Joint Hindu Family Business: Definition, Characteristics, Advantages 2021

Joint hindu family business

Joint Hindu Family Business, also known as JHF Business, is a kind of Business Organization owned and managed by Hindu undivided families and is run by them jointly.

However, The Joint Hindu Family Business closed corporation may be a distinct sort of organization peculiar to India. In addition, Joint Hindu Family Firm is made by the operation of law.

Above all, It doesn’t have any separate and distinct legal entity from that of its members. The business of Joint Hindu Family is controlled under the Hindu Law rather than Partnership Act.

During this sort of business, the membership is often acquired only by birth or by marriage to a male who is already a member of the Joint Hindu Family.

Types of Schools

  1. Dayabhaga– However, Which is prevalent in Bengal and Assam
  2. Mitakshara– Similarly, Which is prevalent within the remainder of the country

According to Mitakshara law, there’s a son’s right by birth within the Joint Hindu Family Business property. When a son is born in the family, he acquires an interest within the property jointly held by the family.

About Karta

Karta is the senior-most member of the joint Hindu family business. Karta is responsible for all the decisions made and all the profits and losses that occurred in business. The Joint Hindu Family business is controlled and managed by one named ‘Karta’ or ‘Manager’.The Karta or manager works in consultation with other family members, but ultimately he features a final say.

The liability of Karta is unlimited while the liability of other members is restricted to their shares within the business.

Characteristics of a Joint Hindu Family :

Characteristics of a Joint Hindu Family

1.Governed by Hindu Law:

There are two types of schools Joint Hindu Family Business: (i) Dayabhaga, and(ii) Mitakshara.

2.Management:

All the affairs of a Joint Hindu Family are controlled and managed by one understood as ‘Karta’ or ‘Manager. Karta is the senior member of the whole family.

He’s employed in consultation with other family members, but ultimately he features a final say. In addition, All the members of the family have full faith in Karta.

After that, Only Karta is entitled to affect outsiders. But other members can affect outsiders only with the permission of Karta.

3.Membership by Birth:

The membership of the family is often acquired only by birth. As soon as a son is born into the family, he becomes a member. However, Membership requires no consent or agreement.

4.Liability in Joint Hindu Family Business

Except for the Karta, the liability of all other members is restricted to their shares within the business.

The Karta isn’t only susceptible to the extent of his share within the business. Still, his separate property is equally attachable, and the amount of debt is often recovered from his separate property.

5.Permanent Existence:

The death, lunacy, or insolvency of any member of the family doesn’t affect the existence of the Joint Hindu Family business.

Above all, The family goes on doing its business.

6.Implied Authority of Karta:

In a joint family firm, only Karta has the implied authority to contract debts and pledge the credit and property of the firm for the standard purpose of the firm’s companies.

7.Minor also a Partner:

In a partnership, the minor cannot become a co-partner though he could also be admitted to the advantage of the partnership.

During a Joint Hindu Family Business, a minor may be a partner.

8.Dissolution:

The Joint Hindu Family Business closed corporation is often dissolved only at the desire of all the family members. Any single member has no right to urge the business to dissolve.

Advantages of Joint Hindu Family :

Advantages of Joint Hindu Family :

1.Easy to Start:

It is effortless to start the Joint Hindu closed corporation. No legal formalities are required to be faced, like registration. It requires no agreement.

2.Efficient Management:

The management of the Joint Hindu Family Business closed corporation is centralized within the hands of Karta of family. During this business, Karta takes all decisions and gets them implemented with the assistance of another member. No other member interferes in his management.

3.Secrecy:

In a Joint Hindu family business closed corporation, all the choices are taken by the ‘Karta’ himself. He’s during a position to stay all the affairs to himself and maintains perfect secrecy altogether matters.

4.Prompt Decision:

The Karta is that the only one that exercises control and direction over the business. He might not consult anyone in taking decisions. Similarly, This ensures prompt or quick decisions. Being the only master, he takes prompt decisions and takes advantage of the chance.

5.Economy:

For the success of any business, the economy may be a must. It’s well-balanced and maintained in Joint Hindu Family Business closed corporation. The Karta of the family spends all the money with proper decisions of himself.

6.Credit Facilities:

In Joint Hindu closed corporation, the credit facilities are more. One reason for this is often that the liability of the ‘Karta’ is unlimited. Karta has personal relations with others, which also help raise credit.

7.Natural Love between Members:

In Joint Hindu Family Business closed corporation, it’s the natural love and affection that the members have for each other. It helps to run the business smoothly.

8.Freedom regarding Selection of Business:

The Karta is at freedom to pick any business of his choice. He does not depend upon others.

Disadvantages of Joint Hindu Family Business :

Joint Hindu Family Business

1.Limited Membership:

The membership of the business is restricted to the members of the family only. No outsider can become a member of a Joint Hindu closed corporation.

2. Limited Sources of Capital:

The capital is restricted only up to the resources of 1 family. this is often not sufficient to satisfy the business requirements for expansion. Thus the dimensions of the business remain small. The Karta cannot take advantage of economies of huge size thanks to limited finance.

3. Limited Managerial Skill:

The Karta might not be ready to perform all managerial functions due to the limitation of your time, energy, and skills. Due to the limited scale of operations and financial resources, it will not be feasible to secure the services of experts in several fields like purchasing, production, and marketing.

4.Unlimited Liability:

The liability of the Karta is unlimited. The Karta isn’t only susceptible to the extent of his share within the business. Still, his separate property is equally attachable, and the amount of debt is often recovered from his separate property.

This factor puts a ceiling on the expansion and expansion of the business.

5.Misuse of Power:

The management of a Joint Hindu closed corporation is centralized within the hands of Karta of the family. No other member can interfere in his management.

This might cause the misuse of power and therefore the Karta may use the facility for his personal interest.


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