Section 21B 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.
The Disciplinary Committee hears the more serious misconduct, that in the Second Schedule or in both Schedules, and it can remove a name from the Register permanently. Section 21B in force today is the 2006 text. A new section 21B was enacted in 2022 but is not in force. The Act was called the Cost and Works Accountants Act, 1959 until 10 May 2022.
In force: a Committee of five, with the President or Vice-President presiding, two elected Council members and two Central Government nominees. For Second Schedule or combined misconduct, after a hearing, it may reprimand, remove the name permanently or for a period, or fine up to rupees five lakhs. Enacted in 2022 but not in force: a non-member Presiding Officer, an inquiry within one hundred and eighty days, fine up to ten lakh rupees, and firm penalties up to fifty lakh rupees.
How this article reads the Act
This article follows the Act as printed by the Institute (as amended in 2011), read with the 2022 Amendment Act to the extent brought into force by S.O. 2184(E) dated 10 May 2022. Section 58 of the 2022 Act, which substitutes section 21B, is not among the provisions brought into force. A later commencement notification should be checked; none was found in the sources consulted.
Section 21B in force: the 2006 text
Section 21B(1): composition. The Council shall constitute a Disciplinary Committee consisting of:
- the President or the Vice-President of the Council as Presiding Officer;
- two members elected from among the members of the Council; and
- two members nominated by the Central Government from persons of eminence having experience in the field of law, economics, business, finance or accountancy.
A proviso says the Council may constitute more Disciplinary Committees as and when it considers necessary.
Section 21B(2): procedure. The Committee, while considering cases placed before it, follows such procedure as may be specified.
Section 21B(3): penalties. Where the Committee is of the opinion that a member is guilty of professional or other misconduct mentioned in the Second Schedule or both the First Schedule and the Second Schedule, it must give the member an opportunity of being heard before making any order, and may then take any one or more of these actions:
| Clause | Action |
|---|---|
| (a) | Reprimand the member |
| (b) | Remove the name of the member from the Register permanently or for such period as it thinks fit |
| (c) | Impose such fine as it thinks fit, extending to rupees five lakhs |
Section 21B(4). The allowances payable to the members nominated by the Central Government shall be such as may be specified.
Section 21B as enacted in 2022 (not in force)
| Sub-section | What the 2022 text says |
|---|---|
| (1) | One or more Committees, each of: (a) a Presiding Officer not a member of the Institute, with experience in law, nominated by the Central Government from a Council panel; (b) two members of eminence in law, economics, business, finance or accountancy, not members of the Institute, nominated by the Central Government from a Council panel; (c) two members nominated by the Council from a panel of members. The same Presiding Officer and (b) members may serve different Committees |
| (2) | Procedure as specified, including faceless proceedings and virtual hearings |
| (3) | On receipt of the preliminary examination report, the member or firm submits a written statement within twenty-one days, extendable by another twenty-one days in exceptional circumstances, for reasons recorded in writing |
| (4) | The Committee concludes its inquiry within one hundred and eighty days of receiving the report |
| (5) | If it finds Second Schedule misconduct (or both Schedules), it may pass an order within thirty days of the finding, after a hearing: (a) reprimand, recorded in the Register of members; (b) remove the name permanently or for such period as it may think fit; (c) fine up to ten lakh rupees |
| (6) | For a partner or owner of a firm repeatedly found guilty during the last five years, action against the firm may include (a) prohibition for up to two years, (b) suspension or cancellation of registration and removal from the Register of firms, or (c) fine up to fifty lakh rupees |
| (7) | Failure to pay a fine within the specified time leads to removal of the name from the Register of members or Register of firms for such period as the Council thinks fit |
| (8) | The Presiding Officer and members are paid prescribed allowances |
The main differences
| Point | In force (2006) | Enacted 2022, not in force |
|---|---|---|
| Presiding Officer | The President or Vice-President | A non-member with legal experience nominated by the Central Government |
| Council members | Two elected by the Council | Two nominated by the Council from a panel of members |
| Fine | Up to rupees five lakhs | Up to ten lakh rupees |
| Time limits | None stated | 180 days for the inquiry; 30 days for the order |
| Firms | Not covered | Prohibition up to two years, cancellation of registration, fine up to fifty lakh rupees |
Until a notification brings the 2022 text into force, the 2006 text applies. The firm penalties link to the Register of firms in Chapter IVA, which is also not in force; see our article on sections 20A to 20D.
Board of Discipline and Disciplinary Committee: who hears what
| Board of Discipline | Disciplinary Committee | |
|---|---|---|
| Misconduct | First Schedule | Second Schedule, or both Schedules |
| Removal from the Register (in force) | Up to three months | Permanently or for such period as it thinks fit |
| Fine (in force) | Up to rupees one lakh | Up to rupees five lakhs |
See our article on the Board of Discipline.
What follows an order
An order of the Committee imposing a penalty under section 21B(3) can be appealed to the Appellate Authority within ninety days of communication, and the Authority can confirm, modify, set aside or reduce or enhance the penalty; see our article on sections 22A to 22E. A member whose name has been removed for a specified period cannot re-enter the Register until the period expires, under the proviso to section 8, and the removal also affects eligibility to contest Council elections; see sections 9 to 10B.
A short example
Vandana Iyer certifies a statement of forecasts for a lender without checking the basis, conduct that could fall in the Second Schedule. The Director (Discipline) places the case before the Disciplinary Committee. The Committee hears her and finds the misconduct proved. It may reprimand her, remove her name for a period or permanently, and fine her up to rupees five lakhs, in any combination. She may appeal to the Appellate Authority.
A member or complainant who needs to respond to or prepare for a hearing can use legal dispute resolution support.
The same rule for chartered accountants
See Section 21B of the Chartered Accountants Act, 1949. The figures here are those printed in this Act.
Need help before the Disciplinary Committee?
If a Second Schedule complaint has been raised against you or you are weighing one, our legal dispute resolution team can help you plan the reply and the hearing.
Key takeaways
- In force: five members, with the President or Vice-President presiding and two Central Government nominees.
- For Second Schedule or combined misconduct: reprimand, removal permanently or for a period, fine up to rupees five lakhs.
- A hearing is required before any order.
- The 2022 section 21B, with a non-member Presiding Officer and firm penalties up to fifty lakh rupees, is not in force.
- Appeal lies to the Appellate Authority.
Read next
- Section 21A: the Board of Discipline
- Sections 21C, 21D and 22: civil court powers and misconduct defined
- Sections 22A to 22E: Appellate Authority and appeals
Disclaimer: Based on the Cost and Works Accountants Act, 1959 (now the Cost Accountants Act, 1959) as printed by the Institute of Cost Accountants of India (as amended in 2011), read with the Chartered Accountants, the Cost and Works Accountants and the Company Secretaries (Amendment) Act, 2022 to the extent brought into force by S.O. 2184(E) dated 10 May 2022, as consulted on 3 October 2026. Regulations, rules, later amendments and commencement notifications should be checked. This article is general information, not legal advice; check the official text before acting.