The advancement in technology has led to the creation of electronic cheques, particularly in a business to business environment. Different countries have a choice of cheque systems, which are governed by the laws applicable to each country's jurisdiction. The authentication of these electronic instruments is proposed to be endorsed by digital signatures. In India, the enactment of the Information Technology Act, 2000 obligated amendments to The Negotiable Instruments Act, 1881 in order to impart legal validity to such electronic instruments. The authors in this article elucidate the amended provisions and examine the evidentiary value of such electronic instruments.

The electronic cheque or simply the e-cheque is gradually replacing the longstanding paper cheque. The Negotiable Instruments (Amendments and Miscellaneous Provisions) Act, 2002 was amended to include the phrase "electronic cheque" in the definition of "cheque". Accordingly, the substituted definition of a cheque in Section 6 reads as "A `cheque' is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form."

It is a data string, which associates a message in the digital form with some originating entry. It is created and verified by means of cryptography, the branch of applied mathematics that concerns itself with transforming messages into apparently meaningless forms and back again. It uses a scheme or mechanism consisting of signature generation algorithm with a method for formatting data into messages to produce a digital signature, and a related signature verification algorithm with the method to recover data from the message to authenticate a digital signature.

It is important to note that, the Information Technology Act, 2000, in Section 3(2) provides for a particular asymmetric cryptosystem and hash function as a means of authenticating the electronic record. Any other method used by banks for authentication should be recognized as a source of legal risk.

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