Introduction

Nowhere has the term “Hindu Undivided Family” (HUF) been defined. It derives its meaning and rules from the two schools of Hindu Law, Dayabhaga School in West Bengal and Mitakshara School in the rest of the country. 

HUF has steadily expanded from its original basic principles because of the favorable business potential and the fact that it is governed by the criteria of the 1956 Hindu Succession Act. In case you weren’t aware, the HUF is exempt from paying income taxes, lowering the overall amount of taxes the family must pay and increasing their liquidity in the process. It does not, however, take away the need to monitor the business in terms of the obligations they accrue and the associated legal repercussions.

Debt liability of joint Hindu family

The Hindu Undivided Family is composed primarily of the Karta and the Coparceners. Due to the position’s predominately male orientation, the Karta position rarely passes to the oldest woman in the family. Positively, the Hindu Succession (Amendment) Act of 2005 to the 1956 Act gave daughters the coparcenary rights that they had previously been denied and permitted them to partake in the property in the same way as sons. The oldest child overall and the unmarried daughter will take over as the Karta after her father’s passing, according to this as well. Even after she marries, she will continue to have her rights as a coparcener.

The same cannot be said for the wife of the deceased Karta or the female members who join the family by the relation of marriage, they are treated as members of the HUF only. They are entitled to maintenance and shares when the partition occurs but not to the actual partition.

Liability of Karta

The liability of the Karta is unlimited against the coparceners. Unlimited liability means that in case Karta is unable to repay the loan, it is to be recovered by the sale of his personal assets. His liability spreads out as six principle points-

• Liability to maintain: The Karta must take care of everyone, even the daughters of the joint family. He is responsible for maintaining the members and their house, and if he doesn’t, they can sue him and get money damages.
• Liability to provide account: Usually, the Karta is not needed to keep business documents, but this responsibility arises when the company is divided and the coparceners ask for them. He is responsible for any form of fraud or misrepresentation.
• Liability to spend reasonably: The Karta is in charge of the family’s resources, earnings, and outgoings. As a result, he is the only one in charge of keeping the surplus that is generated. He cannot spend the money irresponsibly and must be open and honest about every transaction. 
• Liability to not start a new business: Karta is the oldest male figure in the joint family and thus, the head. He is the owner of the business and cannot deviate from his duty and liability to be faithful to his own business. If he has to start a new business, it should be after the consultation and agreement with the coparceners. 
• Liability to not alienate property: Hindu Joint Family comes into existence on the sole basis of undivided ancestral property. This in itself suffices for the Karta to not alienate the property and maintain it with adequate costs and expenses. Only in the exceptional cases of family benefit can the Karta be allowed to alienate the property, which also after due notification and consent from the coparceners. 
• Liability to recover and repay debts: 

Any contract debt that the Karta enters into has the consequence of making the family liable for the debt. Instead, Karta is ultimately responsible for the correctness of the records, so if he has given something on credit, he must make sure that the arrears are paid back.

The liability of Karta is not limited to only the above-mentioned activities, he has responsibility for other family-related issues like marriage and representation. 

The pious obligation of a son

In the Hindu Undivided Family, male members are of priority when it comes to carrying out the duties and obligations of the Karta. After the death of the Karta, the male member second to the Karta, either a male relative or the eldest son, takes over the business. 

Once again, the history of this principle may be traced back to the ancient Hindu Laws that served as the foundation for the company. Hindu law mandates that whatever the father was unable to repay during his lifetime must be completed equally by both of his sons, and even if they were to get divorced, they would still be required to fulfill the debt according to their respective divided portions. This keeps the commitment from going unfulfilled and the sons’ obligations from becoming too heavy.

On these terms considering the Karta is the Father, the son has various pious obligations, the most important being discharging his father’s debts unless the debts are illegal in nature. Lord Dunedin had given his decision on the question of at what stage can a debt be considered illegal. He has said that any debt can only be considered illegal when the entire motive for obtaining the money was illegal and not if the father had legally obtained the sum but afterward misappropriated it. Thus, for a debt to be considered illegal to enable the exoneration from fulfilling its repayment, two conditions have to be met:

1. The debt must be prior in time.
2. The debt must be prior in fact.

Another point to be noted is that, for the acquittal of the son from repaying his father’s debts, it is not necessary that the debt has to be illegal only. It could be obtained through immorality or dishonesty and still would be considered a valid ground for the son’s relief. 

In a nutshell, once the son takes over the family as the Karta, he has to fulfill all of his father’s incomplete obligations as well as perform the duties expected from a Karta and enjoy the powers conferred upon him unless corrupted by any kind of immoral, unlawful or dishonest conduct.

Landmark judgments

The lack of laws is balanced by the numerous key judgments given by the Apex Court and High Courts. Some of the judgments are old but still serve their purpose as upholding the principles of a Hindu Undivided Family and thus, are still in use and relied upon. 

The following case laws under the points of their importance have been enlisted, spanning a wide range of time, going back to the immediate post-independence years and some principles given during the British era as well.

• Position and Capacity of Karta
  • Chandrakant Manilal Shah and Anr Vs. Commissioner of Income Tax (AIR 1992 S 66): In this case, the issue was that a HUF was afterward changed over into an association, but the child had not brought within the capital in cash, and in this way, the enrollment of the firm was denied by the CIT on grounds that it was not a substantial organization. And so was maintained by the Re-appraising Tribunal and the Tall Court. Be that as it may, the Supreme Court chose that similar to when a person brings in cash resources it is valuable for the operations of the firm in case a person gives aptitude and work to the firm, it is comparable to the same. From this judgment, it was induced that Karta being the proprietor of the HUF turned organization, needs to bring in capital. The same isn’t an obligation for the children. This encouragement drives the point that the Karta being capable of the support of the family needs to bring cash assets to meet the essential prerequisites since there’s a plausibility that the child might not bring in any capital.

• Alienation of the property and legal necessity
  • M/s Nopany Investments Ltd.(P) Vs. Santokh Singh (HUF) AIR 2008 SC 673: In this case,there were numerous questions of law but here, the center is on the address whether a more youthful male part of the HUF seem to act with the capacity of the Karta indeed in case there were other more seasoned individuals and the Karta himself was lively. The administering given by the Preeminent Court said that in a case due to a few unavoidable circumstances the Karta is incapable to carry out his obligations and commitments, he has the control to name another part of his family, be it more youthful, as the modern Karta with the information and assent of the other coparceners and individuals of the HUF, in this way diminishing himself from his commitments towards the property and the family. 
  • Dev Kishan and Ors. Vs. Ram Kishan AIR 2002 Raj 370 : In this case,the significance of “legal necessity” was emphasized by the Rajasthan Tall Court. Besides, the Court ruled the distance of the property by the Karta illegal since he had sold and sold the joint family property for the reason of marriage of two minor young ladies, which is illegal beneath the Child Marriage Restriction Act, 1929 and does not motivate the certainty of legitimate need.
• Position of women as Karta and Coparceners 

As discussed above, initially there were a lot of restrictions upon the women on the terms of their contribution to the HUF. The cases below show the transition in the position and power of women in the HUF. 

• Gangoji Rao and Anr. Vs. channappa (AIR 1982 Kant 222): In this case, the sons had challenged the alienation of the property by their mother who was the widow of the father. The Karnataka High Court had then ruled that women cannot be either the Karta or a coparcener in a HUF. 
• Mrs. Sujata Sharma Vs. Shri Manu Gupta (2016) 226 DLT 647 : This case is one of the most historic judgments for women and their involvement in a family business. In this case, the Delhi High Court in the year 2015 decided that a female member of the family can also become the Karta and shall enjoy all the equal rights the sons do. 
• Duty to bear expenses

Nanak chand Vs. handra Kishore Agarwa;la (AIR 1970 SC 446): Marriage is one of the foremost sacred and esteemed connections within the culture and conventions of Hinduism. Because it is, the HUF as well as values the significance of marriage. Karta incorporates an obligation to urge the single individuals of the family in wedlock particularly the girls as their marriage is considered sacrosanct beneath Hindu law. He must bear all the costs of the marriage through the stores of the family and on the off chance that he has got to pool within the assets from the exterior, he must see them reimbursed in time.

Conclusion

In any case of the truth that laws supervising Hindu Bound together, Family is not codified and composed, other than the framework given by Hindu laws and the Hindu Movement Act, 1956, the legal solutions to be associated to the issues rising out of blunders inside the family have been well-founded by the measures and point of intrigued judgments verbalized by the Apex Court.