In Absence of Minimum Fee, Compounding by Revenue Officials Is Not Criminal Misconduct: Kerala High Court Clarifies Power, Quashes FIR Against Two Accused

“Fixation of a lesser amount as compounding fee, in the absence of any minimum limit, by exercising discretion of the officers concerned, would not constitute an offence” – In a significant verdict clarifying the scope of criminal misconduct under the Prevention of Corruption Act, the Kerala High Court delivered a split ruling , partially quashing a Vigilance case filed against three Revenue officials accused of illegally compounding offences under the Mines and Minerals (Development and Regulation) Act, 1957. Justice A. Badharudeen ruled that no offence was made out against two accused, as their actions occurred before the 2015 Government Order which changed the compounding authority, and no minimum compounding fee existed at the time. However, the third accused who acted after the new rules came into force was denied relief, with the Court holding that the investigation against him shall continue.

The FIR stemmed from a Vigilance case registered in 2021, alleging that the Revenue officials, acting in their capacity in Thamarassery Taluk Office, had compounded 13 cases of illegal transportation of soil and minerals by collecting a meagre sum of ₹4,17,000 instead of the alleged proper amount of ₹15,25,000, thereby causing a loss of ₹11,08,000 to the State exchequer. The accused were charged under Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption Act, 1988, and they approached the High Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023, to quash the proceedings.

The petitioners, Praveen Kumar P.N. (Accused No.2), Latheesh Kumar K. (Accused No.4), and Valakkulavan Sreedharan (Accused No.7), argued that no offence was made out since there was no statutory prescription of a minimum compounding fee until 2017, and they exercised the compounding power based on the authority conferred upon them by S.R.O. No.860/1995, which was issued under the Kerala Minor Mineral Concession Rules, 1967.

The prosecution, on the other hand, contended that the Kerala Minor Mineral Concession Rules, 2015, came into force on 7 February 2015, and G.O.(P) No.77/2015/ID, dated 05.06.2015, superseded earlier orders, thereby stripping Revenue officials of the authority to compound such offences. Post this G.O., only the Geologists and officers of the Department of Mining and Geology were competent to undertake compounding actions.

“The legal position is emphatically clear. When there is inconsistency, the repealed enactment ceases to apply. Power has been fully vested in the officers mentioned in G.O.(P)No.77/2015/ID” – Kerala High Court on Change of Authority

The Court carefully analyzed the transition of legal authority and observed that under the new regime, the compounding authority stood transferred exclusively to the Mining and Geology Department from 05.06.2015 onwards. In that regard, the Court ruled:

“In view of the introduction of the KMMC Rules, 2015, the officers empowered under Annexure A14 G.O. had no power to compound the offence... and the power has been fully vested to the officers mentioned in G.O.(P)No.77/2015/ID, dated 05.06.2015, in suppression of Annexure A14.”

On the issue of pecuniary loss or corrupt intent, the Court made a key observation that in the absence of a prescribed minimum compounding fee, no assumption of criminal intent or loss could be drawn. The Government itself prescribed a minimum fee only through G.O.(Ms) No. 51/2017/ID, dated 21.06.2017.

The Court noted:

“Even the Geologists, who were duly empowered under the new G.O., had not imposed any minimum compounding fee, since no minimum fee had been fixed by the Government. In such circumstances, the mere fixation of a lesser amount by the 2nd accused, prior to the coming into force of the G.O. prescribing a minimum compounding fee, cannot, by itself, be construed as constituting any offence.”

“Since no minimum compounding fee was in effect, and compounding occurred before the new G.O., no offence is made out” – Kerala High Court quashes case against Accused Nos. 4 and 7

Accordingly, the Court found that Accused Nos. 4 and 7 had exercised the compounding powers prior to 05.06.2015, at a time when they were legally empowered and no minimum compounding fee was fixed. Hence, no criminality could be inferred, and their prosecution was unjustified.

Justice Badharudeen ruled:

“The contention raised by the learned counsel for the petitioners, insofar as accused Nos.4 and 7 are concerned, would definitely succeed, as they had not committed any offence.”

However, as far as Accused No.2 – Praveen Kumar P.N. – was concerned, the materials showed that seven compounding actions took place after 05.06.2015, when the new G.O. had already stripped him of any authority to compound such offences. The Court held that since his actions were without jurisdiction, the FIR and investigation against him could not be quashed at this stage.

“The compounding done by the 2nd accused in respect of 7 cases... was without any authority. Therefore, the investigation against the 2nd accused shall go on to culminate in filing a final report.”

In view of the distinction in legal position and factual timelines, the Court invoked its inherent powers under Section 528 BNSS and allowed partial quashment of the proceedings.

The interim stay earlier granted was also vacated.

Concluding, the Court held: “This petition is allowed in part. The entire prosecution as against accused Nos.4 and 7... stand quashed, while disallowing the quashment plea at the instance of the 2nd accused.”

The judgment reinforces the principle that in the absence of statutory minimums and in light of legal transitions, mere administrative discretion exercised in compounding, even if later superseded, cannot be criminalised retroactively.

Date of Decision: 12 December 2025