Analyzing decisions [Biswabahan Das v. Gopen Chandra Hazarika, AIR 1967 SC 895; Sheonandan Paswan v. State of Bihar, (1987) 1 SCC 288], it is evident, legislative sanction for compounding of offences is based upon two contrasting principles: first, private parties should be allowed to settle a dispute between them at any stage (with or without the permission of the Court, depending on the offence), even of a criminal nature, if proper restitution has been made to the aggrieved party; and second, this should not extend to situations where the offence committed is of a public nature, even when it may have directly affected the aggrieved party.

As such, in deciding on whether to compound an offence, a Court does not just have to understand its effect on the parties before it but also consider the effect it will have on the public. Hence, societal interest in the prosecution of crime which has a wider social dimension must be borne in mind.

Section 320, CrPC provides for compounding of offences only under IPC. Hence, in respect of offences which lie outside IPC, compounding may be permitted only if the statute which creates the offence contains an express provision for compounding before such an offence can be made compoundable. The power of compounding must, in other words, be expressly conferred by the statute which creates the offence.

– Hon’ble Justice Dr. D.Y. Chandrachud, Prakash Gupta v. Securities and Exchange Board of India, [Criminal Appeal No. 569 of 2021].