What is Joint Hindu Family Business?
Mohammed Julfekar Haider
This resource describes about what is joint hindu family business?,who are the members of joint hindu family business, its management and types of joint hindu family business.
Joint Hindu Family Business is a different type of organization, which is found only in India. As the name suggests, it is type of organization in which all the members of Hindu Undivided Family manage and control the business with the direction of head of the family. It is not a Partnership. It is just like a Partnership where only the members of the family can take part. It is not even sole trading concern, but it is enlargement of sole trading concern in which continuity is guaranteed. The business is carried on from generation to generation. It comes into existence by the operation of Hindu law. It is the result of Hindu Undivided Family system followed in India. Wherever, there is Hindu Undivided Family, there is the scope of Joint Hindu Family Business.
Joint Hindu Family Business, though is an enlarged form of sole trading concern but it enjoys stability. It is given due recognition by the Income Tax Act, 1961, and by the Joint Hindu Succession Act, 1956, but it lacks legal status. Status of Joint Hindu Family firm and its members is one and the same.
The membership of Joint Hindu Family Business is restricted only to members of the family. Members of the family are called 'co-parceners'. Before 1956, female members of the family were not having equal rights with male members but the Hindu Succession Act, 1956, has its provisions for female members also. The business is controlled by head of the family called as 'Karta'. Karta and co-parceners are usually male members.
The management of Joint Hindu Family Business is in the hands of the head of the family who is known as "Manager of Karta". The Karta has to carry on the business with care, he has to protect the interest of the members, he cannot make secret profits. Karta has full authority and control over financial aspects of business. He is called "Custodian of Property". He is fully responsible for business risk, his liability is unlimited. The liability of the co-parceners is limited. The co-parceners have to help Karta in doing the business. Any member is free to get separate from Joint Hindu Family Business. Generally, separation from the Joint Hindu Family is due to the disagreement with the Karta's policies and programs.
Types of Joint Hindu Family Business:
There are two types of Joint Hindu Family Businesses. They are as follows:-
Only male members born in the family are eligible to get equal share in the property of the family. This system exists in India except West Bengal and Assam.
Under this both male and female members get the share in the property of family. This form exists in West Bengal and Assam. From June 22, 1994, the female members also have the co-parcenercy right in the state of Maharashtra.
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Responses to "What is Joint Hindu Family Business?"
Guest Author: tenzin dodhon 12 Jun 2014
It's really helpful. This page has highlighted some of the very important points which is not in the guides.
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