Introduction
A contract is a legally enforceable agreement between two parties. Contracts are usually written on paper and signed by both parties (“Paper Contracts”). The Indian Contract Act, 1872 (“Contract Act”), however, makes no provision that a contract must be written on paper and signed by the parties. In fact, an oral Contract is legitimate as long as it meets the requirements for a valid Contract under the Contract Act. As a result, Paper Contracts are recommended due to their enforceability and evidentiary significance. Paper Contracts would be useful in the event of a dispute between the parties because the presence and conditions of the Contract could be easily shown.
This raises the question of whether Electronic Contracts or Electronic Signatures (contracts stored in digital form on an electronic device) can replace Paper Contracts in the Digital Era. To put it another way, whether Electronic Contracts in the eyes of the law have the same validity and enforceability as Paper Contracts?
Provisions of Information Technology Act of 2000 (“IT Act”) in conjunction with the Contract Act; Answers these Questions
According to Section 4 of the IT Act, if any law requires that information or any other matter be in writing, typewritten, or printed form, such requirement shall be deemed satisfied if such information or matter is–
(a) rendered or made available in an electronic form; and
(b) accessible in such a way that it can be used for a subsequent purpose.
Furthermore, pursuant to Section 10 A of the IT Act, if a Contract is formed, proposals are communicated, proposals are accepted, proposals are revoked, and acceptances are revoked, such Contract shall not be deemed unenforceable just because such electronic form or means were used.
In Tamil Nadu Organic Private Ltd v. State Bank of India, the Madras High Court noted that “Contractual responsibilities might emerge by way of electronic methods and that such Contracts could be enforced through the law,” citing the aforementioned clauses. Section 10A of the IT Act, according to the High Court, allows for the use of electronic records and electronic methods for the negotiation of agreements, contracts, and other reasons.
In light of the foregoing, it is evident that a Contract could be legitimately entered into by electronic means. The next challenge is how the parties can authenticate each other by signing the contract with their handwritten signatures. Similarly, an Electronic Contract could be authenticated by the parties by affixing their Electronic Signature on the Contract, as per sections 3 and 3A of the IT Act. Electronic Signatures, as defined in Section 3A of the IT Act, are electronic signatures that have been approved by the Central Government and are included in Schedule II of the IT Act.
Two modes of Electronic Signatures Approved by Govt
-
Aadhaar or other e-KYC services are used for e-authentication.
A user with an Aadhaar ID connected to their mobile number could sign digital documents securely online using an online e-signature service. In this example, an Application Service Provider (ASP) interacts with an online e-signature service to give users a mobile or web app interface with which they can engage. Users can then utilize this app interface to apply e-signatures to any digital document online by validating their identity using an eKYC service offered by an e-sign service provider, such as an OTP (one-time passcode). The online e-signature service collaborates with an accredited service provider to deliver government-compliant certificates and authentication services.
-
The use of a Digital Signature Certificate issued by a Certifying Authority authorized by the Central Government for e-authentication.
In this situation, a person could use a Digital Signature Certificate received from a Certifying Authority certified by the Central Government to authenticate a digital document. The Digital Signature Certificate is usually included in a USB token with a personal PIN, which may be plugged into a computer and used to sign a digital document using the PIN.
An Electronic Signature affixed to an Electronic Contract is the same as a handwritten signature affixed to a Paper Contract and has the same legitimacy.
Where any law requires that information or any other matter be authenticated by affixing the signature of any person, or that any document is signed or bear the signature of any person, such requirement shall be deemed to be satisfied, notwithstanding anything contained in such law, if such information or matter is authenticated by means of Electronic Signature.
Exception
A Contract for the sale or conveyance of immovable property or any interest in such property could not be completed via an Electronic Contract, according to Section 1(4) r/w Schedule No.1 of the IT Act.
Evidentiary Value of Electronic Signatures in court
The Supreme Court has thoroughly answered this matter in Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal and Others, interpreting Sections 65 A and 65B of the Indian Evidence Act, 1872 (Evidence Act). An original electronic document could be proven in court by the owner of a laptop computer, computer tablet, or even a mobile phone where such electronic document is stored, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him, as set forth in paragraph 72 of the Judgment.
If the above is not possible, a printout of the electronic document can be taken and proved in accordance with S.65B(1) of the Evidence Act, along with the required certificate under S.65B(4) of the Evidence Act, as laid down by another three-judge bench of the Supreme Court in Anvar P. V. v. P. K. Basheer & Ors. The certificate u/s 65 B(4) of the Evidence Act, according to the aforementioned judgment, must be signed by a person in a responsible official position in regard to the functioning of the device in which the electronic document is stored and;
must meet the following conditions:
(a) It must identify the electronic document;
(b) it must describe the way of production of the electronic document;
(c) it must include the specifics of the equipment used in the production of that document; and
(d) it must address the conditions set out in S.65-B(2) of the Evidence Act.
Read more blogs @advocatetanwar.com