely on the ground that the agreement was formed electronically. However, such non-recognized electronic signatures do not have the presumption of validity of electronic signatures and the validity of electronic contracts signed using such electronic signatures may be disputed. In such a case, the signatory may be required to prove:
The conduct of the parties with respect to the subject matter of the contract/electronic record may also be relevant in this context.
Use cases that require a traditional signature
Under Indian law, the following documents must be signed with a traditional wet signature:
In addition, notarization is carried out by a registered notary under his or her signature and seal. As a matter of practice, this has always been carried out through a physical seal and wet signature and requires verification of physical copies of documents.
Disclaimer: Information on this page is intended to help businesses understand the legal framework of electronic signatures. However, Adobe cannot provide legal advice. You should consult an attorney regarding your specific legal questions. Laws and regulations change frequently, and this information may not be current or accurate. To the maximum extent permitted by law, Adobe provides this material on an "as-is" basis. Adobe disclaims and makes no representation or warranty of any kind with respect to this material, express, implied or statutory, including representations, guarantees or warranties of merchantability, fitness for a particular purpose, or accuracy.