What is meant by Joint Hindu Family business? What are its essential features?
Meaning of Joint Hindu Family (JHF) or Hindu Undivided Family (HUF)
The Joint Hindu Family (JHF) firm is a form of business organisatioin in which the family possesses some inherited property and the Karta, the head of the family, manages its affairs. It comes into existence by the operation of Hindu Law and not out of contract between the members or co-parceners. If the persons who have co-parcenary interest in the ancestral property carry on business, it is a case of Joint Hindu Family firm. Thus, the Joint Hindu Family business is a business by co-parceners of a Hindu undivided estate or property.
Its essential features are as follows
(i) Formation The membership of the family business is the result of status arising from birth in the family. It does not require any agreement between the family members.
(ii) Control The right to manage the business vests in Karta alone. He takes all the decisions and is authorised to manage the business. Decisions taken by the Karta are binding on all the members.
(iii) Liability The liability of all the members of the Joint Hindu Family, except that of the Karta, is limited to the value of their individual interest in the joint property. The liability of the Karta is unlimited and as such extends to all that he owns as his separate and private property.
(iv) Continued Existence The existence of the Joint Hindu Family business is not affected by the death or insolvency of a co-parcener or even that of the Karta.
(v) Minor member A person becomes a member of the family business because of birth in the family. Thus, all minors in the family are co-parceners in the family business.