Chapter VI - Registration of Charges
Section 86
Section 86: penalties for breaching the charge provisions
Section 86 is the penalty provision for Chapter VI of the Act, which deals with registration of charges. A company that defaults on any Chapter VI provision, and each officer in default, is liable to a fixed monetary penalty.
On this page
Need advice on Section 86?
This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) If any company is in default in complying with any of the provisions of this Chapter, the company shall be liable to a penalty of five lakh rupees and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees. (2) If any person wilfully furnishes any false or incorrect information or knowingly suppresses any material information, required to be registered in accordance with the provisions of section 77, he shall be liable for action under section 447.
Introduction
The section has been changed twice. The Companies (Amendment) Act, 2019 numbered the original text as sub-section (1) and added sub-section (2) on false information, deemed in force from 2 November 2018. The Companies (Amendment) Act, 2020 replaced the fine-and-imprisonment wording of sub-section (1) with civil penalties from 21 December 2020 (S.O. 4646(E)).
Section 86 originally commenced on 12 September 2013 under S.O. 2754(E).
Key takeaways
Company penalty
A company in default in complying with any provision of Chapter VI is liable to a penalty of five lakh rupees.
Officer penalty
Every officer of the company who is in default is liable to a penalty of fifty thousand rupees.
False charge information
A person who wilfully furnishes false or incorrect information, or knowingly suppresses material information, required for registration under section 77 is liable for action under section 447.
Penalties, not fines
Since 21 December 2020, sub-section (1) provides for penalties rather than fine and imprisonment.
Penalty for Chapter VI defaults
Under section 86(1), if any company is in default in complying with any of the provisions of Chapter VI, the company is liable to a penalty of five lakh rupees, and every officer of the company who is in default is liable to a penalty of fifty thousand rupees. Chapter VI covers sections 77 to 87, including the duty to register charges, satisfaction of charges and the register of charges.
This wording was substituted by section 16 of the Companies (Amendment) Act, 2020, in force from 21 December 2020 (S.O. 4646(E)). The 2013 text provided for a fine on the company, and imprisonment or fine, or both, for officers in default. Penalties under the Act are adjudged under section 454.
- India Code — consolidated Companies Act, 2013, section 86
- eGazette — Companies (Amendment) Act, 2019 (No. 22 of 2019)
- eGazette — Companies (Amendment) Act, 2020 (No. 29 of 2020)
- eGazette — MCA notification S.O. 4646(E) (2020 Amendment Act provisions in force 21 December 2020)
- eGazette — MCA notification S.O. 2754(E), 12 September 2013 (commencement)
False or suppressed information
Section 86(2) was inserted by section 12 of the Companies (Amendment) Act, 2019, which is deemed to have come into force on 2 November 2018. If any person wilfully furnishes false or incorrect information, or knowingly suppresses material information, required to be registered under section 77, that person is liable for action under section 447.
Practical preparation
Track every charge created on company assets; file particulars for registration within the time allowed by section 77; register satisfaction of charges under section 82; keep the register of charges under section 85 up to date; verify the particulars filed against the loan documents before submission; respond promptly to any adjudication notice.
Practical checklist
Do
- Maintain a charge tracker linked to every loan sanction and security document.
- Cross-check the particulars filed with the Registrar against the signed charge documents.
Avoid
- Do not ignore late or missed charge filings; each default exposes the company and its officers to penalty.
- Do not file incomplete or inaccurate charge particulars.
Illustrative example
Hypothetical: an unregistered hypothecation
A company hypothecated its stock to a bank but never filed the charge particulars with the Registrar.
Default
The failure is a default in complying with section 77, a Chapter VI provision.
Penalty
The company is liable to a penalty of five lakh rupees, and each officer in default to fifty thousand rupees.
Adjudication
The adjudicating officer adjudges the penalty under section 454.
Outcome
- Timely filing would have avoided both the penalty and the risk to the lender’s security.
Glossary
- Charge
- An interest or lien created on the property or assets of a company as security, as defined in section 2(16).
- Officer who is in default
- An officer described in section 2(60) who is responsible for the default.
- Adjudication
- The process under section 454 by which an adjudicating officer imposes a penalty.
Frequently asked questions
Is the penalty a fixed amount?
Yes. Section 86(1) states five lakh rupees for the company and fifty thousand rupees for each officer in default.
Can there still be criminal liability?
For wilfully false or suppressed information required for registration under section 77, section 86(2) makes the person liable for action under section 447.
When did the penalty regime start?
The substituted sub-section (1) has applied since 21 December 2020 (S.O. 4646(E)).
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026