Author: Adv. Jasleen Kaur
Last updated: 17.05.2020
India is moving towards digitization in all walks of life and with the unforeseeable pandemic situation that has dawned upon all of us recently, it would be hard to overlook the possibility of a digitally run economy with mitigated requirement of physical presence. From the advent of the Information Technology Act, 2000 (IT Act), digital signatures have been recognized in India. In fact, as per the IT Act, any contract formation expressed in electronic form or by means of electronic records shall not be deemed to be unenforceable solely on the ground that such electronic form or means was used for that purpose. With specific reference to property documents, the Report of the Steering Committee on Fintech Related Issues rightly recommends to consider amendments permitting digital alternatives in power-of-attorney, trust deeds, wills, negotiable instrument, other than a cheque, any other testamentary disposition, any contract for the sale or conveyance of immovable property or any interest in such property, etc.
Interestingly, the Central government executed the National Land Records Modernization Program (presently referred to as the Digital India Land Records Modernization Program) to accomplish total computerization of the property enlistment procedure and digitization of all land records. However, the pace of modernization of records and carrying them to an online stage has been moderate. As of September 2017, six states / association regions (UTs) had completed 100% computerization of land records, 10 states / UTs had completed upto 95%-99%. So as to improve the nature of land records, and make them increasingly available, the local government actualized the National Land Records Modernization Program in 2008. It aims to accomplish total computerization of the property enrollment procedure and digitization of all land records.
Scenario under the Information Technology Act, 2000
As per Section 3 of the IT Act, 2000, digital signatures are considered reliable, legal and secure because digital signatures employ hash functions and cryptosystems for electronic records. While it is true that Section 5 of the IT Act provides for Legal recognition of electronic signatures on documents by having an overriding effect on any law which provides that information or any other matter shall be authenticated by affixing the signature or even laws which provide that certain documents shall be signed or bear wet-signature of a person, Section 1(4) read with the First Schedule at the same time, provides an exception to contracts for the sale or conveyance of immovable property or any interest in such property from the purview of IT Act. The Act surely leaves a light of hope in the proviso to Section 1 by stating that the Central Government may, by notification in the Official Gazette, amend the First Schedule by way of addition or deletion of entries thereto. However, in the 2008 amendment to the Act, the entry relating to contracts of immovable properties was retained in the First Schedule.
The Registration Act, 1908
Though electronic records including electronic signatures are legitimately admissible and possess evidentiary value in the Indian courts by merely filing an affidavit under Section 65B of the Indian Evidence Act, 1872, the Registration Act, 1908 as originally drafted did not refer to electronic means of registering documents and continued to be used in India in its obsolete form for more than a century. It was only in The Registration (Amendment) Bill, 2013 – Bill No. XLVII of 2013 that the phrase ‘electronic means’ came to be used, undoubtedly as a result of the IT Act. Now, under Section 35 of the Registration Act that provides for the procedure of registration of documents, the persons executing the document have a choice to appear personally or through electronic means if they prefer to, before the registering officer. Not only this, the amendment also provided that when a document is registered through the electronic means, the rules made by the State Government shall be followed in this regard which makes it all the more easier for implementation at the local level.
Further, Section 69 of the Registration Act commends power of the Inspector-General to superintend registration offices and make rules in that behalf and clause (j) of sub-section 1 very broadly states that the Inspector-General shall have power from time to time to make rules generally, regulating the proceedings of the registrars and sub-registrars. Such being the case, the Act confers wide powers on the Inspector-General to modify the proceedings in the registering offices in a way that complement the requirements of a dynamic society like ours. A classic example of utilizing the Act to suit its needs has been set by the state of Maharashtra which initiated electronic registration of documents back in the year 2012 itself. It went a step ahead by enacting The Registration (Maharashtra Amendment) Act, 2010 by adding a new clause to sub-section 1 of Section 69 stating that the Inspector-General will also have powers to regulate the procedure for presentation of document, appearance for admission, endorsements, manner of fixing signature and seal and mode of payment of registration fees when the document is presented by electronic means.
The Transfer of Property Act, 1882
As per the Transfer of Property Act, 1882 the term “registered” means registered in any part of the territories to which the Act extends under the law for the time being in force regulating the registration of documents. The Transfer of Property Act 1882 truly confirms to the provisions of the Registration Act. Therefore, any instrument that has been registered and its registration is completed in the manner prescribed by the Indian Registration Act, 1908 (16 of 1908), and the rules made there under is considered to be a legitimate document under the Transfer of Property Act.
Looking into the provisions of the IT Act, The Registration Act and The Transfer of Property Act, it can be fairly stated that a combined reading of these three enactments will pave way of validly applying electronic signatures on documents related to immovable properties and their transfers in India. With specific reference to transactions related to conveyance of property and their registration as per the due process of law, it can be fairly stated that neither of these legislations explicitly or impliedly negate the application of electronic signatures but, in a way, only pave a way for such modifications to fall within their ambits.
Disclaimer: The article is only a view and cannot be considered as legal opinion.