I am referring to section 86 of the Companies Act, 2013 which has been notified among the 98 notifications on 12th September 2013. The other sections of this Chapter i.e. Chapter VI relating to registration of charges has not been notified. Only section 86 which deals with penalties, fines etc. has been notified.
This section levies a minimum fine of Rs.1 lakh on the companies which can go upto Rs.10 lakhs and every officer who is in default will face a punishment of imprisonment upto a term of 6 months or with a minimum fine of rs.25,000 which can extend to Rs.1 lakh or both. This is regarding Chapter VI which is registration of charges.
It is not clear in what circumstances will such hefty fines and penatlies be levied. Will it be for every delay in the filing of the registration of charges and modification or satisfaction of charges. Or will it be only in case of dispute proven in a trial in a Company Court or the National Company Law Tribunal.
If it is more mere delays in registration of charges, then it is very hefty and already there are provisions for getting the delay commuted by making an application to the relevant authorities which is the Regional Director in the present instance. In India there are many co-operative banks which are not very sensitive with regard to the time frame within which the charges or the modifications thereof are required to be filed. Also there are many companies who are not very aware of the provisions relating to the registrations or modifications of charges and therefore I feel this section is very draconian in its intent.