HUF is a unique form of business that exists only in India and is subject to the provisions of Hindu law. It stems from the application of Hindu law and not from the treaty. The company is owned by members of the undivided Hindu family, called Co-Parceners. The business of a HUF is run by the oldest male member, also known as Karta or Manager. However, a Coparcener other than the “Karta” of the family may be expressly or implicitly authorized to settle debts on behalf of the company (Lai Chand vs Ghanayalal). A partnership arises from a contract between partners. While a HUF is created by the application of Hindu law. It is created by status or birth in the family, no agreement is required for this. In a partnership, each partner has the right to claim his or her separate share of the profits, but a member of a joint Hindu family business does not have this right. His only remedy lies in a trial for division.
A partnership subject to a contract between the partners is dissolved with the death of a partner, but a joint Hindu family business is not dissolved with the death of a Coparcener (Baij Nath vs. Ram Gopal). The liability of other co-debtors is limited to the extent of their interest in the common family property and they assume no personal liability. A minor cannot become a full partner in a company; it can only be admitted to the benefits of the partnership. In a HUF, a male child becomes a full member from birth. A partnership is governed by the provisions of the Indian Partnership Act 1932. A HUF transaction is subject to the Hindu Inheritance Act. No new partners may be included in the existing partnership without the consent of all other partners. In the case of a HUF company, a person becomes a member (Coparcener) by birth alone. A partnership may be dissolved in the event of the death, insanity or insolvency of one of the partners.
In a partnership, the liability of all partners is unlimited. Each partner is jointly and severally liable to third parties for all the debts of the company. In the case of HUF, the liability of each member, with the exception of Karta, is limited to the extent of his share of the family`s property. Distinction between partnership and common Hindu family1. Regulatory law: A partnership is subject to the provisions of the Indian Partnership Act of 1932, while a common Hindu family business is subject to the principles of Hindu law. A partnership arises from a contract, while a joint Hindu family business is established by law and is not the result of a contract. The main differences between a partnership and a HUF company are as follows. A partnership is created by a contract between partners, while a common Hindu family (hereinafter referred to as HUF) is created by status, i.e. by birth in the family.
Thus, if two or more members of a HUF run an inherited business, it is not a partnership because it was established by statute or birth and not by an agreement. In a common Hindu family business, only the “Karta” is personally liable without restriction, i.e. his share of the joint family assets as well as his self-acquired or other separate assets are liable for debts incurred on behalf of the family business. In a partnership, no new partner is admitted without the consent of all partners, while in the case of a joint Hindu family business, a new member is admitted only by birth. In a partnership, each partner implicitly has the power to represent the firm and bind the other partners by their shares. In HUF, this right belongs solely to Karta, other members may be expressly or implicitly authorized by Karta to incur debts on behalf of the company. In a partnership, women can be full partners, while in a common Hindu family business, membership is limited to male members only. After the passage of the Hindu Succession Act of 1956, when a Coparcener dies, women receive only the interest of the co-sharers and they do not become co-parkers themselves. In a partnership, women can become partners and enjoy the same rights and privileges as male partners. In the case of a HUF company, on the other hand, membership is limited to male members. However, under the Hindu Inheritance Act of 1956, a relative of a deceased male member receives a co-parkery interest in the event of death. A partnership is dissolved in the event of the insolvency or death of a partner.
But the death, madness or insolvency of a Coparcener does not affect a HUF. It continues to function even after the death of a Coparcener. In the company, the liability of the partners is solidary and unlimited. In other words, each partner is personally and jointly and severally liable without limitation, and if the liabilities of the company cannot be fully discharged from the company`s property, the separate personal property of each partner is liable for the debts of the company. As the head of the common family, the Karta has full control of the family`s business affairs. He also acts as the custodian of the company`s assets. Its liability is unlimited, while the liability of the Coparceners is limited to the value of their individual interests in the common ancestral property. The death or insolvency of a Coparcener or even the Karta has no impact on the life of the family business. However, a HUF company can be dissolved by mutual agreement between all Coparceners. Mitakshara It is applicable to the rest of India. After this school, a common Hindu family consists of all people, including single wives and daughters, who descend from a common ancestor.
But only the people who make up the company acquire by birth a co-park interest in the common ancestral property, this interest belongs to three successive generations of the male line (son, grandson and great-grandchild), who inherit the ancestral property immediately after their birth in the family. Thus, the property that a Hindu inherited from his father, grandfather and great-grandfather is considered his ancestral property. .