Expanding the ambit of IT Act in a bid for increased digitalisation

– Neha Sinha, Assistant Legal Advisor |


The Information Technology Act, 2000 (‘IT Act’) allows digital execution of documents by way of electronic and digital signatures. While the reach of IT Act is wide, certain contracts and transactions were excluded from its ambit. The First Schedule of IT Act enumerates the documents or transactions to which IT Act is not applicable and such documents or transactions cannot be signed digitally. Recently, the Ministry of Electronics and Information Technology has released a notification amending the First Schedule of the IT Act. The amendments are as follows:

  1. Entry No. 5 of the said Schedule included “any contract for sale or conveyance of immovable property or any interest in such property”. Contracts for sale of immovable property fell outside the scope of the IT Act and hence, could not be signed digitally. The Amendment has omitted the Entry No. 5, thus, bringing contracts for sale or conveyance of immovable property within the ambit of the IT Act. This amendment allows a contract for sale of immovable property to be executed digitally.
  2. Entry No. 2 of the said Schedule contained power-of-attorney, thus, excluding it from the purview of the IT Act. The amendment allows the application of the IT Act to those power-of-attorney that empower an entity regulated by the RBI, National Housing Bank, SEBI, IRDAI and PFRDA to act for the person executing it. Hence, a power-of-attorney in favour of entities regulated by these bodies can now be executed digitally.
  3. Entry No. 1 of the said Schedule, excluded the application of the IT Act to negotiable instruments other than a cheque. Hence, negotiable instruments could not be signed digitally, but cheques were exempt from this provision and they could be signed digitally.  The amendment has included other negotiable instruments and brought them within the purview of the IT Act. Now, a cheque, a demand promissory note or a bill of exchange issued in favour of or endorsed by an entity regulated by the Reserve Bank of India, National Housing Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority, can be signed digitally.
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