SRP Ltd committed an offence under the General Clauses Act, 1897 for which investigation is initiated. Managing Director (MD) of the company called a meeting of Key Personnel Officers for immediate resolving the issue. D

Compounding of an offence is a settlement mechanism, by which, the offender is given an option to pay money in lieu of his prosecution, thereby avoiding a prolonged litigation. There is no definition of the word "compounding" in the Companies Act 2013, however, the legal meaning of compounding is "doing good the default/non-compliance". In simple words, we can define that Compounding of offence is a process whereby the person or entity committing default will file an application to the compounding authority accepting that he/it has committed an offence. The compounding authority (RD/NCLT) in case of the Companies Act, 2013 (the Act) may compound the offence and ask the defaulter to deposit fee which is compounding fees as decided by it on case to case basis. Which offences can be compounded? Not all offences under the Companies Act, 2013 can be compounded. Only the following offences (whether committed by a company or any officer thereof) as mentioned below, can be compounded under Section 441 of the Companies Act, 2013: Offences punishable with "fine only". Offences punishable with "fine or imprisonment or both" or "fine or imprisonment". Exceptions: Which offences cannot be compounded? No compounding shall be done in the following cases: Offence punishable with "imprisonment only"; or Offence punishable with "imprisonment and fine"; or Where investigation has been initiated or is pending against the company; An offence committed by a company or its officer within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. When compounding can be done? Certain offenses committed by a company or its officers that are punishable with a fine may be compounded. Third proviso to Section 441 (1) of the Companies Act, 2013 states that any offence covered under this sub-section by any company or its officer shall not be compounded if the investigation against such company has been initiated or is pending under this Act. Conclusion: In view of above details, as in the given case the investigation is initiated, it can't be compounded. Hence, the Company secretary in employment is correct.