What is Coercion under Indian Contract Act 1872

Coercion is a concept in the Indian Contract Act, 1872 that refers to the use of force or threat to compel a person to enter into a contract. Coercion can be physical, such as violence or imprisonment, or mental, such as intimidation or blackmail. Coercion can also be directed against the person contracting or any other person.

According to Section 15 of the Act, coercion is defined as committing, or threatening to commit, any act forbidden by the Indian Penal Code (45 of 1860) 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.

Thus, not only actually committing an act forbidden by law amounts to coercion but a threat to do such forbidden act is also considered as a coercion. It need not to be against the party to contract. It may be against some one else too. But the point to be noted for determing the coercion is that the purpose of exercising the coercion must be to make the other party to enter into a Contract. Otherwise it may be a crime but not coercion.

The effect of coercion on a contract is that it makes the contract voidable at the option of the party whose consent was obtained by coercion. This means that the coerced party can either affirm or rescind the contract. If the coerced party affirms the contract, he or she loses the right to rescind it later. If the coerced party rescinds the contract, he or she must restore any benefit received under the contract to the other party, unless it is impossible to do so.

Some examples of coercion in contracts are:

• A threatens to kill B if B does not sell his house to A at a low price. B agrees to sell his house to A out of fear. This is a contract induced by coercion and B can rescind it later.
• C threatens to publish some defamatory statements about D if D does not lend him some money. D agrees to lend him some money to avoid damage to his reputation. This is a contract induced by coercion and D can rescind it later.
• E unlawfully detains F's car and demands that F signs a promissory note in his favour. F agrees to sign the note to get his car back. This is a contract induced by coercion and F can rescind it later.

Coercion can be exercised by any person, not necessarily a party to the contract. It can also be directed against any person, not necessarily a party to the contract. The only requirement is that the coercion must have caused the consent of a party to the contract.

Coercion affects the validity and enforceability of contracts. It violates the principle of free will and autonomy of contracting parties. It also undermines the trust and confidence that are essential for fair and lawful transactions. Therefore, it is important to be aware of the meaning and consequences of coercion and to avoid entering into contracts under coercion.
The following case laws will help to understand the concept of coercion under Indian Contract Act 1872.

• Chikkan Ammiraju v. Chikkan Seshamma (1917) a husband threatened to commit suicide if his wife and sons did not execute a release deed in favour of his brother. The wife and sons executed the deed under duress and later sued to set it aside. The Madras High Court held that the threat to commit suicide amounted to coercion under section 15 of the Indian Contract Act, as it was an act forbidden by section 309 of the IPC (attempt to commit suicide). The court also observed that it was immaterial whether the threat was made in good faith or not, as long as it had the effect of inducing fear in the mind of the other party. The court therefore declared the deed to be voidable and allowed the wife and sons to rescind it.
• Askari Mirza v. Bibi Jai Kishori (1923) a minor girl was married to a man who was suffering from an incurable disease. The girl's father executed a deed of gift in favour of the husband's mother, transferring his entire property to her. The deed was executed under the influence of religious and moral pressure exerted by the husband's family, who threatened to expose the girl's plight to the public and bring disgrace upon her father. The father later filed a suit to cancel the deed on the ground of coercion. The Allahabad High Court held that the deed was obtained by coercion, as it involved a threat to injure the reputation of the father and his daughter, which was an act forbidden by section 499 of the IPC (defamation). The court also held that the coercion was not only directed against the father, but also against his daughter, who was a party to the contract by virtue of her marriage. The court therefore set aside the deed and restored the property to the father.
• Andhra Sugars Limited v. State of Andhra Pradesh (1968)In this case, a sugar company entered into an agreement with the state government to supply sugar at a certain price. The agreement also contained a clause that if the company failed to supply sugar as per the agreement, it would pay a penalty to the government. However, due to a shortage of sugarcane, the company could not fulfil its obligation and requested for relief from the penalty clause. The government refused to grant any relief and threatened to cancel the company's licence and take over its assets if it did not pay the penalty. The company paid the penalty under protest and later sued for its recovery on the ground of coercion. The Supreme Court held that the government's threat amounted to coercion, as it involved an unlawful detaining of property, which was prejudicial to the company's interest. The court also held that such coercion vitiated not only the penalty clause, but also the entire agreement, as it affected its very essence. The court therefore allowed the company to recover the penalty amount from the government.