DISTINCTION BETWEEN PARTNERSHIP FIRM AND HINDU JOINT FAMILY:
Broadly, a partnership firm is a mode of carrying on of the business, whereas the Hindu Joint
Family is a kind of social system. The difference between the two can be seen from various
perspectives as given under:
- Creation
The partnership firm is the creation of the agreement/contract between the partners. The
Hindu Joint Family (HJF) is created by status. - Interest of members
In a firm every partner is having a specific interest in the business of firm, and his interest is governed by the terms of the contract or by the Indian Partnership Act.
In a HJF, each member is not specifically interests in the affairs of HJF, and his interest is
not governed by any agreement and is governed by Hindu law. - How membership acquired
In a firm it is by the sweet will of the person resulting in a contract that a person acquires the membership of the firm.
In HJF, by birth one acquires membership. - Introduction of new member
Section 31 (1) of Indian Partnership Act, provides that a person acquires on becomes a
member of the firm when all the partners consented to it. It is because the new person must gain trust and confidence of all.
In HJF, by birth. - Position of minor
In a firm, a minor cannot be a member of partnership except to the benefits of the firm.
In HUF, he will be a member of the HJF. - Number of members
Limited in firm. Case of banking business the number of partners is 10, and in case of non-banking it is 20.
In case of HJF, the number of unlimited. - Liability
In a firm as defined in Section 25 of I. P. A., the liability is joint and several. It is unlimited and personal liability is also there.
In a HJF, it is only the Karta who is having unlimited liability, but in case of others, it is only
upto the extent of their share. - Conduct of business
In a firm, every member has the right to take part in the conduct of business. But, it can be
fixed by the contract.
In HJF, usually Karta takes care of. But others can also take part. - Authority to bind
Section 2 (a) makes it clear that the act of one partner is binding on all partners i.e. firm.
Sections 18, 23, 24 all strengthens this aspect.
A member of the HJF cannot bind the others for his act. - Element of mutual agency
Mutual agency is the foremost aspect of a firm. It is not an important element of HJF. - Death of a member
The death of a partner, dissolves the firm if not prevented by the contract.
The death of a member of HJF does not affect the continuity of HJF notably. - Effect of insolvency
Insolvency of one partner dissolves the firm if not prevented by the contract. But, if all
partners become insolvents, then the firm is bound to dissolve.
Insolvency of a member of HJF, does not dissolve or end the HJF. - Effect of non-registration
Unregistered firm cannot bring a suit in a court of law for the enforcement of contractual
rights.
No such disability in case of HJF. - Law applicable
Firm – Indian Partnership Act
HJF – Hindu Law - Relation how ends
In case of firm, by a suit of dissolution, the relation gets end.
In HJF, the relation comes to end by a suit of partition.
Cases:
i) Kshetra Mohan Sanyasi vs. C. E. P. T. (1953) – The affairs of HUF is looked after by its
Karta. Two kartas of two such family may enter into partnership, the same is popularly known
as between two undivided Hindu families. But, in the eye of law it is partnership between two
kartas.
ii) Rashik Lal and Co. vs. I. T. Commissioner, Orissa (1998) – Where a person nominated by
the HUF joins a partnership, the partnership is legally said to be between such nominated
person and other individual partners, but HUF by itself cannot be deemed to have become a
partner.
iii) Mangu Lal vs. Munni Lal (1933) – Where a stranger is associated with the members of a
Joint Hindu Family for a business, the rights and liabilities are determined by the contract Act
rather than by Hindu Law.
