Companies Act • Official Statutory Text & Practice Guide
Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 2013
Section 86 of Companies Act: Punishment for contravention of Chapter VI
Official Bare Act Text
Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary
If any company contravenes any provision of this Chapter, the company shall be punishable with fine which shall not be less thanone lakh rupees but which may extend to ten lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both.
Statutory Defined Terms in this Section:(Click any term for official legal definition)
Section 86 prescribes severe quasi-criminal financial penalties against companies and default officers for breaches of charge registration provisions, while imposing stringent criminal liability under Section 447 for fraudulent or false submissions.
Corporate and Officer Monetary Penalties: Subject to Section 86(1), any company in default under Chapter VI is liable to a penalty of five lakh rupees, and every officer in default is liable to a penalty of fifty thousand rupees.
Decriminalization and Adjudication Framework: Amended to substitute criminal prosecution with civil penalties adjudicated by the Registrar under Section 454 for procedural defaults in charge registration.
Stringent Criminal Sanction for Fraud: Under Section 86(2) (inserted by the 2019 Amendment), wilfully furnishing false or incorrect information or knowingly suppressing material information in charge filings attracts severe criminal prosecution under Section 447.
Officer in Default Accountability: Imposes direct personal liability on managing directors, KMPs, and designated directors who neglect or manipulate statutory charge filings.
Key Landmark Precedents:
Registrar of Companies v. Rajshree Sugar & Chemicals Ltd., (2000) 6 SCC 133: The Supreme Court affirmed that company law penal provisions for statutory non-compliance are strictly enforced, and default cannot be excused on grounds of administrative inadvertence without formal compounding.
K.K. Rohatgi v. State of Bihar, (1982) 52 Comp Cas 851 (Pat): Held that directors cannot evade penal liability for corporate non-filing of charges by claiming passive non-involvement, as the statute casts an affirmative compliance duty on the board.
P.S. Nanavati v. Mohanlal Kalidas, (1985) 58 Comp Cas 254 (Guj): Affirmed that deliberate suppression or falsification of charge particulars undermines commercial stability and warrants prosecution against corporate officers.
Courtroom Practice & Strategic Litigation Guidance:
When responding to a Section 86 show-cause notice from the RoC for delayed or deficient charge filings, immediately file a compounding application under Section 441 before the Regional Director (or make payment under the Section 454 adjudication mechanism). Ensure that the default does not involve suppression of facts, as any taint of fraud under Section 86(2) excludes compounding and leads to mandatory SFIO or criminal prosecution under Section 447.
Legal Commentary & Landmark Judgments: Section 86
Section 86 prescribes severe quasi-criminal financial penalties against companies and default officers for breaches of charge registration provisions, while imposing stringent criminal liability under Section 447 for fraudulent or false submissions.
When responding to a Section 86 show-cause notice from the RoC for delayed or deficient charge filings, immediately file a compounding application under Section 441 before the Regional Director (or make payment under the Section 454 adjudication mechanism). Ensure that the default does not involve suppression of facts, as any taint of fraud under Section 86(2) excludes compounding and leads to mandatory SFIO or criminal prosecution under Section 447.