JOINT HINDU FAMILY – AN AFFECTION OF

BUSINESS

• INTRODUCTION :

The Joint Hindu Family Business is an affectionate business and distinct form of organization 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 instead of Partnership Act. The
membership in this form of business organization 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, throw their resources and labor with joint
stock and share profits and the losses together, then this family is known as composite family.”

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 the joint family. It means, when a son is born in the family, he acquires an interest in the
property jointly held by the family.

The business of the Joint Hindu Family is controlled and managed by one person who is called ‘Karta’ or
‘Manager’. The Karta or manager works in consultation with other members of the family but ultimately he
has a final say. The liability of Karta is unlimited while the liability of other members is limited to their shares
in the business.

When a business enterprise is run by the family members and they run a business as a family business then
such a form of business organization is called Joint Hindu Family Business.It is also called as Hindu Undivided
Family.Joint Hindu family conducts business inherited from it as per Hindu law.

• AIMS AND OBJECTIVES :

I have selected this project aims to learn the benefits and functions of the Joint Hindu Family Business

Objectives of the study are

1. To learn about what is joint Hindu family

2. To learn about the problems in joint Hindu family
3. To learn about the benefits of joint Hindu family
4. To learn about the features of joint Hindu family.

• METHOD AND METHODOLOGY :

In this project, we are going to learn about Joint Hindu Family Business

Primary data is data gathered for the first time by the researcher. It is the raw form of data and thoroughly
studied and hence a helpful tool for secondary data. Here the method used for collection of primary data is
by using the reference to the website.
The referred websites in this project are used as a source of data for this project. Most of the content is
collected from these websites. The authenticity of this information cannot be taken seriously and thus
keeping that in mind most of that data might be true or fake.

• PRESENTATION OF DATA:

1. Features of Joint Hindu Family Business

a. Formation: Joint Hindu Family cannot be formed or created by any contract or agreement
because this organization came into existence by the operation of the “Hindu Law”. It is not
formed by any agreement like partnership firm. Whenever there is Hindu Undivided Family,
there is the scope for Joint Hindu Family Business.(2) Registration: It is not at all compulsory
to register this organization because it is the result of Hindu Law.(3)) Membership: There are
two types of members i.e Karta and Co-parceners. Karta is the elder male member of the
family who controls and manages the business. The other family members are called as the
co-parceners. There is no limit on membership because the membership is by birth.(4)
Management: The head of the family has full responsibility for the management of Joint Hindu
Family Business. He is free to take any decision without any interference of any co-parceners
but he can take advice and help from the family members.

b. Liability: The liability of Karta is unlimited because he is the only deciding authority whereas
the liability of co-parceners is limited up to their share in the capital of the family.Sharing of
Profits and Losses: According to Hindu Succession Act, 1956, all the members of Hindu
Undivided Family have equal rights to share the profits as well as losses of the business.

c. Legal Status: Any organization gets separate legal status only after its registration with
appropriate authorities. In case of Joint Hindu Family firm registration is not at all compulsory;
hence it does not enjoy any legal status.
i. Though Joint Hindu Family Business is enlarged form of sole trading concern and it
has got due recognition by Income Tax Act, 1961, and Joint Hindu Succession Act,
1956, then also it does not enjoy separate legal status because of Joint Hindu Family
firm and its members are one and the same that is inseparable.

d. Partition: As Joint, Hindu Family Business is totally controlled by Karta, and co-parceners do
not have the right to interfere in the decisions of Karta. But, as per Hindu Law any member
who is unsatisfied with the decision of Karta can demand partition.

e. Continuity and Stability: This organization enjoys a long and stable life as it is not affected due
to death, insolvency, the insanity of any of its member. In other words, if Karta dies or
becomes incapable of managing the business then the succeeding co-parceners will act as
Karta.
 f. Conduct of Business: A Joint Hindu Family business is generally run by a senior member of the
family called as Karta or the Manager, and he had the full authority to conduct the business
activities and business operations.

g. Rights of Karta: The Karta can give receipts, make contracts and draw bills, but he cannot give
up debts already due to the Joint Hindu Family Business. He had the authority to sell or
mortgages the property of Joint Hindu Family while conducting the business of the firm.

h. Dissolution: If the family business becomes insolvent, the adult co-parceners and the manager
will be adjudged insolvent, although their share in the family property can be used to pay off
the debts of the Joint Hindu Family Business.

i. Flexibility: There is a great deal of flexibility in business operation. The Karta can expand or
change the line of business or he can even close down the business. The co-parceners normally
agree with the decisions taken by Karta in the conduct of business.

j. Business Secrecy: There is a great deal of business secrecy in this organization. The business
secrets are known to co-parceners in general and Karta in particular. It is not obligatory for
them to publish their accounts which results in a great deal of privacy and secrecy.

k. Credit Standing: This type of business enjoys greater credit in the market especially because
of unlimited liability on Karta. As a result of this, he does business on better terms. He also
gets liberal financial facilities from banks and others. Better credit standing in the market
increases competitive strength of this business.

2. Needs and important of Joint Hindu family

3. Types of Joint Hindu family

Although the joint family system seems to be general in India, it is a peculiar characteristic of the Hindu
social system. As a matter of fact we find joint family system in some non-Hindu communities. Moreover, all
Hindus do not follow the Brahmin pattern of family and, therefore, there are different types of joint families.
Different types of joint families found in India are discussed below.

1. On the Basis of Relatives who are Members of Joint Family:

ADVERTISEMENTS:
Pauline Kolenda presents the following types of joint family on the basis of the relatives who are its
members.
a) Collateral Joint Family:
It comprises two or more married couples between whom there is a sibling bond. In this type, usually
a brother and his wife and another brother and his wife live together with unmarried children.
b) Supplemented Collateral Joint Family:
It is a collateral joint family along with unmarried, divorced or widowed relatives. The supplemented
relatives are generally the widowed mother of the married brothers or the widower father, or an
unmarried sibling.
c) Lineal Joint Family:
Two couples, between whom there is a lineal link, like between a parent and his married son or some
times between a parent and his married daughter, live together.
d) Supplemented Lineal Joint Family:
It is a lineal joint family together with unmarried, divorced or widowed relatives who do not belong to
either of the lineally led nuclear families: for example, the father’s widower brother or the son’s wife’s
married brother or sister.
e) Lineal Collateral Joint Family:
In this type three or more couples are linked lineally and collaterally. For instance, we can have a family
consisting of parents and their two or more married sons together with the unmarried children of the
couples.
f) Supplemented Lineal-Collateral Joint Family:
In this type are found a lineal collateral joint family plus married, widowed, separated joint family plus
married, widowed, separated relatives who belong to none of the nuclear families (lineally and
collaterally linked), for example, the father’s widowed sister or brother or an unmarried nephew of
the father.

2. On the Basis of Rules of Inheritance:

On the basis of Rules of Inheritance there can be two types of joint families (a) Mitakshara Joint family,
(b) Daya Bhag joint family.

(a) Mitakshara Joint Family:

The Mitakshara tradition of joint family is based on Yagya Valakya Smrjti and its commentary which
were made by Vigyaneswar. Mitakshara rules of inheritance are followed throughout India except
Bengal and Assam. According to this rule of inheritance, we find the following characteristics:

(i) The ownership of property starts from the time of birth. Along with the father, the sons have equal
rights in the ancestral property during the life time of the father.

(ii) During the life time of the father there cannot be division of property among the male members,
but after the death of the father the sons have right over the property.

(iii) Women do not have equal rights over the family property as the males have.

(iv) The management of the property is the duty of the father.

(v) If there is any debt in the family then the father has the right to dispose of the family property to
settle the debt.

(b) Daya Bhag Joint Family:

The Daya Bhag tradition is based on the commentaries made “by Jeemutvahana. According to Daya
Bhag tradition, we find the following characteristics:

(i) The ancestral property cannot be divided during the lifetime of the father.

(ii) There is no question of claiming any right over the ancestral property during the life time of the
father:

(iii) The head of the family has the sole authority to manage, purchase or dispose the family property
in whatever manner he likes and only after, his death the question of the division of the property
arises,

(iv) Women also have right over the property.

Hence, we find that according to the Mitakshara law, the male members have a right over the family
property from the time of birth, but in Daya Bhag law there is no such thing as the right over property
from time of birth and only after the death of the father the property can be divided.

According to Mitakshara law, if a person dies, the remaining persons equally claim the right over the
property. On the other hand, according to Daya Bhag law, if a male person dies without leaving any
sons then the share of the husband goes to the wife. In Mitakshara law only male members can claim
the property, but in Daya Bhag law, widows can claim a share in the property. According to Mitakshara
law, nobody can dispose of the family property, but in Daya Bhag there is no such restriction. In this
manner we find that the Hindu joint family is based on rules of inheritance and rules of securing or
disposing of the property.

3. The Basis of Authority:

There can be two types of families on the basis of authority

(a) Matriarchal Joint Family:

Matriarchal joint family is found among Nayars of Malabar. The characteristic feature of the Nambudri
distinguishes their Illom from the joint family of the other Hindus. The most distinguishing feature is
its non- partibility of family property. All the members who belong to Illom have interests in the family
property. But this property is not divided by the members because the economic interests cannot be
fulfilled if the family property is divided. Another thing is that the consent of all the members is
important.
For the perpetuation of Illom only the eldest son marries. Although other members of the family are
not debarred from marrying, generally they do not marry Nambudri women. They marry Nayar
women who, along with their children stay in their matrilocal families. Only when the eldest brother
fails to have children, the next senior brother marries a girl of his own caste to perpetuate the family.
The eldest brother is the head of the family. He has absolute control over the property He has no
power to alienate the property either by sale, gift or otherwise any portion of the property without
the consent of all the members of the Illom. Though the younger brothers have no right to demand a
portion, they, nevertheless, have right to maintenance in the family property.
Another outstanding feature of the Illom is that the female members of the family have equal rights
with men in property. As such, sale or any such alienation can be valid only when it is assented to by
all the female members of the family. Accordingly, a wife can set aside any alienation of property
made by her husband.
Hence, the outstanding features of an Illom that distinguish it from the Hindu joint family are: (i) non-
partibility of family property (ii) more rights of female members in the family property.
The matrilineal family of the Nayars of Kerala is known as the ‘Tarwad’. A Nayar Tarwad is made up a
female and her male as well as her male children and the children of those female children and so on.
It does not include the children of sons, as they belong to the Tarwad of their mothers.
The family property belongs to the Tarwad and the property is non-partible and individual members
are not entitled to enforce partition. The eldest member of the family is entrusted with the
management of the property and he is known as Karnavan. In case, the eldest male is found to be
incapable of managing the property due to either mental or physical incapacity, the next senior male
member steps into his place.
The Karnavan has more or less absolute authority over the family property, but he is not empowered
to make any permanent alienation of it. Any act of permanent alienation of the property requires
either the explicit or implicit consent of all the members of the Tarwad. The Karnavan may be removed
from his position, if he is found to have acted with bad faith or wrecklessness or is proved to be
incompetent to manage the affairs of the family.
When the Tarwad grows big, it may be divided into smaller units called ‘ Tavazhis’ with the consent of
all the members of Tarwad. Each Tavazhi, like a Tarwad consists of woman, her daughters and sons,
the daughters and sons of her daughters and so on. The property of the Tarwad is equally divided
among the Tavazhis. After the division, the members of Tavazhis cease to have any right over the
property of the parent Tarwad. But their kinship ties with the Tarwad continues.

(b) Patriarchal Joint Family:

The patriarchal joint family is found among the tribes of central India as well as among all Hindus which
is patrilocal and patrilineal. The offspring’s, particularly male members, do not leave as a general rule
their families of origin after they are married. Hence, the patrilocal joint family consists of several
families of origin and several families of procreation.
Among the Hindus we find a joint family system prevailing throughout India. The head of the family or
the Karta of the joint family has a right to make decision for his family because he is the working head
and he decides all family matters.
To conclude, there are many patterns of joint family found in different parts of India. The different
castes and tribes of India show different forms of family organization, but fundamentally all family
constitutions are either patriarchal or matriarchal.
4. Advantage of Joint Hindu family Business

1. Easy to Start:
It is very easy to start the Joint Hindu Family Business. No legal formalities are required to be faced,
such as registration. It requires no agreement.
2. Efficient Management:
The management of Joint Hindu Family Business is centralised in the hands of Karta of family. In this
business, Karta takes all decisions and gets them implemented with the help of other member. No
other member interferes in his management.
3. Secrecy:
In Joint Hindu Family Business, all the decisions are taken by the ‘Karta’ himself. He is in a position to
keep all the affairs to himself and maintains perfect secrecy in all matters.
4. Prompt Decision:
The Karta is the only person who exercises control and direction over the business. He may not consult
anyone in taking decisions. This ensures prompt or quick decisions. Being the sole master, he takes
prompt decisions and makes advantage of the opportunity.
5. Economy:
For the success of any business, economy is a must. It is well- balanced and maintained in Joint Hindu
Family Business. The Karta of family spends money with great caution and economy.
6. Credit Facilities:
In Joint Hindu Family Business the credit facilities are more. One reason for this is that liability of the
‘Karta’ is unlimited. Karta is having personal relations with others, which are also helpful in raising
credit.
7. Natural Love between Members:
In Joint Hindu Family Business, it is the natural love and affection which the members are having for
each other. It helps to run the business more efficiently and smoothly.
8. Freedom regarding Selection of Business:
The Karta is at freedom to select any business of his choice. He has not to depend on others.

5. Disadvantage of Joint Hindu family Business

1. Limited Membership:
The membership of the business is limited to the members of family only. No outsider can become
the member of Joint Hindu Family Business.
2. Limited Sources of Capital:
The capital is limited only upto the resources of one family. This is not sufficient to meet the
business requirements for expansion. Thus the size of the business remains small. The Karta cannot
take the advantage of economies of large size due to limited finance.
3. Limited Managerial Skill:
All the managerial functions which are essential for the successful operation of a business are
performed by the Karta of the family. The Karta may not be able to perform all managerial functions
because of limitation of time, energy and skills. Because of limited scale of operations and financial
resources, it may not be feasible to secure the services of experts in different fields like purchasing,
production and marketing.
4. Unlimited Liability:
 The liability of the Karta is unlimited. The Karta is not only liable to the extent of his share in the
business but his separate property is equally attachable and amount of debt can be recovered from
his separate property. This factor puts a ceiling on the growth and expansion of the business.
5. Misuse of Power:
The management of a Joint Hindu Family Business is centralised in the hands of Karta of the family.
No other member can interfere in his management. This may lead to the misuse of power and the
Karta may use the power for his personal interest.

• CONCLUSION

The family enterprise continues to be an important element of the world economy and a location for
understanding conflict in family relationships internationally. Managing conflict effectively in the process of
succession is crucial to preserving the impact family enterprise has on our economy and families themselves.
Therefore, whether the family business is based in the United States or across the world, one needs to be
aware of the five points in which conflict is most likely to occur:

The mutual acceptance of roles

The agreement to continue the business

The propensity of a successor to take over

The propensity of an incumbent to step aside

Succession planning because the conflict in family succession is universal.

• REFERANCE
1. http://www.indiastudychannel.com/resources/124903-Features-Joint-Hindu-Family-Business.aspx
2. https://www.iaspaper.net/joint-family/
3. http://www.businessmanagementideas.com/organisation/types/hindu-undivided-family/joint-
hindu-family-business-meaning-characteristics-and-advantages/8904
4. http://family.jrank.org/pages/513/Family-Business-Conclusion.html
5. https://www.quora.com/For-people-living-in-a-joint-family-how-do-you-manage-your-finances-
when-all-members-are-earning
6. http://www.yourarticlelibrary.com