Section 21 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 21 sets up the Disciplinary Directorate headed by the Director (Discipline) and decides where a complaint or information about a member goes next. The section as in force is the 2006 text, sub-sections (1) to (5). Section 21 as substituted by the 2022 Amendment Act, sub-sections (1) to (9), is enacted but not yet in force as per the ICAI 2022 edition and S.O. 2184(E) dated 10 May 2022.
This article is as per the Act as printed in the ICAI edition of 2022 (amended up to the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022). The footnote to the 2022 section reads "came into force w.e.f." with a blank date, and the edition's cover lists section 21 as yet to be notified. A later commencement notification should be checked, together with later amendments and notifications.
In force today: the Council establishes a Disciplinary Directorate under a Director (Discipline), who forms a prima facie opinion on information or a complaint filed with the prescribed fee. A First Schedule matter goes to the Board of Discipline; a Second Schedule matter, or both, goes to the Disciplinary Committee. A withdrawal of a complaint needs the Board's or Committee's permission. Enacted but not yet in force: a 30-day decision on whether a complaint is actionable, a 21-day written statement, a preliminary examination report, no withdrawal and publication of the status of cases.
Why the Directorate matters
Chapter V (Misconduct) is the Act's disciplinary machinery. Section 21 is its entry point: every complaint or piece of information about a member starts here. The next steps are in section 21A (Board of Discipline) and section 21B (Disciplinary Committee), and the misconduct itself is defined by section 22 and the two Schedules. If you are a member facing a complaint, or a complainant weighing one, a prompt legal dispute resolution review of the route and timeline is sensible.
Section 21 as in force (2006 text)
This is the section as substituted by the 2006 Amendment Act, in force from 17 November 2006.
| Sub-section | Rule |
|---|---|
| (1) | The Council shall, by notification, establish a Disciplinary Directorate headed by an officer of the Institute designated as Director (Discipline) and such other employees, for making investigations in respect of any information or complaint received by it |
| (2) | On receipt of any information or complaint along with the prescribed fee, the Director (Discipline) shall arrive at a prima facie opinion on the occurrence of the alleged misconduct |
| (3) | If the Director (Discipline) is of the opinion that a member is guilty of professional or other misconduct mentioned in the First Schedule, he shall place the matter before the Board of Discipline; if in the Second Schedule or in both Schedules, before the Disciplinary Committee |
| (4) | In making investigations, the Disciplinary Directorate shall follow such procedure as may be specified |
| (5) | If a complainant withdraws the complaint, the Director (Discipline) shall place the withdrawal before the Board of Discipline or the Disciplinary Committee, which may, if it is of the view that the circumstances so warrant, permit the withdrawal at any stage |
Points to note on the in-force text:
- Prescribed fee. The complaint or information must come along with the prescribed fee. The amount is in the regulations; the Act states none.
- Procedure. "Specified" means specified by rules made by the Central Government. The procedure for investigation is in those rules and is not stated in the Act.
- Routing. The Director (Discipline) does not decide guilt. He forms a prima facie opinion and places the matter before the right body: First Schedule to the Board of Discipline, Second Schedule or both to the Disciplinary Committee.
- Withdrawal. A complainant may withdraw, but the Director places the withdrawal before the Board or Committee and the body decides whether to permit it. The words "at any stage" show that permission can be given at any point.
The Schedules are explained in the later articles, starting with the First Schedule, Part I.
Section 21 as enacted by the 2022 Amendment Act (not yet in force)
Act 12 of 2022 substitutes a longer section 21 with nine sub-sections. It is enacted but, as per the edition and S.O. 2184(E), not yet brought into force.
| Sub-section | Rule as enacted |
|---|---|
| (1) | Council establishes, by notification, a Disciplinary Directorate consisting of a Director (Discipline), at least two Joint Directors (Discipline) not below the rank of Deputy Secretary, and other employees appointed under section 16, to investigate suo moto or on information or a complaint, in such form and with such fees as may be specified |
| (2) | Within thirty days of receipt, the Director (Discipline) decides, in the manner specified, whether the complaint or information is actionable or liable to be closed as non-actionable |
| (2) first proviso | the Director may call for additional information from the complainant or informant, giving fifteen days time before deciding |
| (2) second proviso | recommendations on non-actionable complaints go to the Board of Discipline within sixty days of receipt, and the Board, after looking into the merits, may refer the matter back to the Director for further investigation |
| (3) | In an actionable case the Director gives the member or the firm an opportunity to submit a written statement within twenty-one days, which may be extended by another twenty-one days for reasons recorded in writing |
| (4) | On receipt of the written statement, the Director sends a copy to the complainant or informant, who submits a rejoinder within twenty-one days of receiving it |
| (5) | On receipt of the statement and the rejoinder, the Director submits a preliminary examination report within thirty days, if a prima facie case is made out against a member or firm |
| (6) | If a prima facie case is made out for First Schedule misconduct, the report goes to the Board of Discipline; for Second Schedule misconduct, or both Schedules, to the Disciplinary Committee |
| (6) first proviso | a complaint or information filed by an authorised officer of the Central or a State Government or any statutory authority, supported by an investigation report or extract with supporting evidence, is treated as the preliminary examination report |
| (6) second proviso | where no prima facie case is made out, the Director submits the matter to the Board of Discipline, which may close it if it agrees, or itself proceed, refer it to the Disciplinary Committee or advise further investigation |
| (7) | the Directorate follows the procedure specified |
| (8) | a complaint filed with the Disciplinary Directorate shall not be withdrawn under any circumstances |
| (9) | the status of actionable information and complaints pending before the Directorate, the Boards of Discipline and the Disciplinary Committees, and the orders passed under sections 21A and 21B, shall be made available in the public domain by the Directorate in the manner prescribed |
Side-by-side: what would change
| Point | In force (2006) | Enacted 2022, not yet in force |
|---|---|---|
| Structure | Director (Discipline) and other employees | Director, at least two Joint Directors and other employees |
| Start of inquiry | information or complaint with prescribed fee | information or complaint, or suo moto, in the specified form with specified fees |
| First screening | prima facie opinion of the Director | decision within thirty days: actionable or non-actionable |
| Written statement | none stated | member or firm, twenty-one days plus twenty-one |
| Report | placing the matter before the Board or Committee | preliminary examination report within thirty days |
| Firms | none | member or firm |
| Withdrawal | permitted at any stage if the Board or Committee agrees | not permitted |
| Publicity | none | status and orders in the public domain |
Two further notes. The 2022 text speaks of "the member or the firm", which ties to the firm registration scheme in Chapter IVA that is also not yet in force. And the Register provision in section 19(2)(ca), which is in force, uses the same word "actionable"; see the article on sections 19 and 20.
A worked example
Under the section as in force, a client files a complaint with the prescribed fee alleging that a member signed a report without checking the books. The Director (Discipline) forms a prima facie opinion. If the facts, if proved, fall within a clause of the First Schedule only, he places the matter before the Board of Discipline; if they fall within the Second Schedule or both, before the Disciplinary Committee. If the client then wants to withdraw, the Director places the request before that body, which may permit it if the circumstances warrant. Under the 2022 text, once in force, the complaint would be tested as actionable or non-actionable within thirty days, the member would give a written statement within twenty-one days, and the complaint could not be withdrawn.
Need help with a complaint or an inquiry?
Whether you are responding to a complaint or preparing one, the route, the Schedule involved and the timing matter. Our legal dispute resolution team can read the matter against section 21 as in force and the current notifications and help plan the response.
Key takeaways
- In force: a Disciplinary Directorate under a Director (Discipline) forms a prima facie opinion on information or a complaint received with the prescribed fee.
- First Schedule matters go to the Board of Discipline; Second Schedule or both go to the Disciplinary Committee.
- A withdrawal needs the permission of the Board or Committee, which may give it at any stage.
- Enacted but not yet in force: thirty-day actionable test, written statement, rejoinder, preliminary examination report, no withdrawal and publication of case status.
- The investigation procedure is in the rules made by the Central Government; the fee is in the regulations.
- A later commencement notification should be checked before relying on the 2022 text.
Read next
- Section 21A of the Chartered Accountants Act, 1949: the Board of Discipline
- Section 21B of the Chartered Accountants Act, 1949: the Disciplinary Committee
- Professional misconduct in tax audit and the TAQRB
- Section 21 of the Cost Accountants Act, 1959: the Disciplinary Directorate
Disclaimer: Based on the Chartered Accountants Act, 1949 as printed in the ICAI edition of 2022 (amended up to Act 12 of 2022), read with S.O. 2184(E) dated 10 May 2022, which brought only part of the 2022 amendments into force, as consulted on 3 October 2026. Regulations, rules, Council guidelines, later amendments and commencement notifications should be checked. This article is general information, not legal advice; check the official text before acting.