Compounding, which is discretionary, is nothing but a settlement by paying the penalty instead of facing the prosecution for the offence committed. When compounding is done, the prosecution is converted into fine i.e. condonation of prosecution by imposing penalty. This is a shortcut to avoid litigation as it is not only time consuming but also unduly diverts the attention of the companies. It enables the offender company and the director / officer-in-default to avail peace and avoid cumbersome trial.