Exam Question # Q.8. What do you mean by Joint Hindu Family Firm?

 

Ans. In India a large number of business are carried on in the shape of Joint Hindu Family (JHF) which are in essence individual entrepreneurs possessing almost all the advantages and limitations of sole proprietorship. A JHF comes into existence by the operation of law. If the business commenced by a person is carried on by male members of his family after his death, it is a case of JHF.

Except in West Bengal where Dayabhaga system of Hindu Law is prevailing, in the rest of India Mitakshara system of inheritance is in operation according to which three successive generations in the male line simultaneously inherit the ancestral property from the moment of their birth. Thus son, grandson, and great grandson become joint owners of ancestral property by reason of their birth in the family.

They are called co-partners in interest. The Hindu Succession Act, 1956, has extended the line of co-partners interest to female relatives of the deceased partner or male relative claiming through such female relatives. The family business is included in heritable property and is thus the subject of co-partenary interest. Under the Dayabhaga Law, the male heirs become members only on the death of the father.

Father or the other senior family member manages the business and is called Karta or Manager; other members have no right of participation in the management. The Karta has control over the income and expenditure of the family and is the custodian of the surplus, if any. The other members of the family cannot question the authority of the Karta and their only remedy is to get the JHF dissolved by mutual agreement.

If the Karta has misappropriated the funds of the business, he has to compensate the other co-partners to the extent of their share in the joint property. The Karta can borrow funds for conducting the business but the other co-partners are liable only to extent of their share in the business. In other words, the liability of the Karta is unlimited.

A Joint Hindu Family can enter into partnership with others. But outsiders cannot become members of the JHF. The death of a member does not dissolve the business or the family. Dissolution of the Joint Hindu Family is possible only through mutual agreement. The male adult members can demand partition of the property of the JHF. On separation, a co-partner has no right of asking for previous accounts.