Admissibility of E-sign in India

16 May 2022

In the era of Digital India, electronic contracts or e-contracts are rapidly replacing paper-based contracts. 

E-contracts are preferred by parties as they are cost-effective, faster to execute, harder to forge, and do not require the logistical hassles of signing paper contracts. The COVID-19 outbreak and resulting restrictions in movement and physical interactions had made it difficult for people to come together and sign paper contracts, thus increasing the appeal of e-contracts.

The Information Technology Act, 2000 (“IT Act”) recognizes electronic records, rendering them valid if they are made available in electronic form and accessible for future reference. As per section 3 of the IT Act, any person can authenticate an e-contract by affixing his digital signature. Further, contracts formed through electronic communication and electronic records are legally binding under section 10A of the IT Act. 

The IT Act recognizes two types of electronic signatures, viz: (a) digital signatures; and (b) electronic signatures, in order to authenticate electronic documents and records. Digital signatures work through the application of symmetric cryptosystems and hash functions and are associated with certificates issued by third-parties licensed by the government. Electronic signatures, on the other hand, include providing signatures through any electronic process. 

Use of digital signatures requires a Digital Signature Certificate,  which is assigned by a certifying authority as provided under the IT Act. The validity and enforceability of electronic and digital signatures shall be the same as handwritten signatures. 

Further, section 3 of the Indian Evidence Act, 1872 (“Evidence Act”) covers electronic records under the definition of the term “evidence”. Information contained in an electronic record is deemed as a document under Section 65B of the Evidence Act, and is admissible as evidence in any proceedings. Additionally, every contract that contains electronic signatures is presumed to be concluded under Section 85A of the Evidence Act. Section 85B of the Evidence Act further stipulates that in any proceeding involving secure electronic/digital signatures, the court is required to presume that the secure electronic/digital signature is affixed by the person to whom it relates.

In conclusion, e-contracts and documents which are electronically signed shall be deemed to be valid and enforceable. 



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