Introduction to HUF
The Joint Hindu Family Business is a
distinct form of organisation peculiar to India. Joint Hindu Family Firm is
created by the operation of law. It does not have any separate and distinct
legal entity from that of its members. The business of Joint Hindu Family is
controlled under the Hindu Law. The membership in this form of business
organisation can be acquired only by birth or by marriage to a male person who
is already a member of Joint Hindu Family.
“When two or more families agree to live
and work together, invest their resources and labour jointly and share profits
or losses together, then this family is known as composite family or HUF”
& Co (a chartered accountant firm)
There are two schools of Hindu Law-one
is Dayabhaga which is prevalent in Bengal and Assam and the other is Mitakshara
prevalent in the rest of the-country. According to Mitakshara law, there is a
son’s right by birth in the property of joint family. It means, when a son is
born in the family, he acquires an interest in the property jointly held by the
family. Today Hindu succession Act 2005 is applicable to all male and female
members of a HUF.
The main characteristics of Joint Hindu
Family Business are given below:
The business of the Joint Hindu Family
is controlled and managed under the Hindu law.
All the affairs of a Joint Hindu Family
are controlled and managed by one person
who is known as ‘Karta’ or ‘Manager’. The Karta is the senior most male
member of the family. The members of the family have full faith and confidence
in Karta. Only Karta is entitled to deal with outsiders. But other members can
deal with outsiders only with the permission of Karta.
The membership of the family can be
acquired only by birth. As soon as a child
is born in the family, that child becomes a member. Membership requires
no consent or agreement.
Except the Karta, the liability of all
other members is limited to
their shares in the
business. The amount of debt can be recovered from his personal property also.
The death, lunacy or insolvency of any
member of the family does not affect the existence of the business of Joint
Hindu Family. The family goes on doing its business.
In a joint family firm, only Karta has
the implied authority to enter into a contract for debts and pledge the property
of the firm for the ordinary purpose of the businesses of the firm.
In a Joint Hindu Family firm even a new
born baby can be a co-parcener.
The Joint Hindu Family business can be
dissolved only at the will of all the members of the family. Any single member
has no right to get the business dissolved.