This article has been written by Diva Rai, a student of Symbiosis Law School, Noida. In this article she discusses coercion and duress, unlawful detaining of property, compulsion of law, effect, causation and nature of threats.
Section 15 defines coercion as committing any act forbidden by The Indian Penal Code, 1860 or unlawful detaining of property, or threatening to commit these acts. Coercion invalidating a contract need not proceed from a party to the contract or be immediately directed against a person whom it is intended to cause to enter into the contract. It includes unlawful detention of property.
Coercion and Duress
Coercion under this Act is much wider than what was duress in the English law. It includes unlawful detention of property, may be committed by any person not necessarily a party to the contract, and may be directed against any person, even a stranger, and unlike duress, causing of immediate violence or unnerving a person of ordinary firmness of mind are not necessary under the Indian law.
Act Forbidden by the Penal Code
The words act forbidden by the Indian Penal Code, make it necessary for the court to decide in a civil action, whether the alleged act of coercion is such as to amount to an offense. In Ammiraju v Seshamma, a question arose as to whether a release executes by a wife and son in consequence of a threat of committing suicide had been obtained by coercion within the meaning of this Section. Wallis CJ and Seshagiri Aiyar J answered the question in the affirmative, holding that the word forbidden was wider than the term punishable, and that though a threat to commit suicide was not punishable under The Indian Penal Code, 1860 it must be deemed to be forbidden, as an attempt to commit suicide was punishable under the Penal code (s 309).
Threat of Bringing Criminal Charges
The mere threat of bringing a criminal charge does not amount to coercion, as it is not per se forbidden by the Penal Code. But the threat of bringing a false charge with the object of making another do a thing was coercion, for although threatening another with criminal prosecution was not per se forbidden by it when the threat related to a false. In Kishan Lal Kalra v NDMC, the plaintiff had claimed that he had surrendered the possession of the disputed site not voluntarily but under a threat that if he did not so, then he would be arrested and detained under The Maintenance of Internal Security Act, 1971. It was held that the receipt obtained by the defendants was by exercising pressure, duress and coercion.
Under the language of the Section as it stands, a threat to commit an offense under any law other than The Indian Penal Code 1860, may not amount to coercion. Recognizing this, the Law Commission of India had recommended a wider expression to include penal laws other than the Indian Penal Code 1860. It has been held that an agreement to refer matters in dispute to arbitration entered into during the pendency and in fear of criminal proceedings could not be avoided on the ground of coercion, though the agreement may be void as opposed to public policy within the meaning of s 23. Refusal to withdraw a prosecution, unless a bond was executed for the amount due, was not covered by this Section, nor a threat of a strike.
A deed of retirement from partnership was challenged on the ground that it was obtained under threat/coercion and it was signed in a police station. It was held that this could only be regarded as a voidable contract, but since it was not avoided immediately and the retiring partner had also accepted the benefit as such, so the same was valid.
Unlawful Detaining of Property
Consent can be said to be caused by coercion if it is caused as a result of unlawful detainment of property, or threat to do so. A refusal on the part of a mortgagee to convey the equity of redemption except on certain terms is not an unlawful detaining or threatening to detain any property within the meaning of this Section. Where an agent, whose services were terminated, detained accounts to obtain his release, the release was induced by coercion. Where in order to realize fine due from a son, the government attached the property belonging both to him and his father, payment then made by the father in order to save the property from being sold was held to have been made under coercion.
To the Prejudice of any other Person- In Ammiraju v Seshamma, where the threat by a husband to commit suicide caused the wife to release the property, it was held that the wife was prejudiced. The possibility of the husband leaving the wife and the child uncared for was sufficient in the eye of law to furnish a ground of prejudice.
Proof of Coercion and Burden of Proof
The defendant relying on the defense of coercion should set out all the facts constituting these invalidating circumstances. A suspicion or mere probability is not sufficient to support a plea of coercion. In a contract made between parties where duress was not the sole reason for entering into a contract, there is no burden on the party threatened to show that but for threat, no agreement would have been made. Such an agreement was void (under the English law) unless the party who made the threats could show that the threats contributed nothing to the other party’s decisions to enter into a promise.
The burden of proof does not lie on the innocent party to show that but for the threats, no contracts would have been signed. It is for the party using the alleged threats to establish that the acts of alleged threats or unlawful pressure contributed nothing to the consent of the other party to the contract.
Power of the Court Under the Specific Relief Act 1963
Where the terms of the contract or the conduct of the parties at the time of the making of the contract, though not rendering the contract voidable, gave the plaintiff an unfair advantage over the defendant had entered into the contract under circumstances which make it inequitable to enforce specific performance.
Coercion under Section 72
The definition contained in this section is for the purpose of considering whether the consent to a contract was free under s 14. It does not govern the meaning of the term as used in s 72 of the Contract Act, where every kind of compulsion would be covered, even if it did not measure up to the definition under s 15.
Compulsion of Law
The compulsion of law is not coercion under this Section, and the contract is, in the eyes of the law, freely made. In Andhra Sugars v State of Andhra Pradesh is a case of the eligibility of the sales tax on ‘sale’ of sugar, the cane growers were not bound to accept it under the Andhra Pradesh Sugar Act 1961. This was held to be an agreement not caused by coercion, undue influence, fraud, misrepresentation or mistake. The contract was neither void nor voidable but was valid under s 10.
In Vishnu Agencies v Commercial Tax Officer, a question arose whether cement supplied under the orders of the Cement Control Act of West Bengal was a sale, and the court held that it was no less a contract because it lacked volition, or was made under compulsion. So long as mutual assent was not totally absent, it was a contract.
Under statutory regulations relating to the supply of sugarcane, sugar factories are compelled to enter into an agreement with the cane growers on various terms and conditions including the price fixed by the state known as State Advised Price. Although the price may not be to the liking of the sugar factory, yet s 15 is wholly inapplicable. It is well settled that even a compulsory sale does not lose the character of a sale. The state has regulatory power under the statute to fix the price of sugarcane. Such sales do not attract the element of coercion as defined under s 15.
The mere fact that the contract has to be entered into in conformity with and subject to restrictions imposed by law does not per se conformity with and subject to restrictions imposed by law does not per se impinge on the consensual elements in the contract. The compulsion of law is not coercion and despite such compulsion, in the eye of the law, the agreement is freely made.
Under the English law, actual or threatened violence to the victim’s person has long been recognized to amount to duress, but duress may consist of actual or threatened imprisonment as in Cumming v Ice, now also includes wrongful threats to property or threats to seize goods, and wrongful or illegitimate threats to his economic interests, where the victim has no practical alternative but to submit. In Lynch v DPP, Northern Ireland all five members of the House of Lords rejected the notion that duress deprives a person of his free choice, or makes his act non-voluntary.
Duress does not deprive the victim of all choice, it leaves him with a choice of evils. A person acting under it intends to do what he does but does so unwillingly. Duress deflects without destroying the will of one of the contracting parties. Though earlier cases have requires that the duress must negate true consent and render the victim’s actions non-voluntary, later cases have applied the test of whether the victim had a practical choice.
Effect on Contract
A contract obtained by means of duress exercised by one party over the other is at very least voidable and not void, but if it is voluntarily acted upon by the party entitled to avoid, it will become binding on him.
It is sufficient that a threat to the victim’s person was a reason for the victim entering into the contract, and it was not necessary for him to show that he would not have entered into the contract without the threat, and the other party could show that the threat had not influenced the victim. In Barton v Armstrong, there was a struggle for power between A and B over L Ltd. and A had threatened B on various occasions with death if L Ltd did not agree to pay a sum of money and purchase his shares. The evidence showed that B was frightened by those threats, but they had not influenced him in executing a deed on behalf of L Ltd. B sought a declaration that the deed was secured under duress and was void.
The Privy council held that if a person threatens another with unpleasant consequences and if the other does not act in a particular manner, he must take the risk that the impact of his threat may be accentuated by extraneous circumstances for which he is not, in fact, responsible. They further held that A’s threats may have been unnecessary, but it would be unrealistic to hold that they played no part in making B decide to execute the documents even if A had made no threats and exerted no unlawful pressure to induce him to do so, the threats and unlawful pressure, in fact, contributed to b’s decision to sign the documents and recommend their execution. The Privy Council made the declaration that the deeds in question were executed by B under duress and were void so far as the rights or obligations inter se of the parties to the deed were concerned.
Nature of Threats
Not all threats are improper or illegitimate. A threat to commit a crime or tort is improper. A threat to break a contract may not amount to duress on the ground simply that the victim was influenced by the threatened action. Something more than commercial pressure is required. A threat to prosecute would be lawful if the charge is known to be false, and the false, and the threat is for an improper motive, but a threat to institute civil proceedings cannot amount to duress.
A threat to carry out something within one’s rights is not duress unless coupled with unreasonable demands. It has been observed in CTN Cash & Carry Ltd v Gallaher Ltd, that though in certain circumstances, a threat to perform a lawful act coupled with a demand for payment may amount to economic duress, extending such duress in commercial context would have far-reaching implications, and would introduce a substantial and undesirable element of uncertainty in the commercial bargaining process, in the sense that it would enable bona fide settled accounts to be reopened when parties to commercial dealings fell out.