Settlement is a method of reaching agreement in a dispute whereby each party surrenders something that it wants. An agreement so reached in criminal cases is known as compounding.
The general scheme for compounding of offences has been given by Section 320 of CRPC. It lays down an elaborate list of offences which are compoundable directly and those which may be compounded only with the permission of the court. The effect of compounding shall be deemed to be acquittal in the case. No compounding is permissible except under Section 320 Cr. P.C.
The Policy of legislatures adopted in this section is that in the case of minor offenses, where the interest of the public is not vitally affected, the complainants should be permitted to come to terms with the party against whom they had complained.
The Principle behind this provision is that, wrongs of certain classes which are essentially of a private nature i.e. which affect mainly a person in his individual capacity or character, may be sufficiently redressed by compositions. The test of determining the classes of offences which concern individual only as distinguished from those which have reference to the interest of the state, has been laid down under this section and court of law cannot go beyond that test and substitute for it one of their own.
Compounding is even permissible to be done by the guardian and legal representative of minor indict or deceased complainant or injured, with the permission of the court. Compounding has also been permitted during the hearing of Appeal and revision in High Court or Supreme Court. But if the accused is a previous convict and he is liable to enhanced or some different kind of punishment than the ordinary punishment, compounding is not permitted.
It is also the duty of criminal court not to allow the withdrawal of the prosecution in non- compoundable offences. However, non-compoundable nature of the offence must be apparent on the face of the record or after the evidence of prosecution, if required. The compounding of the offence marks that the person against whom the offence has been committed has received some gratification, to act as an inducement for his desiring to refrain from a prosecution.
The verification of the compromise alone is sufficient, whether it is duly executed or not, is cases where permission of the magistrate is not mandatory. But otherwise when the permission is must, it must be obtained before filling a compromise in court and such permission can only be granted when the prosecution is pleading in court.
A Magistrate shall permit an offence to be compounded only if he is satisfied that such permission can be validly granted. He has the discretion to reject the permission if after filing of compromise complainant retract from compromise or it is found that the some of the offence or all of them are non compoundable or there are other valid reasons for not granting permission.
Compromise once affected cannot be withdrawn but it should be legal and only according to Sec. 320 of C.R.P.C. If the criminal court is set in motion by the issue of process in non-complainant to carry his prosecution upto the end of the case.