E-Signatures in India
Trimex International FZE Ltd. Dubai vs. Vedanta Aluminium Ltd., India.
(2010)3SC C 1.
The Supreme Court in the 2010 case of Trimex International FZE Ltd. Dubai vs.
Vedanta Aluminium Ltd., India.[6] (“Trimex Case”) provided this clarity with regard
to contracts concluded on emails. In the Trimex Case the Supreme Court, held that
inference can be drawn from documents exchanged on telegram, emails etc. (“Tele
communication”) that a valid contract subsists given that intention of the party to be
bound by the terms of such Tele-communications and essential elements of a valid
contract are present.
Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal and Ors
(2020)7SCC1.
Admissibility- In 2020, the Supreme Court while interpreting section
65B (Admissibility of electronic records) of the Indian Evidence Act, 1872
(“Evidence Act”) in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal and
Ors.[7] (“Arjun Panditrao Case”) attempted to streamline the procedure to be
followed for adducing electronic records[8] as admissible in a court of law. In the
Arjun Panditrao Case, the Supreme Court has clarified that admissibility of electronic
records will need to be tested in accordance with Section 65B of the Evidence Act.
Further, the Apex Court also explained that the original electronic device on which
such electronic record is stored will be considered as ‘primary evidence’ and the
copies of such electronic record will be deemed as ‘secondary evidence’. In case such
electronic record is being considered as primary evidence, then the certificate required
to be produced from an officer in charge of the ‘original device’ under section 65B(4)
of the Evidence Act shall not be required.
SEBI’s interpretation on e-Execution
Recently, Investment Advisor, Paytm Money Limited (“Paytm”) and Portfolio
Manager, Purnartha Investment Advisers Pvt. Ltd (“Purnartha”)[9] approached the
Securities and Exchange Board of India (“SEBI”), individually, seeking guidance on
whether agreements under the relevant SEBI regulations, can be concluded through
electronic signatures or by the client providing consent on emails. SEBI came up with
two very different interpretations for concluding such investment management
agreements.
In response to executing Investment Agreements between the Investment Advisor and
the customer, mere electronic consent of the customer and maintaining the electronic
version of the investment agreement is not sufficient for compliance under the SEBI
(Investment Advisor) Regulations, 2013. On the other hand, SEBI in its informal
Guidance to Purnartha, allowed affixing electronic signatures as per the IT Act, on the
portfolio management agreement for compliance under applicable regulations. Going
with the interpretation of SEBI, it is pertinent to note that the securities market
regulator views electronic contracts concluded on emails and electronic signatures
affixed on electronic contracts differently. In the strictest sense, the interpretation by
SEBI to Paytm seems to be in contravention of the principles laid down by the
Supreme Court under the Trimex Case.
Evidentiary Value
The DS and electronic records are recognized by the Indian Evidence Act, 1872 under
various sections (Section 3, 22A, 47A, 67A, 85) and holds an evidentiary value
under Section 73-A.
Tamil Nadu Organic Pvt. Ltd. Vs. State Bank of India, AIR 2014 (Writ Petition No.
34736 of 2013)
Execution of Digital Signature
The Madras High Court inter alia held that, "the contractual liabilities could rise by
the way of electronic means and that such contracts could be enforced through law.
Moreover, the court also stated that authentication of electronic records are usually
made by affixing of digital signature as provided under section 3 of the IT Act and
that section 10-A of the IT Act enables the use of electronic records and electronic
means for the conclusion of agreements, contracts and other purposes."
Electronic signatures are legally recognized in India and are provided for in the Information
Technology Act, 2000 (“ITA”), the Indian Contract Act of 1872 (“ICA”) and the Electronic
Signature or Electronic Authentication Technique and Procedure Rules, 2015 (“ESEATPR”).
Electronic Signature under Indian Law
Electronic Signature has been brought into existence under Section 3A by
the Information Technology (Amendment) Act, 2008.
Section 5 of the Information technology Act, 2000 considers the e-signature on par
with physical signatures when they are done in the manner prescribed.
They are also admissible as evidence in the court of law as per Section 65-B of the
Indian Evidence Act, 1872.
Section 67A of the Indian Evidence Act, 1872 says that a signatory has to demonstrate
that the electronic Signature belongs to him in case of any dispute related to e-
signature on any document arises.
Section 66C of the Information Technology Act, 2000 renders punishment and penalty
for identity theft, which also includes an electronic signature.
Digital Signature
A digital signature is a type of electronic signature that is encrypted and assures a signer’s
identity. The Digital Signature is usually authorized because trusted authorities conduct
verification of a digital signature. The best part about a digital signature is that it is more
secure as compared to an electronic signature.
