In this article, we shall introduce the Hindu Succession Act and the changes brought about by it in the Hindu society.

To codify Hindu laws, the Government appointed a small Hindu Law Committee known as the Rau Committee with B. N. Rau, a judge of the Calcutta High Court as its Chairman and three other lawyers as its members.  They were D. N. Mitter, ex-judge of Calcutta High Court; Gharpure, Principal, Law College of Poona; and Rajratna Vasudev Vinayak Joshi, a lawyer of Baroda. This committee toured the country from end to end and gathered evidence from representative bodies and leaders of the communities.  The committee had the able assistance of leading lawyers and jurists. The Committee advocated a Hindu code- a blend of the finest elements of various schools of Hindu law. On the basis of the various private Bills on the property, the Committee evolved a common law of Intestate succession for all Hindus in British India. The Code recognized the equality of status of men and women before the law with appropriate obligations as well as rights.

The Rau Committee reported in June 1941 that the Hindu Code Bill should be taken up by compartments:

1. Hindu Marriage,’
2. Hindu Succession,
3. Hindu Minority and Guardianship,
4. Hindu Adoption and Maintenance.

It was essential to reduce the law relating to each part to a statutory form, and then consolidate the various acts into a single code. There was great opposition to the Succession Act. The opponents of the bill argued that the women members were not representing the general women’s opinion and that the reformers were influenced by Western education and law, instead of Hinduism and were unpatriotic. Many women members of parliament, as well as the congress like Renuka Ray, Durgabai Deshmukh, and Sucheta Kriplani argued that political equality was meaningless without economic and social equality provided by female inheritance rights. The original draft of the provisions relating to intestate succession contained in the Rau committee’s bill underwent substantial changes in the hands of the select committee. In the bill stage itself, various suggestions were made from time to time for amendment of the select committee’s version. Ultimately the Hindu Succession Act came into force on 17th June 1956. It was very much in tune with the changed socio-economic scenario of Hindu society. Under this Act, the long-felt need for improving the lots of Hindu females through effective legislation was fulfilled and their right of inheritance on par with males was fully recognized. It brought about comprehensive and radical changes in the law of intestate succession amongst Hindus.

Objects of the Act:

The objects for the enactment of the Hindu Succession Act are the following:

• To amend and codify the law relating to intestate succession among Hindus.
• To regulate succession to the property of intestates governed by the marumakkattayam and nambudiri laws of inheritance.
• To meet the needs of a progressive society.
• To remove inequalities between men and women with respect to rights in the property

Fundamental Changes Brought About By the Act:

Following are some changes effected under the Hindu Succession Act, 1956

• There were two schools in old Hindu Law namely i) Mitakshara and Dayabhaga governing the Hindu succession. However, the Hindu Succession Act, 1956 brings all the schools into a uniform system.
• In old- law there was a distinction between male and female heirs, but the Hindu Succession Act. 1956 removed the distinction between male and female heirs.
• Under the old law, the rule of preference is based on the right to offer pinda or propinquity of blood, but the order of succession provided by the Act is based on the concept of love and affection.
• Under the old law, a simultaneous succession of different types of heirs was not recognized. Now class 1 heirs take simultaneously under the Hindu Succession Act.
• Under the old law, the samanodakas with the 14th degree marked the limit of agnatic kinship and similarly, five degrees on the mother’s side and seven degrees on the father’s side marked the limits of the cognate relationship. However now these limits have been removed by the Hindu Succession Act,1956.
• The old law gave the benefit of the doctrine of representation only to the sons, grandsons, and great-grandsons of predeceased sons. But the Hindu Succession Act. 1956 extends the benefit of this doctrine also to the children of predeceased daughters and also to daughters of predeceased sons and daughters of a pre-deceased son of a predeceased son as also to the widow of a pre-deceased son and the widow of a predeceased son.
• Under the old law, there were no rights to certain female heirs to succeed to the interest of a Mitakshara coparcener, but the Hindu Succession Act, 1956 has given the rights to a certain female heir to succeed to the interest of a Mitakshara coparcener. Under the old law, there was Stridhana and women’s Estate (Limited Estate), but the Hindu Succession Act abolished Stridhan and women’s estate.
• Under the old law, succession to Stridhana depended upon the nature of the Stridhana and the nature of the marriage (whether approved or unapproved) and the particular school of law to which the parties belonged. The Hindu Succession Act devised a simplified system.
• Under the old law, there was a lot of confusion and disorder in computing the order of succession among agnates or cognates. But the Hindu Succession Act, 1956 made the provisions very clearly the order of succession of agnates or cognates as the case may be.
• Under the old law, the rights of illegitimate issues depended upon the caste to which the parents belonged and they also varied from school to school. Now under the Hindu Succession Act. 1956 illegitimate kinship is recognized only with reference to the mother for purposes of inheritance.
• The old law of succession had rules of disinheritance based upon disqualifications e.g. lunacy and idiocy. Similarly, the unchastity of the widow disqualified her for inheritance. Now the Hindu Succession Act, 1956 removed all these disqualifications and diseases, defect or deformity is no ground of exclusion from inheritance under the Act.
• Under the old law, in a joint family, on the death of a coparcener, the principle of survivorship operated and the widow or daughter or mother of the deceased coparcener or his predeceased son’s daughter, or predeceased daughter’s daughter cannot inherit his share. The Hindu Succession Act, 1956 remedied this.
• Under the old law of succession, a coparcener could not make a will in respect of his interest in the joint family property. Section 30 of the Hindu Succession Act, 1956 enables him to execute a will in respect of such property.
• Under the old law of succession, there was a system of the impartible estate. But the Hindu Succession Act abolished the impartible estate not created by statutes.
• Under the old law of succession, there was no uniform order of succession. But, Section 8 of the Hindu Succession Act provides for the uniform order of succession governing the property of a male Hindu and Section 15 of the Act provides the uniform order of succession governing the property of a female Hindu.

Next Topic: Succession in case of Hindu Male (Ss. 8 to 13)

Indian Legal System > Civil Laws > Family Laws > The Hindu Succession Act, 1956 > Introduction

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When starting a business or is interested in expanding an existing one, an important decision relates to the choice of the form of organization. By weighing the advantages and disadvantages of each form of organization, the most appropriate form is determined. The decision of selection also depends on the form which satisfies the need of the entrepreneur. Various forms of business organizations from which one can choose the right one include:

• Sole proprietorship,
• Joint Hindu family business,
• Partnership,
• Cooperative societies, and
• Joint-stock company.

Joint Hindu Family Business

Joint Hindu family business is the oldest and specific form of business organization found only in India. It refers to a form of organization wherein the business is owned and carried on by the members of the Hindu Undivided Family (HUF). It is governed by the Hindu Law, which is one of the several religious laws (personal laws) prevalent in India. The firm is created by the operation of law. It does not have any separate and distinct legal entity from that of its members. When two or more families agree to live and work together, throw their resources and labour with joint-stock and share profits and the losses together, then this family is known as composite family.

The basis of membership in the business is birth in a particular family. Any person born into the family (boy or girl) up to the next coming three successive generations can be members of the business. The business is controlled by the head of the family who is the eldest member and is called karta or ‘Manager’. Karta is the main person responsible for business and finances. All members have equal ownership right over the property of an ancestor and they are known as co-parceners.

There are two systems which govern membership in the family business, viz., Dayabhaga and Mitakashara systems. Dayabhaga system prevails in West Bengal and Assam and allows both the male and female members of the family to be co-parceners. Mitakashara system, on the other hand, prevails all over India except West Bengal and allows only the male members to be co-parceners in the business.

Features of Joint Hindu family business:

• Formation: For a joint Hindu family business, there should be at least two members in the family. There must be some assets, business or ancestral property that they have inherited or will eventually inherit. The HUF business does not require any agreement or documentation as membership is by birth. It is governed by the Hindu Succession Act, 1956.
• Liability: The liability of all members except the karta is limited to their share of the co-coparcenary property of the business. Thus their liability is limited. The karta, being the head of the family, however, has unlimited liability. Thus the Karta is not only liable to the extent of his share in the business but his separate property is equally attachable and amount of debt can be recovered from his separate property.
• Control: The control of the family business lies with the karta. He takes all the decisions and is authorized to manage the business. His decisions are binding on the other members. He may choose to confer with the co-parceners about various decisions, but his decision can be independent. His actions will be final and also legally binding. The members of the family have full faith and confidence in Karta. Only Karta is entitled to deal with outsiders. But other members can deal with outsiders only with the permission of Karta. Only Karta has the implied authority to contract debts and pledge the credit and property of the firm for the ordinary purpose of the businesses of the firm.
• Continuity: The HUF business can be continued perpetually.  The business continues even after the death, lunacy or insolvency of the karta or any other member, as the next eldest member takes up the position of karta, leaving the business stable. The business can, however, be terminated (dissolved) with the mutual consent of all the members.  Any single member has no right to get the business dissolved.
• Minor Members: The inclusion of an individual into the business occurs due to birth in a Hindu Undivided Family. Hence, minors can also be members of the business. But they will enjoy only the benefits of the organization.

Merits of Joint Hindu Family Business:

• Easy to Start: It is very easy to start the Joint Hindu Family Business. No legal formalities are required to be faced, such as registration. It requires no agreement.
• Effective control and Prompt Decision Making:
• Like any other organization, there is scope for disagreements and conflicts. But since the karta has absolute decision making power. it will lead to prompt, flexible and effective decision making. The. This avoids conflicts among members as no member can interfere with his right of karta to take a decision. The prompt decisions help the business to grab opportunities.
• Secrecy: In Joint Hindu Family Business, all the decisions are taken by the ‘Karta’ himself. He is in a position to keep all the affairs to himself and maintains perfect secrecy in all matters.
• Continuity: The HUF business can be continued perpetually.  The death, lunacy or insolvency of the karta or any member will not affect the business as the next eldest member will then take up the position. Hence, operations are not terminated and continuity of business is not threatened.
• Limited Liability of Members:
• The liability of all the co-parceners except the karta is limited to their share in the business, and consequently, their risk is well-defined and precise. This keeps the balance between power and responsibility.
• Freedom Regarding Selection of Business: The Karta is at freedom to select any business of his choice. He has not to depend on others.
• Increased Loyalty and Cooperation: Since the business is run by the members are relatives and members of the same family, there is a greater sense of loyalty and cooperation towards one other. Pride in the growth of the business is linked to the achievements of the family. The trust among members is also there and leads to overall cooperation.

Demerits of Joint Hindu Family Business:

• Limited Resources: The capital is limited only up to the resources of one family. No outside members other than family members can be introduced to the HUF.  Thus the joint Hindu family business faces the problem of limited capital as it depends mainly on ancestral property. This limits the scope for expansion of the business. The Karta cannot take advantage of economies of large size due to limited finance.
• Unlimited Liability of Karta: The karta has power but he is burdened not only with the responsibility of decision making and management of the business, but also suffers from the disadvantage of having unlimited liability. His personal property can be used to repay business debts. This may make him overly cautious and timid in his business dealings. Another factor is that he may even be held responsible for the actions of other members.
• Dominance of Karta: The karta individually manages the business and takes all the decisions which may at times not be acceptable to other members. This may cause conflict amongst them and may even lead to breaking down of the family unit.
• Limited Managerial Skills: The position of karta is given to the senior-most family member, whether he is the most qualified or not is not taken into consideration. Since the karta cannot be an expert in all areas of management and he may not be able to perform all managerial functions because of the limitation of time and energy. the business may suffer as a result of his unwise decisions. His inability to decide effectively may result in poor profits or even losses for the organization. Due to the limited scale of operations and financial resources, it may not be feasible for HUF to secure the services of experts in different fields like purchasing, production, and marketing.
• Misuse of Power: The karta is the only decision-maker of such organization. No other member can interfere in his management. This may lead to the misuse of power and the Karta may use the power for his personal interest.

The joint Hindu family business is on the decline because of the diminishing number of joint Hindu families in the country.

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Management > General Management > Forms of Business Organizations > Joint Hindu Family Business (HUF)

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