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CS Professional · Compliance Management, Audit and Due Diligence · Non-Compliances, Penalties and Adjudications

Vistara Agro Ltd's director was compounded for an offence on 1 June 2022. The company's secretary is asked to advise on a similar offence committed on 15 July 2025, which the Regional Director is willing to compound, but an investigation against the company was initiated under the Act and is pending. Which advice is correct?

It cannot be compounded. Although over three years have passed so the offence counts as a first offence, the proviso to section 441(1) bars compounding while an investigation against the company is initiated or pending under the Act. Paying double the fine does not cure this bar.

  1. AIt can be compounded, as more than three years have passed, so it is a first offence
  2. BIt can be compounded only if the company pays twice the maximum fine
  3. CIt cannot be compounded, because the pending investigation bars compounding even though the three-year gap has passedCorrect
  4. DIt can be compounded, but only after the investigation ends and then only by the Registrar

Explanation

From 1 June 2022 to 15 July 2025 exceeds three years, so under 441(2) and the Explanation the new offence is deemed a first offence. But the third proviso to 441(1) says an offence shall not be compounded if investigation against the company has been initiated or is pending under the Act. So the pending investigation is the decisive bar; the Registrar has no compounding power.

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