Compounding

What is Compounding of Offence

Compounding means to agree for a consideration not to prosecute (an offence) or to settle amicably or adjust by agreement. To put it simply, compounding is set to take place when two people come to a settlement. In a legal sense compounding takes place when the victim and the accused come to an agreement by which the victim agrees to not prosecute the accused. Crimes, being public wrongs against the State and society at large, generally cannot be resolved by agreement. But, there are some crimes that are of a private nature and not as serious that can be resolved this way, known as compoundable offences. Most compoundable offences are also non-cognisable.

The Black’s Law Dictionary defines compounding a felony as "the offence committed by a person who, having been directly injured by a felony, agrees with the criminal that he will not prosecute him, on condition of the latter's making reparation, or on receipt of a reward or bribe not to prosecute.”

Official Definition

Compounding as defined in Legislation

Code of Criminal Procedure

The term “compounding” in itself is nowhere defined in Cr.P.C. However Section 320 of Cr.P.C explains the entire procedure of compounding an offence, as well as lists the offences that are compoundable (otherwise being non-compoundable by default) and who may compound offences (usually the victim or the person affected by the crime). Further, it clarifies that compounding of an offence has the same effect as an acquittal.

Section 320(1) of the Code, 1973 is as follows: “The offences punishable under the sections of the Indian Penal Code (45 to 1860) specified in the first two columns of the Table next following may be compounded by the person mentioned in the third column of that Table:” The Table lists twenty one offences. Section 320(2) similarly in a Tabular form provided for compounding of thirty six number of offences under the Penal Code but with the permission of the Court before which any prosecution of such offence is pending, Section 320(3) makes the abetment of any offences or an attempt to commit such offences when such attempt is itself an offence also compoundable. Subsection (4) to (8) provide for compounding of offence on the permission of appellate court revisional court, and the court to which the case is committed, the effect of composition, the effect of death of the person competent to compound and the bar against compounding of an offence where there is provision for enhanced punishment on account of a previous conviction. Lastly subsection (9) is in the following terms. (9) No offence shall be compounded except as provided by this section. As already indicated Section 320 of the Code, 1973 corresponds to Section 345 of the Code, 1898 with some changes as to the lists of Penal Code offences, absence of the effect of death of the person competent to compound and the absence of the bar of composition on enhanced punishment because of previous conviction.

Modifications under Bharatiya Nagarik Suraksha Sanhita (BNSS)

Section 359 of the BNSS (corresponding to Section 320 of the CrPC) now removes adultery for the table of compoundable offences. It provides for compounding with the permission of the Court for the offence of defamation, specified under Section 356(2) of the BNSS, as against the President or the Vice- President or the Governor of a State or the Administrator of a Union Territory or a minister in respect of his public functions when instituted upon a complaint made by the public prosecutor.

Compounding under Income Tax Act

Compounding of offence is a process whereby a person committing a default under the Income-tax Act files an application to the competent authority accepting that it has committed an offence and so that same should be compounded. Competent authority shall be Principal Chief Commissioner or Chief Commissioner or Principal Director-General or Director-General having jurisdiction over the assessee. It should be noted that the compounding of offences is not the right of the assessee. The competent authority may compound the offences on being satisfied with the fulfilment of the conditions subject to which the assessee is eligible for compounding of offence.

The Department of Income Tax has issued detailed guidelines under section. 279(2) of the Income Tax Act, 1961 relating to compounding of offences under Income Tax Act.

Compounding under Companies Act

The provisions pertaining to compounding of offences under the Companies Act, 2013 are set forth under Section 441 of Act. Section 441 of the Act provides for compounding of Offence punishable with fine only, or Offence punishable with fine or imprisonment or both. Under the Act, the compounding authority shall be either Regional Director or National Company Law Tribunal. An offence shall be compounded by Regional Director where the maximum amount of fine which may be imposed for such offence does not exceed INR 25,00,000. All offences where the maximum amount of fine which may be imposed for such offence exceed INR 25,00,000 shall be compounded by National Company Law Tribunal.

Compounding as defined in Case Laws

In the case of Murray v. Queen Empress, the court defined compounding as meaning that the person against whom the offence was committed receives some gratification in exchange for not pursuing prosecution. This gratification need not be financial. However, Sections 213 and 214 of the IPC still criminalise the acts of respectively receiving and offering gifts if the offences may not be legally compoundable.

The Court in the In Re: Policy strategy for grant of bail, Suo motu writ petition provided suggestions regarding compounding of offences. The court proposed the selection of specific courts as pilot cases to identify suitable cases for compounding of offences. These courts are instructed to identify cases pending at pre-trial or evidence stages, involving offences with a maximum sentence of 7 years' imprisonment, excluding certain specified offences. Notices are to be issued to the parties involved, informing them of the court's intention to consider disposing of the cases through compounding of the offence. Public Prosecutors are tasked with assessing the criminal antecedents of the accused, with only cases involving first-time offenders being considered. The court is directed to explain the provisions of compounding to the accused, allowing them time to consider their options. In cases where the under trial is in judicial custody, the court is to facilitate the provision of legal aid and explain the available options to the accused. Additionally, a timeline of 4 months is stipulated for the entire process, encompassing training of judicial officers, identification of cases, notice to the parties, and consideration of the matter. These measures aim to expedite the disposal of criminal cases and provide opportunities for resolution through alternative mechanisms while upholding the principles of justice and fairness.

Compounding as discussed in Government Reports

The 41st Law Commission Report has made recommendations on the issue of compounding in the 24th chapter. The report identified that offences considered private and relatively minor are compoundable. Further, it argued that there can be no general principle or rule to determine whether an offence is compoundable or not, rejecting proposals for a general rule making all offences punishable by up to 3 years compoundable. It argued for clear and specific provisions like those in the existing law.

The National Police Commission in its Fourth Report has suggested that the investigating officers should be empowered to compound an offence which is compoundable at the investigation stage itself and make a report thereof to the magistrate who shall give effect to the composition of such effect. According tot the report, it would help quicker disposal of cases in the compoundable category if the procedure is amended to empower the police officers to take note of the desire of the parties for the compounding of offences from the stage of investigation and thereupon close cases and report the matter to the Court which will have the authority to pass initial order from the police report as in every other case in which the police submit their report.

The 154th Report of law commission sets out the various reasons for which it has recommended the enlargement of the compoundable offences. In particular, it is recommended that a large number of offences be deleted from sub-section (2) of section 320 (offences compoundable with the permission of the court) and place them in sub-section (1) of section 320 (offences compoundable without the permission of the court). The offences so recommended to be shifted from sub-section (2) to sub-section (1) of section 320 are the offences punishable under sections 324, 325, 335, 343, 344, 346, 379, 403, 406, 407, 411, 414, 417, 419, 421, 422, 423, 424, 428, 429, 430, 451, 482, 483 and 486. The Report also supported the suggestions made by certain senior police officers and the National Police Commission in its Fourth Report that the investigating officers should be empowered to compound an offence which is compoundable at the investigation stage itself and make a report thereof to the magistrate who shall give effect to the composition of such effect.

The 237th Law Commission Report on Compounding of (IPC) Offences recommends compounding of offences under Section 380 (theft in dwelling house) subject to the proviso that the value of property stolen is not more than Rs.50,000/-; Section 326 IPC (causing grievous hurt by dangerous weapons) should not be made compoundable; Section 384 (extortion); Section 385 (extortion by putting a person in fear of injury); Section 461 (dishonestly breaking open receptacle containing property); Section 489 (tampering with property mark with intent to cause injury); Section 507 (criminal intimidation by an anonymous communication) subject to the rider that compounding shall be confined to criminal intimidation falling within the first part of Section 506. Further, offence of rioting under Section 147 IPC “provided that the accused is not charged with other offence which is not compoundable”, Section 324 IPC, 4 Section 498A IPC should be made compoundable under Section 320(2) of CrPC to be compounded with the permission of the Court. It also recommends making the offence of criminal conspiracy under Section 120-B IPC as compoundable provided it relates to other compoundable offences and to amend sub-section (3) of Section 320 accordingly.

Types of Compounding

There are broadly two categories of compounding under Section 320—offences where the permission of the court is required to compound, and offences where the permission of the court is not required. Most compoundable offences which require the permission of the court are cognisable offences.

For offences compoundable at the permission of the court, Kelkar summarises the considerations to be taken into by the court:

“While granting permission to compound an offence the court should act judicially and should exercise a sound and reasonable discretion. The safeguard of the court’s permission is to prevent an abuse of the right to compound and to enable the court to take into account the special circumstances of the case which may justify composition. While granting permission to enter into the composition and accepting the same, the chastened attitude of the accused and the commendable attitude of the injured complainant, in order to restore harmony in society, were taken into consideration by the court.”

Official Databases

Crime in India Report

Crime in India Report prepared by National Crime Records Bureau, contains statistics regarding disposal of cases through different methods, one of which is compounding of offences.

A snapshot of the data published by the report

This table shows court disposal of IPC crime cases in the year 2022, total number of cases compounded in the year were 175022.

Total No. Cases Compounded in the year 2022

International Experience

Like India, UK and US also criminalise the compounding of an offence outside of the purview of the law. However, neither uses the term ‘compounding’ to refer to legal compounding as well, instead using ‘out-of-court settlement.’ However, there is no strict legal framework in either of these jurisdictions, instead coming under the discretion of the prosecutor or a particular state in the US to frame its own laws on this aspect.

Way Forward

While data is limited, expanding the number of compoundable offences after careful analysis of their prevalence, severity, and societal impact can be considered. This is in line with reducing backlogs in courts and keeping cases out of the litigation. The focus must be on offences where compounding demonstrably benefits both parties and doesn't undermine public interest.

Secondly, victim consent procedures must be strengthened. Support and guidance services can be implemented to ensure informed decisions and address power imbalances, and to provide guidance and assistance throughout the compounding process, ensuring their rights and interests are protected.