# Punishment for Contravention (Section 86)

If a company contravenes any of the provisions relating to:

Registration of charges,
Modification of charges, OR
Satisfaction of charges,

the punishment is as follows:

## (i) For the Company

Fine: ₹5,00,000 (₹5 lakhs)

## (ii) For Every Officer in Default

Fine: ₹50,000

## Additional Liability under Section 447

Any officer of the company shall additionally be liable under Section 447 (punishment for fraud) if he:

Wilfully furnishes any false or incorrect information; OR
Knowingly suppresses any material information,

which is required to be registered under Section 77.

## Summary

Defaulter	Penalty
Company	Fine: ₹5,00,000
Every officer in default	Fine: ₹50,000
Officer giving false / suppressing material info	Additional liability under Section 447

## Significance of Section 447

Section 447 prescribes severe consequences for fraud — including imprisonment of not less than 6 months extending up to 10 years and fine, depending on the amount and impact of the fraud. Reference to Section 447 here signals that wilful false filings in charge registration are treated as serious frauds.

Worked example

### Example 1

Example: ABC Ltd. fails to file Form CHG-1 for a charge created in favour of Bank Z. The Registrar takes cognizance. ABC Ltd. is fined ₹5,00,000. The Managing Director and CFO, being officers in default, are each fined ₹50,000.

### Example 2

Example: The CS of XYZ Ltd. knowingly misstates the amount secured by a charge in the e-form filed with the ROC. In addition to penalty under Section 86, he is liable under Section 447 for fraud.

⚠️ Common exam mistakes

Treating Section 86 as the only consequence — wilful false information triggers additional Section 447 liability.
Confusing the fines on the company (₹5 lakhs) with that on officers (₹50,000 each).
Believing only the company is liable — every officer in default is independently liable.

Bare-Act text Section 86 · The Companies Act, 2013 · click to expand

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. 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.

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