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VALIDITY OF DIGITAL SIGNATURES UNDER CONTRACTS IN INDIA

Author: Kumar Aditya, IV year of B.A.,LL.B.(Hons.) from School of Law, Bennett University.


Introduction

In the current era, almost all of us are that our signature can easily be forged leading to great loss to the victim of such forgery, thus, one must have an apt understanding of the ways through which he/she can protect his/her own valuable assets and documents.


But, people are ignorant about the ways with the help of which they can ensure non-alteration of their signature within our existing legal framework only. As per section 2(1)(p) of the Information Technology Act, 2000, ‘digital signature means the process of authentication of any kind of electronic record via electronic method or procedure keeping in mind the provision of section 3 of the said Act. And, in consonance with the provisions laid down in section 2(1)(zg),[1] the word ‘subscriber’ has been defined, which states that the subscriber is a person on whose name Digital Signature Certificate (DSC) is issued, thus, he is authorised to put his/her digital signature to authenticate an electronic record so that to provide validity to that record which is subject to due perusal by the competent authority.


How to get a Digital Signature Certificate?

For making an application about getting DSC, an applicant needs to login to the website of Certifying Authority (CA) where an option will be given to choose over type of entity between individual or organization on behalf of which the applicant has filed an application for DSC. Then, it is required that the applicant should submit the necessary details and also the concerned documents regarding proof of identity affixed by an attesting officer.[2]


After that, one makes payment of requisite fee for filing an application for DSC and sends the documents through post to Local Registration Authority who will after perusal of the documents, shall grant DSC to the applicant.[3]


Validity and uses of Digital Signature

Once DSC has been given by the Certifying Authority, then, the said certificate will be valid for one or two years and it can be renewed subject to the procedure prescribed under Certifying Authorities Rules, 2000.[4] These digital signatures are largely used in the same manner as handwritten signatures. However, due to rigorous authentication process by CA while providing DSC, it is hard to counterfeit digital signatures. These digital or electronic signatures are also admissible in the court.[5] But to make it simple for general understanding, their usage can be summarised through following points:[6]

1) It is used to send or receive the digitally signed encrypted mails so that to ensure authenticity of the subject-matter or information given in the said mail.

2) To carry out general web-based secure transactions or to identify the same with respect to other participants of such transactions.

3) For the basic purpose of providing authenticity to MS Word, MS Excel, PDFs, etc. sent to some other person under a certain kind of business arrangement. This is to ensure originality of the given information.

4) It can also be used as secure way for e-filing of cases in current pandemic, along with several other benefits which are provided by the government, can be availed digitally in smooth fashion, for which such digital signatures become useful to authenticate.


Moreover, in daily business correspondence, entering into an arrangement through agreement is crucial, and traditional forms of signing agreements are getting replaced through fully digital documents which are signed digitally. Thus, digital signature becomes a key to solve this problem which is highly secured as compared to general physical documents or e-documents.


Difference between Digital and Electronic Signature

In common parlance we think that both these terms can be used interchangeably, but, one must know the difference between these two different types of signatures before using them for their daily business or official purposes.[7]


Parameter of Comparison

Digital Signature

Electronic Signature

Definition

​Digital signatures connect the fingerprint of the document withone’s own identity. Like it acts as a channel through which a message can be sent via insecure channel but with total security by using encryption method

​While electronic signature is basically used by the person for the purpose of signing documents. Like putting name at the end of mail.


Purpose

​Digital signatures are used to provide security to the document so that the concerned document will not get altered in transit by some other person having ill intent.

​However, electronic, signatures are used merely for the purpose of verifying the document or information sent via mail or through any other electronic means.

Security

​Digital signatures are comparatively safer than the electronic signatures because of the encryption method through which one’s own identity is attached with the fingerprint of the document

​On the contrary, electronic signatures are less secure and thus they become subject to alteration.

Regulation

​There are formal rules and regulations laid down in different legislation and rules framed by the parliament which have to be adhered to for the purpose of obtaining a DSC.

​But, when it comes to electronic signatures, no such rule or regulation is placed to govern the working and use these signatures in official documents.


Importance of digital signature and validity of E-contracts

An agreement which is enforceable by law is called a contract.[1] A contract is one of the essentials for carrying out a business or daily activities, which even exists over such subject-matter that we often ignore. Thus, one needs to have an understanding of the validity of a contract and in current times of Covid-19 pandemic, along with the fact that the government is trying to promote the flagship vision of Digital India across different government offices too, each business entity and common masses in general is moving towards digitalization which includes but is not limited to signing of an e-contract.


Moreover, e-contracts find its validity vide section 4 of the IT Act which places enforceability and possibility of performance of e-contracts similar to that of signing of contracts in physical form. But, certain kinds of documents are excluded from the scope of the IT Act, these; negotiable instruments, power of attorney, trust deeds, etc.[2]


In order to execute contracts electronically, such contracts must have to be authenticated by concerned parties to the contract. And, there are two ways through which such contract can be authenticated, firstly, through affixing DSC, and secondly, through affixing the handwritten signature electronically. As per section 3A of the IT Act, a subscriber is free to authenticate any electronic record through electronic signature/authentication technique which can be considered or listed under Second Schedule of the said Act.


India’s obligation under UNCITRAL

Use of electronic authentication techniques are increasing on daily basis and taking place of handwritten signatures along with any other traditional form of authentication process. Thus, it was important to draw a legal framework within which uncertainties involved in the legal validity of digital signatures, and with this objective, Modern Law on Electronic Signature has been drafted on the fundamental principle of Article 6 read with Article 7 of the UNCITRAL model law on digital signature.[3]


Furthermore, it is important to note that such international laws need to be merged with municipal laws to keep pace with the changing world scenarios.[4] And, India has adopted the validity of digital signatures which is evident from the relevant provisions as mentioned earlier regarding procedure of obtaining DSC and the areas in which such digital signatures are valid in accordance with the provisions laid down in the IT Act.


Conclusion

It is evident from the changing world scenario in the wake of Covid-19 pandemic and with technological advancement, the importance of digital signatures or e-contracts are gaining momentum because of numerous advantages as pointed out in earlier sections. The Information Technology Act, 2000, gives an impetus to changing the model of business along with daily contractual activities, and apart from all that, even it can be observed that many of the documents except few are now permitted to be stored in an electronic form. Thus, the concept of digitalisation in the modern world is a new normal which has to be adopted by everyone to keep pace with the change so that to prevent oneself from becoming obsolete.

[1] The Indian Contract Act, 1872, s.2(h). [2]Supra Note 1, Schedule First. [3]United Nations Commission on International Trade Law (UNCITRAL Modern Law on Electronic Signatures), 2001, Articles 6, 7. [4]Ref. The Constitution of India, 1950, Article 253. [5] The Information Technology Act, 2000, s.2(1)(zg). [6]Information Technology (Certifying Authorities) Rules, 2000, Schedule-IV. [7]Ibid. s.35. [8]Ministry of Corporate Affairs, “Obtain Digital Signature Certificate”, https://www.mca.gov.in.Accessed on 02 September 2021. [9] The Indian Evidence Act, 1872, s.65B. [10]Subramanya, S.R &Byung, K. YI, “Digital Signatures”, IEEE Potentials 25(2), pg.5-8, DOI: 10.1109/MP.2006.1649003, April 2006. Available at: https://www.researchgate.net/publication/3227862_Digital_signatures. [11]Shekhar, Mayank, “Digital Signature and Electronic Signature”, Legal Bites, 23 March 2020.