Section 86 — Punishment & Section 87 — Rectification by Central Government
# Section 86 — Punishment for Contravention
## Persons Liable
Company
Every Officer in Default
Fine: Rs. 1 lakh to Rs. 10 lakh
Imprisonment up to 6 months OR fine Rs. 25,000 to Rs. 1 lakh, or both
## What Triggers Punishment?
Contravention of any provision of Chapter VI (Sections 77–87) — including failure to register a charge, modification, or satisfaction.
## Wilful Furnishing of False Information [Sec 86(2)]
If any person wilfully furnishes any false or incorrect information or knowingly suppresses any material information required to be registered, he shall be liable for action under Section 447 (fraud).
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# Section 87 — Rectification by Central Government
## When Can Rectification be Sought?
The Central Government (powers delegated to Regional Director) may direct rectification of the register of charges if it is satisfied that:
### Category A — Omission/Misstatement is NOT prejudicial to creditors/shareholders
1. Omission to give intimation of payment/satisfaction of charge to ROC, OR
2. Omission/misstatement of any particular in any filing relating to a charge, OR
3. Omission to register a charge within the time required.
## Who Can Apply?
The company, OR
Any person interested (e.g., charge-holder).
## Application
Filed in Form CHG-8 with prescribed fees.
CG may, on such terms and conditions as it deems just and expedient:
Extend the time for giving intimation of payment/satisfaction.
Direct that the omission/misstatement be rectified.
## Key Condition
The default must be:
Accidental, or
Due to inadvertence or some other sufficient cause, or
Not of a nature to prejudice the position of creditors or shareholders.
## Practical Importance
Section 87 is the last lifeline when statutory time limits under Sections 77 and 82 have lapsed — relief is from the Central Government, not the ROC.
Worked example
### Example 1
Example (Sec 86): ABC Ltd. failed to register a charge created on 1st April 2026 even after the 120-day window. It and every officer in default are liable to penalty/fine under Sec 86.
### Example 2
Example (Sec 87): ABC Ltd. (above) approaches Central Government in Form CHG-8 explaining that omission was due to inadvertence and not prejudicial to creditors. CG may direct ROC to register the charge.
### Example 3
Example (Sec 87 — satisfaction): XYZ Ltd. forgot to intimate ROC of satisfaction of a charge even after 300 days. It applies under Sec 87 in Form CHG-8 — CG may extend the time for intimation.
⚠️ Common exam mistakes
Confusing Sec 86 (punishment) with Sec 87 (rectification) — they operate independently.
Believing CG can condone delay in REGISTRATION beyond 120 days under Sec 87 — note that current jurisprudence allows Sec 87 relief only for satisfaction-related defaults; for registration beyond 120 days, the position is restrictive.
Filing the wrong form — Form CHG-8 is for Sec 87 applications, not Form CHG-1.
Forgetting that wilfully furnishing false information attracts Sec 447 (fraud) — a much more serious consequence than penalty under Sec 86.
Bare-Act text Sections 86 & 87 · Companies Act, 2013 · click to expand
Sec 86(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 under this Chapter, he shall be liable for action under section 447.
Sec 87: The Central Government on being satisfied that—(a) the omission to give intimation to the Registrar of the payment or satisfaction of a charge, within the time required under this Chapter; or (b) the omission or misstatement of any particulars, in any filing previously made to the Registrar with respect to any such charge or modification thereof or with respect to any memorandum of satisfaction or other entry made in pursuance of section 82 or section 83, was accidental or due to inadvertence or some other sufficient cause or it is not of a nature to prejudice the position of creditors or shareholders of the company, it may, on the application of the company or any person interested and on such terms and conditions as it deems just and expedient, direct that the time for the giving of intimation of payment or satisfaction shall be extended or, as the case may require, that the omission or misstatement shall be rectified.