When a company contravenes the provisions relating to books of account (Section 128), the following officers are held responsible:
### Persons Responsible
Managing Director (MD)
Whole-Time Director (WTD) in charge of finance
Chief Financial Officer (CFO)
Any other person of the company charged by the Board with the duty of complying with Section 128
### Penalty
Fine: ₹50,000 to ₹5,00,000 (₹5 Lakh)
### Quick Recall
Element
Detail
Section
128
Subject
Books of Account (preservation/maintenance)
Officer-in-default
MD / WTD Finance / CFO / Person charged
Penalty
₹50,000 – ₹5,00,000
> Tip: Books of account along with relevant vouchers are required to be preserved for 8 financial years immediately preceding a financial year (longer if directed by CG in case of investigation).
Worked example
### Example 1
Q: XYZ Ltd. failed to maintain its books of account for the prescribed 8-year period. The Board had specifically charged the CFO with the duty of compliance with Section 128. Who is liable and what is the maximum penalty?
A: The CFO (being charged by the Board), along with the MD and WTD-Finance, are officers-in-default. They are punishable with a fine ranging from ₹50,000 to ₹5,00,000 each.
⚠️ Common exam mistakes
Treating the penalty as imprisonment – Section 128(6) prescribes only a fine, not imprisonment.
Forgetting to include 'any other person charged by the Board' – they are equally liable along with MD/WTD-Finance/CFO.
Confusing the minimum (₹50,000) and maximum (₹5,00,000) penalty thresholds.
Bare-Act text Section 128(6) · Companies Act, 2013 · click to expand
If the managing director, the whole-time director in charge of finance, the Chief Financial Officer or any other person of a company charged by the Board with the duty of complying with the provisions of section 128, contravenes such provisions, such managing director, whole-time director in charge of finance, Chief Financial Officer or such other person of the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.