In this blog post, Shambhavi Kumar, a student of Jindal Global Law School, Sonipat, analyzes the powers and responsibilities of the Karta of a Hindu Joint Family. 

 

Introduction

The position of the ‘Karta’ or the ‘manager’ of the Hindu joint family finds its roots in the ‘Patriarch’ of the ancient family units. The term ‘Karta’ has been defined in the case of Suraj Bunsi Koer v. Sheo Persad.[1]

“Manager – Property belonging to a joint family is ordinarily managed by the father or another senior member f the family: The Manager of a joint family is called Karta.” [2]The absolute powers of the ‘Patriarch’ have now evolved into superior powers that are accompanied by similar responsibilities. These powers and responsibilities are several and quite multifaceted. The power of alienation of a Karta is limited since alienation can only be done in exceptional cases. The other powers of the Karta, however, are almost absolute.

 

Power of Alienation of Joint Property

 

No individual member of a coparcenary has the power to alienate joint family property without the consent of all other members. However, the Dharma Shastra recognizes that in some circumstances a member has the power to dispose of the  joint family property. Mitakshara Law explicitly states this; wherein – “….even one person who is capable may conclude a gift, hypothecation or sale of immovable property, if a calamity (apatkale[3]) affecting the whole family requires it, or the support of the family (kutumbarthe[4]) renders it necessary, or indispensable duties (dharmamarthe[5]), such as obsequies of the father or the like, made it unavoidable.”[6]

The Mitakshara Law, in this aspect, has, over the years, been modified on the following two facets: –

• This power can only be exercised by the Karta and no other member.
• The joint family property cannot be alienated for any reason other than the following three:
  • Apatkale: Legal necessity can be varied, and it is not possible to define it precisely. It, colloquially speaking, includes all things deemed necessary for family members. It, however, needs to be shown that the alienation of the property was for the satisfaction of such a need. In Dev Kishan v. Ram Kishan[7], the Karta, under the influence of one other member of a Joint Hindu Family mortgaged and sold the property for the illegal purpose of marriage of two minor daughters. Their contention was that the act was done in furtherance of a legal necessity. The court, in this case, held that the act was done in furtherance of an unlawful purpose, as the act was in contravention of the Child Marriage Restraint Act, 1929[8], hence, it was not a lawful alienation.
  • Kutumbarthe: Anything done for the benefit of the Hindu joint family property constitutes a benefit of the estate. One view, which is no longer valid, included defensive construction. The Supreme Court has observed that it also includes anything done for positive benefit.[9] The test is a thing that a prudent person would do for his property.
  • Dharmamarthe: Religious obligations consists performance of acts which are of a religious, pious, or charitable nature. The example of Dharmamarthe given by Vijnaneshwara entailed the expression “or the like”. This includes all indispensable duties like sradha, upananyana and the performance of any other necessary sanskars, for the furtherance of which, the karta may alienate the whole property. The power of alienation for charitable or pious purposes is only a portion of the property (movable or immovable).

Alienation for the above three purposes is binding on all family members, even minors.[10] Alienation for any purpose other than the three stated above is not void. It is voidable at the instance of any one of the coparceners. This was decided by the Gauhati High Court in CIT v Gangadhar Sikaria Family Trust[11] where the court held that the transfer not for the purpose of legal necessity or benefit of the estate is voidable, not void ab-initio.[12]

 

Separate Property

 A Hindu may possess separate property even if he is a part of the joint family.[13]Such a property must be self-acquired.[14]It is his personal property, and nobody else belonging to the coparcenary has any right in it. It passes onto his heirs in case of intestate death. It does not get transferred to members of the coparcenary.

The difference between the Dayabhaga and Mitakshara Schools with reference to the power of alienation invested with the Karta is that in the Dayabhaga School, the Karta must render accounts whenever demanded by any of the coparceners under Mitakshara Law, he must only render accounts in case there are charges of fraud or misappropriation against him.

 

Other Powers

1.  Powers of Management: The powers of management of the Karta are absolute.[15] He can manage or mismanage the property, family affairs and business any way he likes without being questioned by anyone. He cannot be liable for positive failures. He can discriminate between family members. However, he cannot deny maintenance or occupation of property to any member of the coparcenary. The possibility is a check on the Karta’s absolute power. Affection and natural concern for the family members and the faith and confidence of the members in him is considered the most important check on his powers. 
2. Right to Income or Remuneration and Expenditure: The income of the joint family property, in its entirety, must be given to the Karta. It is then his responsibility to allott the funds to members and to fulfil their needs. “The income of the Karta is considered expenditure incurred in interest of the joint family, in the interest of and wholly and exclusively for the purpose of the business of the Hindu undivided family, is not a deductible expenditure under the Income Tax Law[16] in computing the income of the Hindu undivided family.”[17] The Karta controls the expenditure of the funds. The scope of his power to spend extends only to family purposes, i.e., management, protection of estate and residence, realization, maintenance, marriage, education, religious ceremonies, etc.[18]
3. Right to Represent Joint Family: The Karta represents the family in legal, religious and social matters.[19]His Acts are binding on the members of the family. The family does not have corporate existence; it acts only through its Karta. It has been held that if a Karta contracts debts in order to carry on a family business, he renders the entire family property, along with shares of the other members of the family, liable for such a debt.[20]
4. Power Of Compromise: The Karta can compromise disputes regarding the family property and/or its management, family debts as well as other transactions. A malafide compromise can be challenged in a partition. The Karta can even compromise a suit pending in court, and the members will be bound by it. However, minor coparceners can use Civil Procedure Code.[21], whereby the compromise has to be approved by the court if one of the parties is a minor.
5. Power to Refer a Dispute to Arbitration: The Karta can refer a dispute to arbitration. If the award is valid, it becomes binding on all members of the joint family.
6. Power to Contract Debts: The Karta exercises an implied authority by which he can contract debts or pledge the credit of the joint family for family or business purposes and pay interest on it.[22]Such debts are binding on the entire family if the following conditions are fulfilled:
   • Debts for business purposes: The debts must be incurred in the ordinary course of business.
   • Debts for family purposes: Family purpose, in this context, has nearly the same meaning as a legal necessity, the benefit of estate and performance of indispensable and pious duties. The creditor must prove that the loan in question had been taken in the ordinary course of business, for family purposes or that he did make bona fide and proper inquiries regarding the existence of the need, in case he wants to hold the whole joint family liable for the debts.

7. Loan on Promissory Note: A loan taken or a promissory note executed by the Karta for the business or any family purpose, gives rise to the possibility of all members of the family to be sued, even though they may not be parties to it. Each member’s liability, however, is limited to the extent of their share in the property.[23] The Karta, on the other hand, is personally liable.
8. Power to Enter into Contracts: The Karta can enter into contracts which will be binding on the family. The contract is specifically enforceable against the family also.

Responsibilities

The most basic duty of a Karta is to provide food, shelter, clothing, etc. to the members of the joint family. His several responsibilities include:

1. Maintenance: All coparceners, from the head of the family to the junior most members, have the inherent right to maintenance. It is the responsibility of the Karta to maintain all the members of the family. “Those who would be entitled to share the bulk of property are entitled to have all their necessary expenses paid out of its income.”[24] If he unjustly excludes a member from getting maintenance or if he does not maintain a member properly, he can be sued for both, the maintenance and arrears of maintenance.
2. Marriage: The Karta is responsible for each unmarried members’ marriage, especially the marriage of daughters since it qualifies as a sacrosanct duty in Hindu law. The expense of the marriage is taken out of the joint family property. If the expenses are met externally, they must be reimbursed out of the joint family funds.[25] 
3. Accounts At the Time of Partition: Partition brings the joint family status to an end. Under Mitakshara Law, it means:

• Severance of status and interest: It is an individual decision; wherein a member wants to sever himself from the joint family and enjoy undefined and unspecified share separately.
• Actual division of property: The specified shares do this. It is a consequence of the declaration of desire to severe. It is, however, a bilateral action.

Opening of accounts refers to the inquiry of the assets of the joint family assets. An inventory is prepared. This includes all items of the family property. The Karta under the Mitakshara Law is required to disclose the accounts only if there are charges of misappropriation, fraud or conversion of assets or property of the joint family against him. In the absence of proof of misappropriation, fraud or conversion against the Karta, the coparcener pursuing the partition cannot demand the disclosure of the past dealings of the Karta with the joint family assets and property.[26] However, if the coparcener who is suing for the partition is wholly excluded from the enjoyment of the property, he can ask to look into the accounts. After severance of status, the Karta must render accounts of the expenditures and income in a manner similar to that in which a trustee or agent has to render accounts. This implies that the Karta has to account for and report all profits.

4. Representation: The Karta is the sole representative of the family vis-a-vis the government as well as all other outsiders. It is because of this position that he must perform several responsibilities and liabilities on account of the family. He must pay taxes and all other dues.[27] He can also be sued on behalf of the family for his dealings.

 

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Bibliography

Primary Sources

Statutes

1. Child Marriage Restraint Act, 1929
2. Indian Income Tax Act, 1922

Case Laws

1. Suraj Bunsi Koer v. Sheo Persad, 1880 ILR 5 Cal 148
2. Dev Kishan v. Ram Kishan, AIR 2002 Raj 370
3. Balmukund v Kamlavati, AIR 1964 SC 1385
4. VVV Ramaraju v Korada Malleswara Rao, (1999) 2 HLR 257 (AP)
5. CIT v Gangadhar Sikaria Family Trust, (1983) 142 ITR 677
6. Mukhtiar Singh v Amarjit Singh, 1975 Cur LJ 121
7. S. Sairam v. P.S. Ramarao Pisey, AIR 2004 SC 1619
8. Bhaskarn v Bhaskaran, (1908) ILR 31 Mad 318.
9. Jugal Kishore Baldeo Sahai v. CIT, (1967) 63 ITR 238
10. Jitmal Bherumal v. Commissioner of Income Tax, (1962) 44 ITR 887.
11. Narendra Nath Roy v Abani Kumar Roy, AIR 1938, Cal 78
12. Singriah v Ramanuja, AIR 1959 Mys 239 (DB)
13. Gopal v. Trimbak, AIR 1953 Nag 195
14. Ananda Charan v Jhatee Charan, AIR 1935 Cal 648
15. Nagarmal v Bajranlal, 1950 77 IA 22
16. Ram Autar v Beni Singh, AIR 1922 Oudh 135.
17. Krishnanand v Raja Ram Singh, AIR 1922 All 116.
18. Chandra Kishore v. Nanak Chand, AIR 1975 Del 175
19. Ghuia Devi v. Shyamlal Mandal, AIR 1974 Pat 68
20. Lalitha Kumari v Rajah of Vizianagram, AIR 1954 Mad 19.

Secondary Sources

Books:

1. Poonam Pradhan Saxena, Family Law Lectures Family Law II, 3^rd Edition, Lexis Nexis.
2. Mulla, Principles of Hindu Law, 17^th Edition, Vol.1, Butterworths India.
3. M. Gandhi, Hindu Law, 2^nd Edition, Eastern Book Company.
4. Werner F. Menski, Hindu Law Beyond Tradition and Modernity, Oxford University Press.
5. Maynes, Treatise on Hindu Law and Usage, 14^th Edition, Bharat Law House.
6. Ramesh Chandra Nagpal, Modern Hindu Law, 2^nd Edition, Eastern Book Company.
7. K. Mitra, Mitra on Hindu Law, Orient Publishing Company.
8. Darret J., Duncan M. “Essays in Classical and Modern Hindu Law” Vol.2, Universal Book Traders.
9. Paras Diwan, Modern Hindu Law, 16th Edition, Allahabad Law Agency.

Online Sources

1. Ankita Gupta, Karta/Manager, and His Legal Position: Socio-Legal Study, available at http://www.manupatra.com/roundup/341/Articles/Karta%20and%20his%20Legal%20Position.pdf
2. Manisha, Concept of Karta in Joint Hindu Family, available athttp://www.lawyersclubindia.com/articles/Concept-of-Karta-in-Joint-Hindu-Family-4678.asp
3. Pragati Ghosh, 5 Most Important Duties and Liabilities of a Manager of a Joint Hindu Family, available at http://www.shareyouressays.com/117196/5-most-important-duties-and-liabilities-of-a-manager-of-a-joint-hindu-family
4. Roopa Gargava, Position of Karta and the effect of Amendment of section 6 of HSA, 1956 in 2005, available at http://www.legalserviceindia.com/articles/karta_hsa.htm
5. Rajini Singh, Position of Karta and the effect of Amendment of section 6 of HSA, 1956 in 2005, available at http://jurisonline.in/?p=18386

Databases:

1. Manupatra
2. SCC Online
3. Jstor

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Footnotes:

[1]Suraj Bunsi Koer v. Sheo Persad, 1880 ILR 5 Cal 148

[2]Mulla, Principles of Hindu Law § 236.

[3]Legal Necessity

[4]Benefit of Estate

[5]Religious obligations

[6]Mitakshara Law

[7]DevKishan v. Ram Kishan AIR 2002 Raj 370

[8]Child Marriage Restraint Act, 1929

[9]Balmukund v Kamlavati, AIR 1964 SC 1385

[10] VVV Ramaraju v KoradaMalleswaraRao, (1999) 2 HLR 257 (AP)

[11]CIT v GangadharSikaria Family Trust  (1983) 142 ITR 677

[12]Mukhtiar Singh v Amarjit Singh, 1975 Cur LJ 121.

[13]Mulla, Principles of Hindu Law § 222.

[14]P.S. Sairam v. P.S. RamaraoPisey AIR 2004 SC 1619

[15]Bhaskarn v Bhaskaran,(1908) ILR 31 Mad 318.

[16]Indian Income Tax Act, 1922 § 37(1).

[17]Jugal Kishore BaldeoSahai v. CIT (1967) 63 ITR 238; JitmalBherumal v. Commissioner of Income Tax, (1962) 44 ITR 887.

[18] Narendra Nath Roy v Abani Kumar Roy, AIR 1938, Cal 78.

[19]Singriah v Ramanuja, AIR 1959 Mys 239 (DB)

[20]Dr.Gopal v. Trimbak AIR 1953 Nag 195

[21]O.32, Rule 7 C.P.C

[22]AnandaCharan v JhateeCharan, AIR 1935 Cal 648; Nagarmal v Bajranlal 1950 77 IA 22; Ram Autar v Beni Singh, AIR 1922 Oudh 135.

[23]Krishnanand v Raja Ram Singh, AIR 1922 All 116.

[24]Maynes, Treatise on Hindu Law and Usage.

[25]Chandra Kishore v. Nanak Chand AIR 1975 Del 175

[26]Ghuia Devi v. ShyamlalMandal AIR 1974 Pat 68

[27]LalithaKumari v Rajah of Vizianagaram, AIR 1954 Mad 19.