Explain the meaning and features of joint Hindu family business..
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Meaning of Joint Hindu Family Business:
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 carried out by the male members of a Hindu Undivided Family is known as Joint Hindu Family Business.
This kind of business is not governed by Industrial or Company Act but it is governed by the Hindu Succession Act, which exists under Hindu Laws.
Features of Joint Hindu Family Business are:
1.Membership by Birth: A person automatically becomes a member in Joint Hindu Family by taking birth in that family. There is no need for any agreement.
2.Management: The Joint Hindu Family Business is managed and controlled by the senior-most male member of the family who is called Karta. Only the Karta has legal rights to enter into contract with outsiders. He only takes all the decisions of business. Other members have no right to take decisions in the management of Joint Hindu Family Business.
3. Number of Members: In Joint Hindu Family Business minimum must be two members and maximum there is no limit. However the membership is restricted to three successive generations.
4. Liability: The liability of Karta is unlimited whereas liability of all other members of Joint Hindu Family Business is limited up to their share in the business. The Karta's liability is unlimited so his personal assets can also be used for paying back the debts of the business.
5. Minor Members: In Joint Hindu Family Business a child becomes a member by birth only so there is no restriction for a minor to become a member of the business.
6. Rights: All the members of Joint Hindu Family Business have the rights to inspect the accounts. The members can also claim their share in the family property at the time of partition of the family.