Introduction
This is the second part of the blog titled Redefining Coercion, From “Forbidden” to “Punishable”: Analyzing the Impact of the Indian Contract Amendment Bill, 2024, relating to the impact of the changes proposed by the Bill. The first consideration i.e, the one arising out of the terminology change from “forbidden” to “punishable” was concluded to restrict the scope of Section 15 of the Indian Contract Act (“Contract Act”). The other change i.e., from “IPC (now BNS)” to “any law for the time being in force” is the subject of today’s discussion which, on the face of it, seems to open the pandora’s box for claims under Section 15.
The current definition of coercion under Section 15 only covers acts done or threats made to commit an act forbidden by the Indian Penal Code, 1860 (The 2024 amendment Bill replaces the term IPC with BNS).The proposed amendment aims to broaden the scope of the section to include acts punishable under any other law in force at the time. Should this Bill be passed, the section’s scope would know no bounds since there is no shortage of laws (such as the Prevention of Money Laundering Act, 2002 (“PMLA”)) which subject certain conduct to punishment in one way or the other.
Is there a need for this amendment?
The Indian definition of coercion is already wider than the English and the American definitions. The current definition is wide enough to cover acts which are committed to prejudice to any person i.e., it is not necessary that the act be caused to the prejudice of the person being coerced. This assumes the existence of a strong moral compulsion that the person being coerced can face, at the threat or commission of the act in question. The Indian Penal Code serves as a great filter for this since it covers the most heinous offences within it.
Illustration: Where A threatens B to sign a deed or else he will kill the loved ones of B is a situation which will attract Section 15. However, if B threatens to burn the Taj Mahal, that would also be capable of attracting Section 15 since the IPC punishes mischief and vandalism.
The above illustration demonstrates that the scope of the current definition is wide enough to cover even acts which do not directly hurt the person being coerced. Further, there is no requirement that the person coercing stands to gain directly from the practice (for this, see para 23 of Karuppayee Ammal v. Karuppiah Pillai and para 17 of Chikkam v. Chikkam. This differs strictly from the definition of coercion in the UK and the US since both of those legal systems require for the act to directly affect the person being coerced.
Rationale in the Bill behind the proposition
The Bill argues that the change is justified since “the Indian Penal Code is not the only law that defines and punishes offences in India.” This statement seems to have merit since we have recently seen a lot of special acts covering offences which are not covered under the IPC. In this vein, one can assert, if the counterfeiting of coins is covered under IPC as an offense, there is no reason for offences such as money laundering or smuggling (covered by special acts such as PMLA) to not be capable of causing coercion as well.
But there is also the argument that there is need to reduce the scope of the existing section and not to expand it further since both the counterfeiting of coins and money laundering should not ordinarily work to coerce a person (whether a stakeholder or not) into agreeing to terms. This concern however is not too substantial since there are other safeguards which ensure that only legitimate claims are given protection. One such safeguard at the courts’ disposal is to assess whether it can reasonably be seen that the act is intended to coerce and also if the contract is attributable to the said coercion. Hence, the amendment merely makes it possible for coercion to occur in a wide number of ways, while not suggesting that threats such as those of counterfeiting coins or to launder money would ordinarily be capable of causing coercion.
Implications, should the Bill be passed
The definition under section 15 is of importance since many other laws rely on it to define “coercion” (see for example para 25 of Sri Bestha Rajasekhar vs Smt M Uma Devi, 7 March 2024). But there are instances, even within the Contract Act which define coercion differently from the definition under Section 15 such as section 72 of the Contract Act which means that any amendment to section 15 would not automatically operate to affect the meaning of the term “coercion” (see for example paras 40-41 of The Ganganagar Sugar Mills Ltd. v M/S. Madanlal Ramswaroop).
Within the amendment, it is notable that the phrase “any law for the time being in force” does not even limit the scope to Indian laws. This is further validated by the explanation to the (existing) section which clarifies that it is not necessary for the act to have been committed on Indian soil or where the IPC applies. Rather, it is simply the act forbidden (now punishable) by the law in question that needs to be looked at regardless of where it is committed. This could possibly attract multiple claims since almost every act that is punishable could be used to claim coercion since it is not even necessary that the act is to the prejudice of the person being coerced or is conducted by the person who seeks to directly gain from the coercion. This way, the statute provides no real filter at all and it is only the judicial interpretation which will have to use its discretion in assessing whether a certain act amounts to coercion. In essence, the statute, instead of limiting the grounds to those likely to actually influence be grounds of coercion dispenses with any meaningful filter to limit the citations where a party can make a claim of coercion. This does not sit in line with the already high pendency of cases since the defense of coercion can be made out in almost all cases since the remoteness of the claim is not considered even in the existing definition. It could actually be of help to keep the defense of coercion available only to cases where it is not highly unlikely that coercion, which forces a party to not act freely could be present. In any case, a more restricted definition has already been tried and tested in other jurisdictions (such as English and American law), meaning that the amendment might be trying to fix what isn’t broken, or even worse trying to fix what’s broken by going in the wrong direction i.e. widening the definition instead of narrowing it down.
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