1959 (8) TMI 59 - HC - Indian Laws

Joint Hindu Family Not Partner in Partnership: Karta's Death Dissolves It

The court held that a joint Hindu family cannot be deemed a partner when the karta enters a partnership. The partnership dissolves upon the karta's death, ... - Issues Involved:1. Whether a joint Hindu family can be deemed to have become a partner when its karta enters into a partnership in his representative capacity.2. Whether the partnership stands dissolved on the death of the karta or continues due to the existence of the joint Hindu family and its new karta.Issue-wise Detailed Analysis:1. Whether a joint Hindu family can be deemed to have become a partner when its karta enters into a partnership in his representative capacity:The court examined the nature of a joint Hindu family in law, considering whether it can be deemed a single entity and a juristic person as per S. 3(42) of the General Clauses Act. The definition of 'person' includes any company, association, or body of individuals, whether incorporated or not. The plaintiff argued that a joint Hindu family is a 'body of individuals' and thus a person, allowing the family to become a partner through its karta.However, the court found that a joint Hindu family is more of a condition or state than an entity. It occupies a peculiar position in law and is not treated as a juristic person for all purposes. The manager of the family acts on behalf of the joint family but does not act as an agent in the legal sense. The court relied on various precedents, including the Supreme Court's observation in Kshetra Mohan Sannyasi Charan Sadhukhan v. Commissioner of Excess Profits Tax, that a Hindu undivided family is included in the expression 'person' under the Income-tax Act but is not a juristic person for all purposes.The court concluded that for the purposes of the Partnership Act, a joint Hindu family cannot be deemed to be a person. When the karta enters into a partnership, he alone becomes a partner, representing the family. The other members of the family are liable only to the extent of their share in the joint family property, and they do not acquire rights or liabilities regarding the partnership business beyond this.2. Whether the partnership stands dissolved on the death of the karta or continues due to the existence of the joint Hindu family and its new karta:The court reviewed several cases to determine whether the death of the karta dissolves the partnership. It noted that the partnership is dissolved on the death of the karta because he alone was the partner, not the entire family. The surviving members of the family cannot claim to continue as partners with the stranger nor sue for the dissolution of the partnership. This view was supported by various cases, including Mewa Ram v. Ram Gopal, Kanhaya Lal v. Firm Devi Dayal-Brij Lal, Mahadeodas v. Gherulal Parakh, and others.The court emphasized that the karta's unique position is defined by Hindu law, and his death automatically dissolves the partnership. The surviving members of the family are not liable for debts incurred after the death of the karta, as they do not become partners by default.Conclusion:The court answered the first question in the negative, holding that the family cannot be deemed to have become a partner when the karta enters into a partnership in his representative capacity. The second question was answered by stating that on the death of the karta, the partnership stands dissolved. The case was remitted to the Division Bench for disposal.Separate Judgments:- Dulat, J. agreed with the judgment.- Gosain, J. agreed with the judgment.Final Answer:The family cannot be deemed to have become a partner when the karta enters into a partnership in his representative capacity. On the death of the karta, the partnership stands dissolved.