India is a land of tradition since ancient time. There are so many cultures and religion exist in India and every religion has its own custom and laws. Hinduism is one of the oldest religion of the world and it has its own laws about various things including family business. There is a concept of Joint Hindu Family Business in Hindu Law and it is one of the oldest forms of business in the World also.
MEANING:
According to Hindu Law, Joint Hindu Family Business is a group of persons whose ancestor is the same. Under HUF Business the unmarried daughters and wives are also included. When a business enterprise is run by the people belonging to the same family and they run the business as a family business, it is called Joint Hindu Family Business. The head or Mukhiya or Manager of such business is known as "Karta" or the manager of the family. The eldest of the family happens to be its Karta and he has absolute authority to raise a loan, deal with other parties, and take decisions. All have an equal share in the family irrespective of their age. Karta of the family has unlimited liability while other members have limited liability. It is based on the two important facts:-
(1) Coparcenary: Coparcenary means a common ownership in the ancestral property. It is created by law and not by any contract. According to Coparcenary, an individual gets a right in the ancestral property immediately after birth. That person is known as Coparcener. This individual can also ask for the division of the ancestrol property.
(2) Common Property: According to Hindu Law, a Hindu Joint Family gets recognised as undivided Hindu family only when the family possesses a property that is used for the welfare of all the members of the family. The common property includes:-
HINDU LAW SCHOOL
MEANING:
According to Hindu Law, Joint Hindu Family Business is a group of persons whose ancestor is the same. Under HUF Business the unmarried daughters and wives are also included. When a business enterprise is run by the people belonging to the same family and they run the business as a family business, it is called Joint Hindu Family Business. The head or Mukhiya or Manager of such business is known as "Karta" or the manager of the family. The eldest of the family happens to be its Karta and he has absolute authority to raise a loan, deal with other parties, and take decisions. All have an equal share in the family irrespective of their age. Karta of the family has unlimited liability while other members have limited liability. It is based on the two important facts:-
(1) Coparcenary: Coparcenary means a common ownership in the ancestral property. It is created by law and not by any contract. According to Coparcenary, an individual gets a right in the ancestral property immediately after birth. That person is known as Coparcener. This individual can also ask for the division of the ancestrol property.
(2) Common Property: According to Hindu Law, a Hindu Joint Family gets recognised as undivided Hindu family only when the family possesses a property that is used for the welfare of all the members of the family. The common property includes:-
- Ancestral Property
- Property created with the help of ancestral property
- Personal property treated as the property of the family
According to the Hindu Law, there are two communities controlling Hindu Families:
1. Mitakshara: This community is popular in the country except in Assam, Bengal and some parts of Orissa. In this community, the moment a son is born he gets all the equal rights, along with his father, in the ancestral property. When he becomes an adult, he can ask for the division of the family property. Under this, the interest of the member is always uncertain because a change is inevitable with every birth and death in the family.
2.Dayabhag: This community prevails only in Assam, Bengal, and some parts of Orissa. Under this, a son does not get any right in the property with his birth. The Ancestral property remains under the absolute ownership of the father throughout his lifetime. A son gets a right in the property only after the death of his father.
MAIN FEATURES:
- Governance: This business is governed by Hindu Law. All the rights and duties of the members are decided by this law.
- Karta: Karta is the head of the business and he is responsible for the management and all the profits and losses of the business. He is also known as Mukhiya or the manager of the Joint Hindu Family.
- Limited Liability: Except Karta of the business all the members have limited liability only to the extent of their share. It means that Karta's Personal Property can also be used for the business or pay business debt but this will happen in the case of another member.
- Permanent: The existence of the Joint Hindu Family business is permanent like the existence of the company. There is no effect of the death, insolvency or lunacy of the members of the business.
- By Birth Membership: A child gets a right in the property of the HUF with his birth. He automatically becomes the member of the business.
- Male Members Only: Male members can only become the Coparcener in the Joint Hindu Family business. But according to Hindu Succession Act, 1956, a woman, in the absence of male successor or after the death of her husband can become the coparcener of the family business.
- There is no need for the registration of the business or to follow any kind of legal formalities to establish a Joint Hindu Family Business.
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