Are Virtual Signatures Legally Binding in India?

What Are Virtual Signatures?

Virtual Signatures are electronic representations of a person's physical wet-ink signature used to sign electronic documents. They can be created by drawing the signature electronically or by selecting a computer-generated template of the signer's name. These signatures can be placed anywhere on the electronic document as per the user's preference.

Legality Of Virtual Signatures in India

In India, the legal validity of electronic contracts, including those signed with virtual signatures, is established by Section 10A of the Information Technology Act, 2000. This section explicitly states that a contract cannot be denied enforceability merely because it was executed electronically. Therefore, electronic contracts including those signed with virtual signatures are legally valid and enforceable.

Exceptions to Using Virtual Signatures

Exceptions to using virtual signatures for eSignatures in India are as follows:

• Documents listed in the First Schedule of the IT Act, 2000: Certain documents are explicitly excluded from being signed with virtual signatures. These may include documents of significant legal importance or those involving specific regulatory requirements.
• Documents mandatorily requiring physical signatures under any law, rule, or regulation: Some documents are required by law to be physically signed, and virtual signatures may not be sufficient for their legal validity.

Key Factors for Enforceability

The legal enforceability of any type of e-sign including virtual signatures, depends on three key factors:

• Authentication: This refers to how well the e-sign method can establish the identity of the signer. Strong authentication methods, such as multi-factor authentication, bolster the credibility of the e-sign and reduce the risk of fraudulent signatures.
• Integrity: It concerns whether the document can be altered or tampered with after the e-signatures are affixed. To ensure integrity, electronic documents should be protected with security measures like digital signatures and encryption to prevent unauthorized changes.
• Non-repudiation: Non-repudiation means that the parties involved cannot deny their acceptance of the terms and conditions mentioned in the contract at a later stage. Robust e-sign methods often provide evidence of the signing process, making it difficult for signers to deny their involvement.

While Virtual Signatures are legally valid for most electronic contracts in India, their enforceability depends on the adequacy of authentication, document integrity, and non-repudiation mechanisms. For specific types of documents listed in the First Schedule of the IT Act or those requiring mandatory physical signatures under the law, virtual signatures may not be acceptable.

Case Laws Acknowledging the Validity of Virtual Signature:

• Rizwanuddin v. Union of India (2010): In this case, the Delhi High Court recognized the legal validity of electronic signatures and held that an electronic signature, which is generated through a process of asymmetric crypto system, is reliable and can be treated as a valid signature for the purposes of authentication of electronic records. This case set an important precedent for the acceptance of electronic signatures, including virtual signatures, in India.
• National Insurance Company Ltd. v. Pranay Sethi (2017): In this case, the Supreme Court of India ruled that an insurance policy contract, which was digitally signed and issued by the insurance company, was legally valid and enforceable. The court upheld the validity of the digital signature as a reliable means of authentication.

Ensuring Secure e-sign with Contractzy Audit Trail:

While virtual signatures are generally legal in India, choosing a reliable e-signature platform is essential. Contractzy, for instance, offers a robust Audit Trail feature that enhances the security and reliability of the signing process.

Audit Trail Provided by Contractzy

The Audit Trail provided by Contractzy is a comprehensive record of all the events and actions that occurs during the signing process of a document. It contains several key elements that enhance its security and reliability. Below is an explanation of the ingredients and security features of the Contractzy Audit Trail.

Ingredients of the Contractzy Audit Trail:

• Logging of signing transactions: The Audit Trail includes detailed logs of all the actions taken during the signing process, such as when the document was opened, when signatures were applied, and when the signing process was completed.
• Timestamps for every event: The Audit Trail timestamps every event in the signing journey, from the moment the first signer opens the signing invitation until the last signer completes their signature. This ensures a clear chronological record of the entire process.
• Public IP address of the signers: The Audit Trail captures the public IP addresses of the signers when they access the document for signing. This information helps in verifying the identity and location of the signers.
• Stamp paper details: If the document being signed is on stamp paper, the Audit Trail records the relevant details related to the stamp paper, such as its value, date of purchase, etc.
• Signer’s Location during Signature: The Audit Trail records the geographical location of the signers when they perform their signatures. This feature helps to establish the physical presence of the signers during the signing process.
• Signature Certificate Details: The Audit Trail includes information about the digital signature certificates used by the signatories. This information ensures the authenticity of the signatures and provides details about the certificate's issuer.
• Geo-location and Face Capture (if enabled): If enabled, the Audit Trail may capture additional security measures, such as geo-location data and face capture of the signers. These measures add an extra layer of security to the signing process.

Security Features of Contractzy Audit Trail:

The Contractzy Audit Trail is digitally signed the moment it is generated. This means that a cryptographic signature is applied to the Audit Trail, ensuring its authenticity and integrity. The cryptographic signature binds the Audit Trail to Contractzy, and any modifications or alterations to the Audit Trail after its generation will be detected, as the signature verification will fail.

Security Benefits:

• Tamper-Resistance: The digital signature on the Audit Trail ensures that any attempt to alter or modify the document or its Audit Trail will be immediately detected, as the signature verification will fail.
• Legal Validity: By being digitally signed, the Audit Trail qualifies “Section 65B: secure electronic record" under the Indian Evidence Act, 1872. This means that it can be presented as evidence in any court of law, and its integrity will be assumed, provided the digital signature is verified successfully.

Conclusion

Virtual signatures offer a convenient and legally sound way to sign documents electronically in India. By understanding the legal landscape, key factors for enforceability, and choosing a secure e-signing platform with comprehensive audit trails like Contractzy, you can ensure your e-contracts are legally binding and secure.