Compounding of offence cannot be refused on prior investigative statements when settlement is final and dues are paid.

Rejection of compounding for alleged absence of full and true disclosure was held unsustainable where settlement proceedings had already attained finality and the disclosure had been accepted. The earlier investigative statements, by themselves, could not establish that the compounding application contained a false disclosure. As the statutory precondition of payment of adjudged dues was satisfied, refusal to compound on that basis was unjustified. The impugned order was set aside and the appeal was allowed.

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Issues: Whether rejection of the application for compounding of offence on the ground of absence of full and true disclosure was sustainable.

Analysis: The application for compounding was rejected because the competent authority doubted the veracity of the disclosures made by the appellant. The record showed that the matter had earlier been taken before the Settlement Commission, where the disclosure was accepted and the dispute was settled on payment of the adjudged dues. Once that settlement had attained finality, the earlier statements recorded during investigation could not by themselves justify a finding that the compounding application contained a false disclosure. The only material precondition for compounding was payment of the adjudged dues, which was not in dispute.

Conclusion: The rejection of the compounding application was unsustainable and the issue is decided in favour of the appellant.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: Where the settlement proceedings have attained finality and the statutory precondition of payment of adjudged dues is satisfied, rejection of compounding solely on the basis of prior investigative statements is not justified if the compounding disclosure itself is not shown to be false.

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