The Central Government has notified the Drugs and Cosmetics (Compounding of Offences) Rules, 2025, which came into force on April 25, 2025. These new rules outline the procedures and framework for the compounding of certain offences under the Drugs and Cosmetics Act, 1940, potentially offering an alternative to prosecution for less severe violations.
Under these rules, both the Central and State Governments are empowered to appoint officers, not below the rank of the reporting authority as defined within the rules, as compounding authorities. These authorities will be responsible for exercising the powers and functions of their respective governments in matters arising from these rules.
Individuals or companies involved in the manufacture, import, sale, distribution, or any other activity covered under the Drugs and Cosmetics Act and its rules can apply to the designated compounding authority for the compounding of an offence. This application can be made either before or after the initiation of prosecution and must be submitted in the prescribed form along with relevant information and documents. Importantly, each company or person involved must submit an individual application.
Upon receiving an application, the compounding authority is mandated to request a report from the reporting authority under whose jurisdiction the alleged offence occurred. This report will detail the particulars provided in the application and any other pertinent information for the authority’s review. The reporting authority is required to furnish this report within one month, or an extended period if granted by the compounding authority.
After considering the application and the report, the compounding authority can issue an order either allowing the application, specifying the compounding amount, and granting immunity from prosecution (as per Rule 6), or rejecting the application. However, the applicant must be given an opportunity to be heard, and the grounds for rejection must be clearly stated in the order. A copy of the order will be sent to the applicant.
Applicants whose compounding application is approved are required to pay the specified compounding amount within thirty days of receiving the order and provide proof of payment to the compounding authority. It is important to note that the compounding amount is generally non-refundable, except in cases where a court rejects the grant of immunity from prosecution. The rules also explicitly state that an applicant cannot claim the compounding of their offence as a matter of right.
The compounding authority, if satisfied that the applicant has cooperated in the proceedings and has made a full and truthful disclosure of the facts related to the case, may grant immunity from prosecution for the specific offence covered by the compounding, subject to any conditions deemed appropriate by the authority.
The immunity granted under these rules can be withdrawn under specific circumstances. If the person granted immunity fails to pay the compounding amount within the stipulated time or fails to comply with any other conditions attached to the immunity, the immunity will be revoked, and the provisions of the Drugs and Cosmetics Act will apply as if no immunity had been granted.
Furthermore, the compounding authority can withdraw immunity at any time if it is satisfied that the applicant concealed any material particulars or provided false evidence during the compounding proceedings. In such cases, the individual may be tried for the original offence or any other offence committed in connection with the compounding proceedings, and the provisions of the Act will apply as if no immunity had been granted.
These new Drugs and Cosmetics (Compounding of Offences) Rules, 2025, aim to provide a framework for resolving certain drug-related offences outside of traditional prosecution, potentially leading to quicker resolutions while still ensuring compliance and accountability within the pharmaceutical sector.
