Digitally Executed Agreements Valid If Parties Acted Upon Them: Punjab & Haryana High Court

The Punjab and Haryana High Court on 9 March, held that digitally executed agreements are valid even in the absence of physical signatures where the parties have acted upon them and do not dispute their existence.

A Single Bench of Justice Jasgurpreet Singh Puri appointed Justice B.S. Walia, former Judge of the Punjab and Haryana High Court, as the sole arbitrator to adjudicate disputes between Delhivery Limited and Smartpaddle Technology Private Limited.

The Bench observed:

“It is not necessary that the agreement has to be physically signed and the same can always be signed digitally by both the parties and in the present case, the agreement was rather given effect to and the conduct of the parties would show that the agreement was acted upon.”

The dispute arose out of a Delivery Service Agreement dated 14 February 2019 executed between Delhivery and Smartpaddle Technology for providing logistics and transportation services.

The agreement, which included detailed terms and conditions and a dispute resolution clause, was shared electronically and acted upon through email communications and commercial transactions between the parties. The contract also incorporated a hyperlinked document containing the scope of work and other governing terms.

Differences subsequently emerged between the parties regarding payments and performance of contractual obligations, following which Delhivery invoked the arbitration clause contained in Clause 12(i) of the agreement.

A formal notice dated 28 January 2025 was issued under the Arbitration and Conciliation Act, proposing the appointment of a sole arbitrator.

Smartpaddle, in its reply, refused to accept the proposed arbitrator and objected that the agreement was not valid as it had not been physically signed.

The matter reached the High Court through an application filed by Delhivery under Section 11(5) of the Arbitration and Conciliation Act, 1996 seeking appointment of an independent sole arbitrator.

The Court examined Section 7(4) of the Act, which recognises arbitration agreements formed through electronic communications or exchanges that provide a record of the agreement.

Delhivery contended that the agreement satisfied the statutory requirements as it was communicated via email, digitally acknowledged and subsequently acted upon by the parties. It also pointed out that Smartpaddle had not denied the existence of the agreement or the arbitration clause in its reply to the notice invoking arbitration.

Rejecting Smartpaddle's objection, the Court held that the statutory framework does not mandate physical signatures if the agreement is otherwise evidenced through electronic communication and the conduct of the parties.

Noting that Smartpaddle had acknowledged the agreement and engaged with the contractual framework governing the parties' relationship, the Court observed that the agreement had been acted upon through performance of services, exchange of invoices and other communications.

Holding that the essential conditions for the existence and invocation of an arbitration agreement were satisfied, the Court concluded that a prima facie valid arbitration clause existed and the disputes required adjudication through arbitration.

It directed the parties to appear before the arbitrator on a date to be fixed and then conduct the proceedings in accordance with the statutory timelines and fee provisions under the Arbitration Act.

Accordingly, the Court allowed the application and appointed Justice Walia as the sole arbitrator to adjudicate the disputes.

Appearances for petitioner (Delhivery Limited): Advocates Abhijeet Singh Rawaley.

Appearances for respondent (Smartpaddle Technology Private Limited): Advocates Veeraj Sharma.