Section 86 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 86 is the penalty section of the Chapter on registration of charges (sections 77 to 87). If a company is in default in complying with any provision of that Chapter, the company is liable to a penalty of five lakh rupees and every officer in default to a penalty of fifty thousand rupees. Sub-section (2) separately brings false or suppressed charge particulars under section 447.
Section 86(1) applies when a company is in default in complying with any provision of the Chapter on charges (sections 77 to 87). The company is liable to a penalty of Rs 5,00,000 and every officer in default to a penalty of Rs 50,000. Under section 86(2), a person who wilfully furnishes false or incorrect information or knowingly suppresses material information required to be registered under section 77 is liable for action under section 447. The 2026 Bill does not appear to amend section 86.
Section 86 at a glance
| Sub-section | Who | What the text says |
|---|---|---|
| (1) | The company | Penalty of five lakh rupees for default in complying with any provision of the Chapter |
| (1) | Every officer of the company who is in default | Penalty of fifty thousand rupees |
| (2) | Any person | Wilfully furnishing false or incorrect information, or knowingly suppressing material information, required to be registered under section 77: action under section 447 |
The official text shows that sub-section (1) was substituted by the Companies (Amendment) Act, 2020 (w.e.f. 21-12-2020). The 2019 amendment Act had earlier numbered the original section as sub-section (1) and inserted sub-section (2), both w.e.f. 2-11-2018.
What "the provisions of this Chapter" cover
The penalty is triggered by default under any provision in sections 77 to 87. The duties most likely to be missed are these.
| Section | Duty or power | Time or condition in the text |
|---|---|---|
| 77(1) | Company creating a charge registers its particulars with the Registrar | Within thirty days of creation; the Registrar may allow later registration on application, on payment of additional fees |
| 79 | Section 77 applies to a company acquiring property subject to a charge, and to any modification of a registered charge | "So far as may be" |
| 82(1) | Company intimates the Registrar of payment or satisfaction in full of a registered charge | Within thirty days of payment or satisfaction; the Registrar may allow intimation within three hundred days on application and additional fees |
| 85(1) | Company keeps a register of charges at its registered office, with a copy of each instrument | Continuing duty |
If you need the registration procedure itself, see section 77 charge registration and our note on filing a charge with the ROC within 30 days. A charge-filing service is the quickest route to checking whether any old charge is still unregistered or unsatisfied on the record.
Who is an "officer who is in default"
Section 86(1) penalises the company and "every officer of the company who is in default". It does not penalise the lender. Some duties in the Chapter sit with someone other than the company. For example, section 84 puts the duty to give notice of a receiver or manager's appointment on the person who obtains the order or makes the appointment. Since section 86(1) speaks of the company and its officers, whether it reaches such a person is a question to take advice on rather than assume.
Late registration is not the only consequence
A penalty is not the whole cost of a missed charge filing. Section 77(3) says that, notwithstanding any other law, no charge created by a company is taken into account by the liquidator (appointed under the Companies Act or the Insolvency and Bankruptcy Code, 2016) or any other creditor unless it is duly registered and the Registrar has given a certificate of registration. Section 77(4) adds that this does not prejudice any contract or obligation to repay the money secured.
Section 78 lets the person in whose favour the charge was created apply for registration where the company fails to register within thirty days, without prejudice to the company's liability for any offence under the Chapter. Section 87 lets the Central Government extend time or rectify an omission or misstatement if it was accidental, due to inadvertence or some other sufficient cause, or not of a nature to prejudice creditors or shareholders. Our article on condonation of delay in filing charges covers how these routes are used in practice.
Section 86(2): false particulars
Sub-section (2) is aimed at a different wrong. It applies to any person who wilfully gives false or incorrect information, or knowingly suppresses material information, that section 77 requires to be registered. The consequence is "action under section 447", the provision on punishment for fraud. A timing default and a misstatement are therefore treated very differently: one is a money penalty, the other can reach the fraud provision. The text does not say a false particular is automatically fraud; it says action under section 447 lies.
How the penalty is imposed and reduced
Penalties under the Act are adjudicated by an adjudicating officer under section 454, with an appeal to the Regional Director. See section 454 on adjudication of penalties and section 454A on repeated default, because a second default within three years of a penalty order attracts double the penalty.
Section 446B reduces penalties for a One Person Company, small company, start-up company or Producer Company (and their officers in default): the penalty is not more than one-half of the penalty specified, subject to a maximum of two lakh rupees for a company and one lakh rupees for an officer. Applied to section 86(1), half of Rs 5,00,000 is Rs 2,50,000, so the two lakh ceiling applies to the company, and half of Rs 50,000 is Rs 25,000 for each officer.
Example. A private company creates a charge in favour of its bank and forgets to register it. The omission is found at the next diligence review. The company faces a Rs 5,00,000 penalty and the director who signed off on filings faces Rs 50,000. If the company is a small company, the section 446B cap would limit these to Rs 2,00,000 and Rs 25,000 respectively. The bank's security, meanwhile, would not be taken into account by a liquidator until it is registered.
Proposed change
We searched the Corporate Laws (Amendment) Bill, 2026 and did not find a clause amending section 86. The Bill is pending, not law.
Need help with charge compliance?
If your company has old borrowings, unsatisfied charges or a charge register that nobody has reconciled, our team can review the position and file the missing forms. Start with our charge filing service so that the register at the registered office and the Registrar's record match.
Key takeaways
- Section 86(1): Rs 5,00,000 on the company and Rs 50,000 on each officer in default, for any default under sections 77 to 87.
- Section 86(2): false or suppressed particulars required under section 77 lead to action under section 447.
- An unregistered charge is not taken into account by a liquidator or any other creditor (section 77(3)).
- Section 446B can halve the penalty for small companies, OPCs, start-ups and Producer Companies, with a cap of Rs 2 lakh and Rs 1 lakh.
- A repeat default within three years of a penalty order can cost twice as much (section 454A).
Read next
- Creation and registration of a charge (section 77)
- Condonation of delay in filing charges: NCLT application
- Section 454A: penalty for repeated default
- Section 446A: factors for determining level of punishment
Disclaimer: Based on the Companies Act, 2013 as amended up to 1 April 2021 (official consolidated text), read with later developments noted in the article; proposals in the Corporate Laws (Amendment) Bill, 2026 are pending and not law as on 30 September 2026. Verify current notifications and rules before acting.