PROJECT REPORT ON
THE INDIAN CONTRACT ACT 1872
Acknowledgement
I would like to take this opportunity to thank every one who put forth their time and efforts to help me to develop this project. This
project took a long time from the collection of information to the compilation. This project could not have been written without the guidance of our Prof. Amita Verma who not only served as our supervisor but also encouraged us to make this project report.
COERCION
According to section 15 of The Indian Contract Act 1872, “Coercion is 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 intention of causing any person to enter into an agreement.1
Coercion is said to be there where there were the consent of a person has been cause either by :-
1. Committing , or threatening to commit any act forbidden by the Indian Penal code, or by 2. Unlawful detaining, or threatening to detain any property.2 Such an act should be to the prejudice of any person whatever.
ESSENTIALS OF COERCION 1) Act forbidden by the Indian Penal Code It has been noted above that if a person commits 1
or
threatens
to
commit
an
act
Bare Act, The Indian Contract Act, 1872, section 15 Avtar Singh, The law of contract, Eastern Book Company, Lucknow, 1978, p. 109 2
forbidden by the Indian Penal Code with a view to obtaining the consent of the other person to an agreement, the consent in such a case is deemed to have been obtained by coercion. For instance, A threatens to shoot B if B does not agree to sell his property to A at a stated price, B’s consent in this case has been obtained by coercion. For coercion, it is not necessary that the Indian Penal Code should be applicable at the place where the consent has been so caused. Explanation to section 15 makes it clear that to constitute coercion, “it is immaterial whether the Indian Penal Code is or is not in force in the place where the coercion is employed.” The following illustration3 would explain the point :A, on board an English ship on the high seas, causes B to enter into an agreement by an act amounting to criminal intimidation under the Indian Penal Code. A afterwards sues B for breach of contract at Calcutta. A has employed coercion, although his act is not an offence by law of England, and although section 506 of the
3
Illustration to Section 15
Indian Penal Code was not in force at the time when, or at the place where, the act was done. In Ranganayakamma v. Alwar Setti,4 the question before the Madras High Court was regarding the validity of the adoption of a boy a widow, aged 13 years. On the death of her husband, the husband’s dead body was not allowed to be removed from her house for cremation, by the relatives of the adopted boy until she adopted the boy. It was held that the adoption was not binding on the widow as her consent
had
been
obtained
by
coercion.
According to Pollock and Mulla, by obstructing the removal of the corpse the possible offence tried to be committed was under section 297, Indian Penal Code, which provides punishments to a person for wounding the feelings of the person by offering indignity to any human corpse . the authors also think that the case could well have been covered under section 16 of the Indian Contract Act as the widow’s consent had been obtained by undue influence. 5
4 5
I.L.R. (1889) 13 Mad. 214. Indian Contract and Specific Relief Acts, 9th ed., p. 134
In
Chikkan
Ammiraju
v.
Chikkam
Seshama.6 The question before the Madras High Court was that whether coercion could be caused by a threat to commit suicide. In this case A, a Hindu, by a threat of suicide, induced his wife and son to execute a release deed in favour of A’s brother in respect of certain properties claimed as their own by the wife and the son. The question before the court was whether a threat to commit suicide could be considered to be an act forbidden by the Indian Penal Code. It was held by Wallis, C.J. and Seshagiri Ayyar, J. that a threat to commit suicide amounted to commercial within
the
meaning of section 15 of the Indian Contract Act and therefore the release deed was voidable. It was observed that the threat to commit suicide could be considered to be an act forbidden by the Indian Penal Code and also the threat to kill oneself was an act where a person was acting to his own prejudice and also to the prejudice of his wife and the son, and thus the requirements of section 15 were satisfied. Oldfield J, who dissented, was, however, of the view that suicide is not an act forbidden by the Indian 6
I.L.R. (1918) 41 Mad. 33
Penal Code (only an attempt to commit suicide is punishable under section 309, Indian Penal Code) and a threat to do that could not be considered to be a threat to do a forbidden act within the meaning of section 15 of the Contract act. The majority view in this case appears to be quite
convincing. Section 309,I.P.C. makes
an (unsuccessful) attempt to
commit suicide
punishable. In this case there was nothing but a threat to (successfully) attempt a suicide. As (successful) attempt to commit suicide is not punishable under I.P.C. because there is no possibility of punishing the wrongdoer, a threat to commit suicide, therefore, should be treated as coercion. Section 15 of the contract act should be amended to expressly cover such cases also, so that uncertainty caused by different views on the subject is avoided.
Need for amendment of section 15 It
may
be
noted
that
committing
or
threatening to commit any act forbidden by the
Indian
Penal
Code
constitutes
coercion.
Acts
forbidden by other Penal laws are not included in the definition. The Law Commission of India in its report on the Indian Contract Act has recommended 7 amendment of section 15 and inclusion in the definition
other
Penal
Laws
also.
The
recommendation is as under:“the proper function of the Indian Penal Code is to create offences and not merely to forbid. A Penal Code forbids only what it declares punishable. There are
Laws
other
than
the
Indian
Penal
Code
performing the same function. We suggest that the words “any act forbidden by the Indian Penal Code should be deleted and a wider expression be substituted therefore so that Penal Laws other than the Indian Penal Code may also be included. The explanation should also be amended to the same effect.”
2) Unlawful detaining of property According to section 15 coercion could also be
caused
by
the
unlawful
detaining,
or
threatening to detain, any property, to the 7
13th report (1958), p. 21
prejudice of any person whatever, with the intention of causing any person to enter into an agreement. For example, if an outgoing agent refuses to hand over the account books to the new agent until the principal executes release in his favour, it is coercion as held in Muthiah Chettiar v. Karupanchetti.8 If the detention of property is not unlawful, there is no coercion. Thus, if a mortgagee refuses to convey the equity of redemption except on the terms dictated by him, there is nothing unlawful in it
and, therefore, no
coercion is caused in this case as held in Bengal Stone Co. Ltd v. Joseph Hyam.9
Forcible dispossession of property under threat is coercion If a person is dispossessed of his property under illegal threat that unless he parts with the possession he would be detained under MISA ( Maintenance of Internal Security), partying with the property under such threat amounts to coercion under section 15. 8 9
AIR (1927) Mad. 852 (1918) Cal.L.J. 78
In Krishan Lal Kalra v. N.D.M.C.10 is an example of persons affected by excesses of Emergency period proclaimed in 1975. In this case the plaintiff was given license by
the
N.D.M.C.
(New
Delhi
Municipal
Committee) to run an open air Restaurant in Connaught Circus, New Delhi. The lease was to expire on 31st May 1978. The plaintiff, who started running the Restaurant under the name and style “Rumble Open Air Restaurant”, was allegedly thrown out of the premises after taking forcible possession thereof without due process of law by the defendant who sent demolition squad with police force on
7th
August, 1976. There was also a threat that the plaintiff would be detained under MISA, if he did not hand over the possession of the property. The
plaintiff
alleged
that
there
was
coercion and he filed the present suit claiming damages of Rs. 10 lacs. It was held that a person is not bound by any act done under duress or coercion. In this case the threat that the plaintiff would be 10
AIR (2001) Delhi 402
detained under MISA amounted to coercion. The plaintiff’s suit was decreed for a sum of Rs. 9,11,525.12 with cost as well as interest @ 12 % w.e.f 7th August,1979 i.e. the date of filling the suit till the payment of the decreed amount.
To the prejudice of a preson Section 15 requires that there should be committing or threatening to commit, ant 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. It means that the act causing coercion should not necessarily be directed against the contracting party, it is enough that the act is to the prejudice of any person whatever, and with the intention of causing any person to enter into an agreement. If, for example, A unlawfully detains B’s son, C, in order to coerce B to enter into the agreement, the case would be covered within this section. Apart from that, it also not
necessary
that
the
wrongful
act
causing
coercion should proceed from the party to the contract. Thus, if in order to coerce a widow to adopt a child, the relatives of the adopted boy do not allow the dead body of the widow’s husband to be taken out of the home until the adoption is made, this is coercion as held in Ranganayakamma v. Alwar setti.11
Threat to strike is no coercion In workmen of Appin Tea Estate v. Industrial
Tribunal,12
the
demand
of the
workers for bonus was accepted after a threat of strike. The question which had arisen was, whether such a decision between the union of workers and the Indian Tea Association could be declared void on the ground that there was coercion. It was held that the cause of the doctrine of collective bargaining under the Industrial Disputes Act, the demand of the workers could be backed by a threat of strike. Such threat was neither a threat to commit an offence under the Indian Penal Code, nor was it 11 12
I.L.R. (1889) 13 Mad, 214 AIR (1966) Assam 115
unlawful detaining of threatening to detain any property and hence it did not amount to coercion and as such the agreement was valid.
Statutory compulsion is no coercion When a statute requires a contract to be entered into, the consent in such a case is not deemed to be caused by coercion, undue influence, fraud, misrepresentation or mistake. In Andhra Sugars Ltd v.
State of A.P.,13 if
any cane grower offered to sell his sugarcane to a factory in a certain zone, the factory was bound to accept the offer under the Andhra Pradesh Sugarcane (Regulation Of Supply and Purchase)
Act,
1961,
and
accordingly
the
agreement was entered into. It was held that in such a case even though there was a legal compulsion
for
the
factory
to
make
the
agreement, the agreement could not be said to be entered into by the lack of free consent, and there was no coercion either.14 13
AIR (1968) S.C. 599 R.K.Bangia, Indian Contract Act, Allahabad Law Agency, Faridabad, 2004, p. 113 14
Hence it can be concluded by making it clear that coercion as thus defined implies a committing or threatening to commit some act which is contrary to law with fulfilling the essentials of coercion.
BIBLIOGRAPHY
1. Bangia R.K., Indian contract Act, Allahabad Law Agency, 10th edition. 2. Singh Avtar, Indian Contract Act, Eastern Book Co., 1978. 3. Pollock and Mulla Indian Contract and Specific Relief Acts, 9th edition 4. www.Indiankanoon.com. 5. www.manupatra.com.
