Joint Hindu Family Business and Karta

Joint Hindu Family Business is a type of business organization that exists only in India. It is governed by the Hindu law and is a family business that is run by the members of a Hindu Undivided Family (HUF). The Karta is the head of the family who manages the business and takes all the major decisions related to it.

Unlimited Liability of Karta

The Karta in a Joint Hindu Family Business has unlimited liability, which means that he is personally responsible for all the debts and obligations of the business. If the business incurs losses or runs into debt, the Karta will have to use his personal assets to pay off those debts. This is because the business and the Karta are considered as one entity under the law.

No Liability for Other Members

However, the other members of the family who are not actively involved in the business have limited liability. They are not personally responsible for the debts and obligations of the business, and their liability is limited to the extent of their share in the business.

Joint Liability

The Karta and other members who are actively involved in the business have joint liability. This means that they are collectively responsible for the debts and obligations of the business. The creditors can recover their dues from any of the members who are actively involved in the business.

Conclusion

In conclusion, the Karta in a Joint Hindu Family Business has unlimited liability, while the other members have limited liability. The Karta and other members who are actively involved in the business have joint liability. This unique business structure is governed by the Hindu law and is still prevalent in India.