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Section 89: Penalty for instigation

The Industrial Relations Code, 2020 (Act No. 35 of 2020) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter XIII: Offences and Penalties
Competent Labour Forum
Act No. 35 of 2020
Section 88 All 104 Sections of Industrial Relations Code, 2020 Section 90

Legal Commentary & Landmark Judgments: Section 89

Section 89 of the Industrial Relations Code, 2020 introduces a progressive statutory mechanism for the compounding of specified offences under the Code either before or after prosecution is instituted, providing an expeditious administrative pathway to discharge penal liability upon payment of designated compounding fees.

  • Scope and Permissibility of Compounding: Any offence punishable under the Code with fine only, or with imprisonment for a term not exceeding one year (or with fine, or with both), may be compounded by a Gazetted Officer authorized by the appropriate Government, either before or after the institution of prosecution.
  • Compounding Fee Matrix: Compounding fee is fixed at fifty percent of the maximum fine prescribed for that offence if compounded before prosecution, and seventy-five percent of the maximum fine if compounded after the complaint has been filed in the Magistrate's court.
  • Legal Effect of Compounding & Bar on Repeat Offenders: Compounding before prosecution operates as an absolute bar to filing any criminal complaint. Compounding post-prosecution must be reported to the Magistrate and has the statutory effect of an acquittal under Section 320 CrPC / Section 359 BNSS 2023. Compounding is expressly prohibited for any person who commits the same offence within three years of a previous compounding or conviction.
Key Landmark Precedents:
  • Gian Singh v. State of Punjab (2012) 10 SCC 303: The Supreme Court observed that statutory compounding mechanisms facilitate commercial harmony, business continuity, and the de-clogging of criminal courts without compromising regulatory objectives in socio-economic enactments.
  • P. Mohanraj v. Shah Brothers ISPAT Pvt. Ltd. (2021) 6 SCC 257: Highlighted that modern corporate and industrial legislation increasingly favors civil compounding and monetary settlements over criminal incarceration for non-egregious regulatory contraventions.
  • State of Madhya Pradesh v. Laxmi Narayan (2019) 5 SCC 688: Affirmed that offences of a commercial, regulatory, or administrative character that do not involve heinous moral turpitude are legitimately resolved through statutory composition mechanisms.
Courtroom Practice & Strategic Litigation Guidance:

Upon receiving an inspection report or show-cause notice identifying an offence punishable under Section 86, evaluate whether it qualifies for composition under Section 89. Immediately submit an electronic compounding application to the designated Gazetted Officer prior to the filing of a criminal complaint, securing the lower 50% compounding rate. Ensure the compounding fee is remitted through the authorized government treasury challan to secure formal statutory discharge and avoid trial.

Section 88 All 104 Sections of Industrial Relations Code, 2020 Section 90