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CMA Foundation · Fundamentals of Business Laws and Business Communication · E-Contracts and E-Signature - Meanings and Requirements

Nimbus Trust Services Pvt Ltd holds a licence to issue electronic signature Certificates. It wants to sell the licence to Kaveri Digital Ltd for a price. Under section 21 of the IT Act, 2000, what is the legal position?

The licence cannot be sold. Section 21(3)(b) states that a licence to issue electronic signature Certificates is not transferable or heritable. Informing the Controller or the buyer's meeting the prescribed requirements does not change this, so the proposed sale to Kaveri Digital has no legal effect.

  1. AThe sale is valid if the Controller is informed afterwards
  2. BThe sale is valid if Kaveri Digital meets the prescribed requirements
  3. CThe licence is not transferable, so it cannot be soldCorrect
  4. DThe licence can be transferred but not inherited

Explanation

Section 21(3)(b) says a licence granted shall not be transferable or heritable. Hence no sale is possible, even to a buyer who meets the requirements or after informing the Controller. The option allowing transfer but not inheritance is wrong because the licence is neither transferable nor heritable.

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