Unique Tradition of joint Hindu Family Business


The distinctive tradition of Joint Hindu Family Business is unique to India only. Even within India, this type of organization exists only in certain parts of the country. In this form of business, all members of Hindu undivided family do trade jointly under the supervision of the leader of the family who is identified as the ‘Karta’. The members of the family are identified as ‘Co-parceners’. The Mitaksara Law governs this form of Business in India. The main features of this type of organizations are:

  • This type of business comes into reality by the process of Hindu law and not out of any treaty. The privileges and liabilities of co-parceners are determined by the rules of the Hindu law.
  • The association of this Joint Hindu Family Business is the result of status arising from the birth in the family and its authority is not affected by the alternative. Originally, only three succeeding male generations were legal owners of the business. However after the Hindu Succession Act was passed, a female family member of a late member or a male family member of female member was qualified for a share in the interest of the related member ( known as co-parcener) at the time of his demise. There is no upper permissible limit to the number of members.

  • Registration is not needed. Besides, the rights of Joint Hindu Family Business members to charge third parties for claims of liability remain unaltered.
  • The business is generally managed generally by the leader of the family. The leader has the right to achieve loans against the family assets. Other members have no right to take loans on the joint-family assets.
  • The leader of the family has the final word in the creation and execution of all policies. Besides, the kartha has super powers, which cannot be questioned, to manage the family business.
  • The leader of the family has unlimited responsibility while the responsibility of the other family members is limited to the value of their individual benefit in the joint family structure.
  • The Family Business enjoys the stability of operations, as its survival is not subject to the death or collapse of a co-parcener or leader of the family. It functions like any other public limited organization.

However today this unique Indian form of Joint Hindu Family Business is losing esteem due to the decline in the combined family structure itself. The existing trend of industrialization and corporate working style are slowly leading to the gradual declines of family business.


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