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Nature and Meaning:

The Joint Hindu Family Firm is the next non-corporate, group ownership form of family
business operative in India. It is governed by the Hindu Law. In the Hindu Law, there are two

Dayabhaga, which is applicable in Bengal and Assam.


Mitakshara, which is applicable in the rest of India.

The origin of the Joint Hindu Family firm is to be found in the principles of inheritance under
the second school i.e., Mitakshara school of Hindu Law. Under this school, the property of a
Joint Hindu Family is inherited by a Hindu from his father, grandfather, and great grandfather
is called ancestral property.
Thus, three successive generations in the male line (son, grandson, and great grandson) can
simultaneously inherit the ancestral property. This interest in inheritance is called
coparcenary interest and the members of the Joint Hindu Family. Hindu Undivided families
(HUF) Firm are called coparceners and the senior most as karta. In this group of coparceners,
however, the female members of the Joint Hindu Family are not included.
It should be carefully noted here that with the operation of the Hindu Succession Act, 1956,
the female relative of a deceased coparcener is eligible to receive only some share out of the
coparcenary interests of such a Coparcener.

Joint Hindu Family Business:

The Joint Hindu Family (JHF) business is a form of business organization run by Hindu
Undivided Family (HUF) , where the family members of three successive generations own
the business jointly.
The head of the family is known as Karta who manages the business.
The other members are called Co-parceners and all of them have equal ownership right
over the properties of the business.

Provisions required for formation of Hindu Joint Family Business.

1. Membership from Birth:
In Hindu Joint Family Business, there are membership has been self activated from the
member birth. It means, members of business are not required for contracting with company.
They become a member from their birth, who are known as Co-parceners. They have an
equal ownership on the hereditary property. In India, there are two systems (Laws) which
have different provisions in case of membership.
a) Dayabhaga System: In this system, male and female both are required to become Coparceners of business and it prevails only in West Bengal.
(b) Mitakshara System: In this system, female and womens cannot be become a member of
business, only male members are required and it allows in all over India except West Bengal.
2. Formation of Business:
For formation of business, there should be at least two members are present at time of
formation and a hereditary property should be formed for Hindu Joint Family Business. There
membership is not created by an agreement in among individuals.
3. No restriction on maximum limit:
In Hindu Joint Family Business, there no restrictions are allowed on maximum numbers of
members or Co-parceners. However, restriction will be allowed after three successive
4. Liability:
In Hindu Joint Family Business, the karta has an unlimited liability in business and all other
members have limited liability in property of business.
5. Control:
The whole control of business has managed by eldest member of business, who is called as
Karta. Karta has taken all decisions to manage the business.
6. Extreme opportunity for Minors:
In Hindu Joint Family Business, a family member get the membership from their birth,
therefore, there minor can also become of Co-parcener of business.
7. Continuity:

The business will never end after the death of Karta. It will continue and appoint the other
eldest member of business, who takes the position of Karta. The nature of business is stable.

Distinction between Partnership and Joint Hindu Family (HUF) Firm:





Mode of

Through an agreement

Operation of law and by birth

Status of

Basically incompetent, but may be

taken in.

Becomes member by birth

Rights of

Right is there unless one waives

such a right

Only Karta conducts, bet may invite

others, if he so desires


Every partner can inspect

A co-parcener has no such right

Liability of

Every partner personally liable,

including his personal estate

Only Karta is liable for the debts of



No restriction about caste, color or


Only Hindus, the members of the

same family


May or may not have perpetual


Perpetual succession till the last

member of HUF survives


May or may not get registered

Does not require registration

Characteristics of Joint Hindu Family Business:

There should be at least two members in the family and the family should possess some
ancestral. There membership is not created by an agreement but by operation of law.
Legal Status:
The Joint Hindu Family business is a jointly owned business. It is governed by the Hindu
Succession Act, 1956.
In JHF business the outsiders are not allowed to become the co-parceners. Only the members
of undivided family acquire co-parcernership right by birth.
Profit Sharing:
All co-parcener have equal share in the profits of the business.
The business is managed by the senior most member of the family also known as Karta.
Other members do not have any right to participate in the management. The Karta has the
authority to manage the business as per his own will and his ways of managing cannot be
questioned by other members. If the co-parceners are not satisfied the only remedy is to get
the HUF status of the family resolved by mutual agreement.
In Hindu Joint Family Business, the karta has an unlimited liability in business and all other
members have limited liability in property of business.
The business will never end after the death of Karta. It will continue and appoint the other
eldest member of business, who takes the position of Karta. The nature of business is stable.

Merits of JHF Business

Demerits of JHF Business

Assured share in profit.

Have capital & manpower limited.

Quick decision

Lack of motivation

Sharing of knowledge and experience

Scope of misuse of power

Limited liability of members


Unlimited liability of karta

Continued existence
Tax benefits

Suitability of JHF Business:

The Joint Hindu Family form of organization is suitable

Where the family inherits a running business and

The family of the business wants to continue that business jointly as a family
This form of business organization is considered suitable for a business that requires
limited financial and managerial resources and having a very limited area of
It is found that JHF are usually engaged in trading business, indigenous banking,
small industry and crafts etc.

Merits of Joint Hindu Family Firm:

Assured share in profits.

Every co-parcener is assured of an equal share in the profits of the business no matter what
his participation in the running of the business. This safeguards the interest of the minor,
physically and mentally challenged co-parcener.

Quick decision
The karta enjoys full freedom in managing the business. It enables him to take quick decision
without any interference.

Sharing of knowledge and experience

A JHF business provides an opportunity for the young members of the family to share the
knowledge and expertise of the elder members of the family.

Limited liability of members

In Hindu Joint Family Business, the co-parceners have limited liability in the property of
business which leads to efficient running of the business.
Unlimited liability of Karta:

That leads to efficient running of the business as Karta personal property is also on stake.

Continued existence
The business will never end after the death of Karta. It will continue and appoint the other
eldest member of business, who takes the position of Karta. The nature of business is stable.

Tax benefits:
HUF is regarded as an independent assesses for tax purpose. The share of co-parceners is not
to be included in their individual income for tax purposes.

Limitations of Joint Hindu Family Firm:

Have capital & manpower limited.

The JHF business has generally limited financial and managerial resource therefore it is not
considered for large businesses.
Lack of motivation
The co-parcener get equal share in the profits of the business irrespective of their
participation. So generally they lacks motivation.

Scope of misuse of power

The Karta can misuse the powers to make for his personal gains. Moreover he may have his
own limitations.
JHF is a highly unstable form of business, even a small rift within the family members can
lead to partition.

A Case study: Kalyan Bhel A Snacks&Chaat Centre

Kalyan Bhel House is a renowned chaat and snack house operating since the last 30 years in
The founder Mr.Rameshbhau commenced this esteemed snack house as a street vendor and as
they say fortune favors the brave, Mr.Rameshbhau in a short span of time expanded this chaat
and snack house business from a street vendor to acquiring 7-8 snack places in and around
Pune and many more coming up soon.
The goal is to satisfy the hunger of chaat and snack lovers and having loyal customers all
year around. Our esteemed customers visit us from all walks of life and we customize our
chaats and snacks as per their requirements. We also cater to party orders, weddings or any
other functions.
Mmmmmmmmmmm,Lai Bhaaree, Badhia hai yaar,yummy,Awesome,Wah! Kya
taste hai, superb,Its Amazing, Im full but I still want to eat some more. The above are
few of the testimonials stated by our esteemed customers who have relished and enjoyed our
chaat and snacks. The above compliments boost our moral and lift Kalyan Bhel House to be
the best in town for chaat and snacks.

One can run a business based on basic idea of business management but having the modern
technologies is place is really important today. The businesses rely on computers for
information management (billing, orders, menu, customers detail, employee pay etc).
Mr. Rameshbhau understands that he cant operate and manage business at the same time and
there was need for professionals to pitch in and take the management into their hands.
Communication has been the main issue in JHF as they have depending on outdated systems
and there was no one employed who was highly proficient in this area. Increase in business
demand the companies to ensure that they have all the modern technologies in place which
will ensure that the business is running smooth as well as the customers base stronger.
Management of organizational change
Implementation of any new information systems in the organization will bring out lot of
chaos and confusion among the members and the stakeholders. It is important to ensure that
appropriate change management strategies are in place to avoid any further problems in
accepting the new systems.
JHF decision to implements this new IS will completely change the current structure of the
business. As far as the company is concerned, currently all the staff members are well aware
of the problems hence they would welcome any change that will take away the problem and
help them in performing better.
1. Identification of problems and the problematic areas has already been done.
2. JHF will have relook into their vision and ensure that now they develop their future
plan and their aim that they want to achieve.
3. Communication the vision and the goals to the staff and stakeholders will ensure that
they are part of business and they make a difference.
4. JHF will have to tackle one problem at a time. If they will try to implement every
change at once, management issues will kick in. Hence first they need to take care of
the transaction related issues and then move onto to management of information and
communication systems.
No change can happen overnight, it is a gradual process and it will take its time.

Decision making at JHF

Once the current problematic areas have to solved through implementation of the appropriate
information system, JHF can move towards decision making aspect. It is not easy to take
decision in a business and requires lot of thinking and research. Implementation of a decision
making system will ensure that the company is able to access all the internal as well as
external details before taking any decision.
Availability of information will enable JHF to foresee the pros and cons of certain decision.
They will be able to make decisions which will have a positive impact on the business.
Decisions are important in terms of which marketing strategy will yield more results, which
promotional technique will attract more number of customers, which business management
strategy will offer best customer service etc.
Ethical consideration
JHF has now identified the scope for using IT for improving their overall business
performance. Stakeholders of the business have to be ready to face initial turbulence in the
performance due the new system and there might be scenarios wherein the customers data
will be required for further research. Customer might be contacted without taking their
consent previously. JHF should increase the awareness all around about the changes that they
are planning to implement and the results that they are expecting


Even though JHF was able to start the business on a good note and got the attention of the
people, but they failed to understand the importance of changing market requirements and the
change in the perception and needs of the people. Over a period of JHF was unable to show
any evolution or development in terms of variety in food and the management of the
The JHF business is losing its popularity now a days and the main cause for its decline is the
gradual breaking of the joint family system itself. The present day trends of industrialization
and westernization are giving way to individual/nuclear family system.


A huge scope of improvement has been identified in the business processes in JHF. JHF has
been lacking in terms of their business management areas and needs development in this area.
Apart from the implementation of new technologies, it is recommended that JHF develop
new strategies which ensure that they are focused on utilizing the positives of these new
Business is all about customers and revenue. Happy customers bring in revenue and at the
same time an unhappy customer will impact the profits along with the overall outlook of the
business. JHF will have to ensure that organizational change recommended above is
welcomes by all the stakeholders of the company including, employees, staff and other
business partners. They should be able to see the benefits of the change.