Coercion

A point of currency the textbooks have not caught up with. Section 15 names the Indian Penal Code 1860. The Penal Code was repealed and replaced by the Bharatiya Nyaya Sanhita 2023 with effect from 1 July 2024. Section 15 has not been amended, so the reference is read through section 8 of the General Clauses Act 1897, by which a reference to a repealed enactment is construed as a reference to the re-enacted provision. In an exam, write section 15 in its own words, naming the Indian Penal Code as the section does, and add that the reference now takes effect as a reference to the corresponding provision of the Bharatiya Nyaya Sanhita 2023. Criminal intimidation, section 506 of the old Code, is section 351 of the Sanhita.

Broken down: the two limbs

Section 15 has two independent limbs. Either will do.

Limb one: an act forbidden by the penal law

1. There is an act committed or threatened.
2. The act is forbidden by the penal law. This is the objective test, and it is what makes the limb workable.
3. It is done to the prejudice of any person whatever.
4. It is done with the intention of causing any person to enter into an agreement.

Limb two: unlawful detention of property

1. Property is detained or its detention is threatened.
2. The detention is unlawful. A lawful lien or a lawful right of retention is not coercion, however inconvenient.
3. Again, to the prejudice of any person, and with the intention of causing a person to enter into an agreement.

Three phrases that decide problems

"Any person whatever." The prejudice need not be to the party to the contract. A threat to harm the promisor's child, or to detain a stranger's goods, is within the section. This is deliberately wide, and it is regularly examined.

"With the intention of causing any person to enter into an agreement." Purpose matters. An act forbidden by the penal law that was not aimed at obtaining an agreement is not coercion under section 15, whatever else it is.

The Explanation. Coercion is judged by the Indian penal law even where the act was done somewhere that law does not run. The illustration is exactly this case, and it is the point the illustration exists to make.

The effect, and getting the money back

Voidable, section 19. Where consent is caused by coercion, the agreement is a contract voidable at the option of the party whose consent was so caused. So the coerced party may affirm it or avoid it, and until they avoid it the contract stands.

Restoring the benefit, section 64. When a voidable contract is rescinded by the party entitled to do so, the other party need not perform, and the party rescinding must restore any benefit received from the other party to the extent he has received it.

Money paid under coercion, section 72. This is the separate and very useful route. Section 72 provides that a person "to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it." It is a quasi contractual claim under Chapter V and it does not depend on avoiding a contract at all. See [Quasi Contracts: Obligations Resembling Those Created by Contract].

Burden of proof. The party alleging coercion must prove it. There is no presumption of coercion, and this is a real difference from undue influence, where section 16(3) shifts the burden in defined circumstances.

Coercion distinguished from undue influence

Set almost every year, because both concern pressure.

A worked example

Ganesh, a transporter, is holding forty crates of Latika's perishable mangoes in his warehouse. Latika has paid the agreed freight in full. Ganesh refuses to release the crates unless she signs a fresh contract giving him her transport business for the next three years at rates well below market.

• Is this coercion? Yes, under limb two. He is detaining her property, and the detention is unlawful because the freight has been paid and he has no right of retention. The threat to continue detaining it is made with the intention of causing her to enter an agreement.
• Does it matter that he threatened no violence? No. The two limbs are independent, and limb two needs no penal offence at all, only an unlawful detention.
• What is the effect? The three year contract is voidable at Latika's option under section 19. It binds Ganesh in the meantime.
• If she signs and then pays him an extra sum to release the crates, section 72 lets her recover that money as money paid under coercion, without needing to avoid the contract.
• If she avoids the contract, section 64 requires her to restore any benefit she received under it.

Now change the facts. Ganesh has a lawful lien because the freight is unpaid, and he refuses to release the mangoes until it is paid, adding that while he has them he would also like the three year contract. The detention is now lawful, so limb two fails. Whether the additional demand amounts to coercion depends on whether anything forbidden by the penal law was done or threatened, and on the facts as stated it was not. Latika's argument would have to be undue influence or unconscionability, which is a different and harder case.

What it does NOT mean

"Any threat is coercion." Only a threat to do something forbidden by the penal law, or to unlawfully detain property. A threat to sue, to terminate a contract lawfully, or to take one's business elsewhere is none of those.

"A threat to prosecute someone is always coercion." A threat to set the criminal law in motion where there are genuine grounds is not by itself an act forbidden by the penal law. It becomes coercion where it crosses into an offence, for example extortion or criminal intimidation, and an agreement to stifle the prosecution of a non compoundable offence is in any event unlawful under section 23.

"Coercion makes the agreement void." It makes the contract voidable at the option of the party coerced, under section 19.

"The threat must be against the other contracting party." The section says to the prejudice of any person whatever.

"Section 15 no longer works because the Penal Code is repealed." The reference is read as a reference to the Bharatiya Nyaya Sanhita 2023 through section 8 of the General Clauses Act 1897.

Quick revision

• s.15: coercion is committing or threatening any act forbidden by the penal law, OR unlawfully detaining or threatening to detain any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement.
• Two independent limbs; either suffices. Limb two needs no offence, only an unlawful detention.
• Explanation: it is immaterial whether the penal law is in force where the coercion was employed. The illustration is the English ship on the high seas.
• The penal reference now takes effect as the Bharatiya Nyaya Sanhita 2023 (in force 1 July 2024) via s.8 of the General Clauses Act 1897; criminal intimidation is s.351.
• Effect: voidable at the option of the coerced party, s.19. On rescission, restore benefits, s.64.
• s.72: money paid or anything delivered under coercion must be repaid or returned, as a quasi contractual claim.
• Burden is always on the party alleging coercion; there is no presumption.

Test yourself

1. Define coercion and set out its two limbs. Section 15 defines coercion as the committing, or threatening to commit, any act forbidden by the Indian Penal Code, or the unlawful detaining, or threatening to detain, any property, to the prejudice of any person whatever, with the intention of causing any person to enter into an agreement. The first limb rests on the criminal law; the second needs no offence at all, only that the detention of property be unlawful.

2. What does the Explanation to section 15 add, and what illustrates it? That it is immaterial whether the Penal Code is or is not in force in the place where the coercion is employed. The illustration is of A, on board an English ship on the high seas, causing B to agree by an act amounting to criminal intimidation under the Penal Code; A has employed coercion even though the act was no offence by English law and section 506 was not in force there.

3. Distinguish coercion from undue influence. Coercion is pressure of a physical or penal kind, needs no relationship between the parties, is tested objectively against the criminal law, and must always be proved by the party alleging it. Undue influence is moral or mental pressure that arises from a relationship in which one party is in a position to dominate the will of the other and uses it to obtain an unfair advantage, and under section 16(3) the burden may shift to the dominant party where the transaction appears unconscionable.

4. A carrier holds goods after freight has been fully paid, and demands a new contract. Advise. The detention is unlawful because the freight is paid and there is no right of retention, so the second limb of section 15 is satisfied, the detention being to the owner's prejudice and intended to cause her to enter an agreement. The resulting contract is voidable at her option under section 19, any extra money paid to release the goods is recoverable under section 72, and on rescission she must restore benefits received under section 64.

5. Is section 15 still workable now that the Indian Penal Code has been repealed? Yes. Section 15 has not been amended, but section 8 of the General Clauses Act 1897 construes a reference to a repealed enactment as a reference to the corresponding provision of the re-enacting statute, so the reference operates as one to the Bharatiya Nyaya Sanhita 2023, in force from 1 July 2024.