OFFENCES AND PENALTIESCentral

Section 31 of The Payment and Settlement Systems Act, 2007

(1)Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act for any contravention, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may, on receipt of an application from the person committing such contravention either before or after the institution of any proceeding, be compounded by an officer of the Reserve Bank duly authorised by it in this behalf.
(2)Where a contravention has been compounded under sub-section (1), no proceeding or further proceeding, as the case may be, shall be initiated or continued, as the case may be, against the person committing such contravention under that section, in respect of the contravention so compounded.

Summary

Compounding is a way to settle an offence by paying a fee instead of going through a full trial.
Only offences that do not strictly require a prison sentence can be settled this way.
If a crime can only be punished with prison, it cannot be compounded.
A person must apply to the Reserve Bank to request this settlement.
A specially authorized officer from the Reserve Bank handles the compounding.
Once a matter is compounded, all legal proceedings for that specific mistake must stop.

Practical examples

1Ms. Gupta is accused of a minor reporting error. She applies to the RBI to compound the offence. An officer agrees, she pays a settlement fee, and the case is closed.

2A company realizes they broke a rule that carries a fine. They apply to settle before the RBI even takes them to court. The RBI accepts the compounding, preventing any future trial.

FAQ

1. Can I settle any crime under this Act through compounding?

No, you cannot settle any offence that is punishable by prison only, or by both prison and a fine.

2. Who do I talk to if I want to compound an offence?

You must submit an application to the Reserve Bank of India.

3. Can I settle after the court case has already started?

Yes, the law allows you to apply for compounding either before or after legal proceedings have begun.

4. What is the benefit of compounding?

Once an offence is compounded, no further legal action can be taken against you for that specific violation.

Test yourself

Q1.Under Section 31 of The Payment and Settlement Systems Act, 2007, which of these offences can be compounded?

Q2.Who has the authority to compound an offence under Section 31 of The Payment and Settlement Systems Act, 2007?

Q3.According to Section 31 of The Payment and Settlement Systems Act, 2007, what is the legal effect of compounding an offence?

Q4.Under Section 31 of The Payment and Settlement Systems Act, 2007, when can a person apply to compound an offence?

30PreviousSection 30 Power to exempt.32NextSection 32 Act to have overriding effect.

←Section 30 Section 32→