Power and Position of Karta

 Q. 17 (a) What do you understand by 'Karta'? Discuss the powers of Karta of a Mitakshara joint family.

Or

(b)'Karta of a Mitakshara joint family has greater power than a trustee or a manager.' How far this statement is correct? Discuss his powers vis-à-vis the Hindu joint family.

(c) What are the powers of a "Karta" in a Hindu joint family? Discuss in detail.

(d) Can "Karta" refer disputes to arbitration and if referred, are other family members bound by the Arbitral award?

(e) A, B and C are members of a Joint Hindu Family. A and B are the managing members. A and B barrow money from P for the Joint family. Since they failed to repay in time, P filed a suit which was decreed against A and B as managers. Discuss whether this decree can be executed against "C"'s share in the co-parcenary property. Can "C" file a suit for partition and claim in junction against 'P' from executing the decree against his share?

 

 

 

Ans. Karta of Mitakshara Joint family.-

 The head of the Joint Hindu Family is called its Karta. The Karta or the manager may be the father or any other senior member of the family. The father is the karta primarily and naturally when the family consists of himself and his sons. When the father dies, his eldest son becomes the manager. But a senior member can relinquish his right of management and any other junior member can take the management of the joint family property in his hands and can be called a Karta.

 

The Karta of a Joint Hindu Family is a sort of representative owner, his independent rights being limited on all sides by the correlative rights of others and burdened with a liability co-extensive with the ownership to provide for the maintenance of the family. He is neither partner nor principal nor the agent of the other members of the family so as to make them liable as principals.

Generally a woman cannot be a coparcener and so cannot be the Karta of the family. However, in the absence of an adult male member, the mother acts as the manager of a Joint Hindu Family though she is not a coparcener among some families, though not legally accepted. A minor may be the Karta but he has to act through his legal guardian till he becomes a major.

 

Only a coparcenar. Only a coparcener can be a Karta. Under the law as it stood before the Hindu Succession (Amendment) Act, 2005, a woman was not a coparcener, so she could not be the karta of a coparcenary. In Commissioner of Income Tax v. G.S. Mills, AIR 1966 SC 24 the Supreme Court observed:

"Under Hindu law coparcenership is a necessary qualification for the managership of a joint Hindu family. A widow is not a coparcener, she has no legal qualifications to become the manager of a joint Hindu family. A widow of a coparcener cannot, therefore, be a karta of the joint Hindu family consisting of three widows and two minors."

 

As the daughter of a Mitakshara coparcener has been made coparcener in the Mitakshara joint family property after the commencement of the Hindu Succession (Amendment) Act, 2005, it seems that a woman can also become a coparcener if she is the senior-most coparcener she can also be Kerta of the family, but after marriage daughter become the family member of her husband family and family bond with her father family is dissolved there she cannot become karat in his birth family.

 

As a general rule, senior most member can be Karta.-As a general rule the senior-most male member is the karta (manager) of the joint family. Hence the father or any other senior member of the family may be the Karta. The father is the karta primarily and naturally when the family consists of himself and his sons. After his death, the kartaship passes to the eldest brother. Where the senior most male member is physically incompetent or has resigned his office, the junior member may be chosen as a Karta.

 

The position of Karta is unique.-"Karta" is one of those sanskrit words that defy all attempts to render it into English. The word "manager" is being used by textbook writers and the Courts. Karta holds a unique position in Hindu coparcenary property which is never enjoyed by the manager of an estate. "There cannot be two karta of a joint family though there can be two managers or representatives of the joint family to manage and represent the joint Hindu family firm. The Karta of a joint Hindu family is certainly the manager of the family property, but undoubtedly possessed powers which the ordinary manager does not possess." One more difference between karta and manager is that a female cannot be a karta of the Hindu coparcenary but she can be the manager of the Hindu joint family firm.

The position of a Manager in a Joint Hindu Family is not analogous to anything known to English Law. Neither the term "partner" nor "principal" nor "agent" will strictly apply. In dealing with the

The Karta of the joint Hindu family is certainly the manager of the family property who undoubtedly possesses powers that the ordinary manager does not possess. The Karta, therefore, cannot be just equated with the manager of the property:( Union of India v. Shree Ram, AIR 1965 SC 1531.)

The position of a Manager in a Joint Hindu Family is not analogous to anything known to English Law. Neither the term "partner" not "principal" nor "agent" will strictly apply. In dealing with the same question, the Privy Council in Annamalai Chetty v. Murugesa Chetty, 30 IA 220, observed that, "The relation of such person is not that of principal or agent or of a partner; it is more like that of a trustee and cestui que trust (beneficiary of the trust). But he is not a trustee in the sense that he (trustee) is liable to account for his past dealing, with the family property nor is he under the same obligation to economise or to save as may be the case with a paid agent or trustee. Under the Dayabhaga Law, his position approximates more closely to that of a trustee than under the Mitakshara Law, as under that law, he is liable to account for his past dealings with the family property. Cowell in Tagore Law Lectures observes that "He is a sort of representative owner, his independent rights being limited on all sides by the co relative rights of others and burdened with a liability, co-extensive with the ownership to provide for the maintenance of the family."

 

Relations of Karta' of Joint Hindu family with its other members are not that a principal and agent or partners. He being head of the family acts on behalf of the family but not as a Partner or Agent because his powers are much wide and unlimited. Unless there are charges of misappropriation etc. he is the master of family affairs and no one can question him regarding his authority. So he is not bound for his positive failures, nor he is bound to give a fixed amount of income to the family. He to bound to carry out the interests of the joint family to the optimum best of his ability and judgment. He is bound to manage the joint family business for the whole of the family. However, any coparcener can ask him for partition.

 

Karta's Liabilities 'Karta' of a joint Hindu family is a being representative of the whole family, bound to maintain all members of the family. If he improperly excludes any member from maintenance, he can be sued for maintenance as well as for the arrear of maintenance. 'Karta' of the family is bound to manage the joint property and business of the family to the greatest advantage. Karta has a duty to spend reasonably. Karta of the Joint Hindu family is also responsible for all unmarried members of the family specifically unmarried daughters. Karta has to pay tax and other due on behalf of the family. He can be sued or he can sue, on behalf of the family.

 

Powers of 'Karta'

 

1. Manager's Power Over Income and Expenditure-- The Manager or Karta of a joint Hindu family has complete control over its income and expenditure. He is neither a trustee nor an agent of other members. So long as he spends the income of the family for the purposes of the family he is not under any legal obligations to economize or to make savings. The family purposes for which he is authorized to spend the family income are the maintenance, residence, education, marriage, Sradha and other religious ceremonies of the copareners and their families. If the manager spends more on such items than what the other coparceners approve, their only legal remedy would be to ask for a partition.

A Karta cannot, however, misappropriate family funds or misapply them to purposes other than those of the family. If he does so he is liable to make good all such sums to the other members of the family.

2. Power of Alienation- He can alienate for value, the family property so as to bind interests of the other coparceners adults or minors provided that the alienation is made for legal necessity, or for the benefit of the estate or for the legitimate and proper purposes of the family business.

 

3. Power to Contract Debts-- The Manager of a joint Hindu family has an implied authority to contract debts and pledge the property of the family for this purpose. Such debts would be binding on the other members of the family to the extent of their interest in such property. However, the manager himself would be liable personally also and not to the extent of his interest in the property as he is the party to the contract.

 

4. Powers to Contract --He has the power of making contracts, giving receipts and compromising or discharging claims ordinarily incidental to the business of the family.

 

5. Power to Acknowledge Debts --A manager of a joint family has the power to acknowledge debt but he has no power to relinquish a debt due to the family. Nor can pass a promissory note to receive a debt which is already time-barred.

 

6. Power to Manage a Family Business or to start a New Business - The Karta has the power to manage the joint Hindu family business. His position is not akin to that of a trustee or of an agent though some of his duties and functions may appear to be similar in character to those of trustees strictly so-called. He has also the authority to start a new business for the family with the required consent of members.

 7. Power to Give a Valid Discharge-- He has the power to give a valid discharge for debt due to the joint family. Hence if one of the members is a minor, he can not claim the benefit of Section 7 of the Limitation Act.

 

8. Power to Represent the Joint Family Property in Suits and Other Proceedings-- He may sue or be sued as representing the family in respect of a transaction entered into by him as a manager of the family or in respect of the joint family property and the decree would bind other coparceners even if they are not parties to the suit.

 

9. Power to Refer Disputes to Arbitration --A Manager has also the power to refer disputes relating to the joint family property to arbitration provided that he does so bona fide i.e., without any fraud or collusion and for the benefit of the family.

 

10. Power of the Manager to Compromise-- If a Manager of a joint Hindu family enters into a compromise bona fide for the benefit of the family such a compromise binds all the other members of the family.

11.  Power to alienate joint family property.-The manager of the joint family property has the power to alienate the joint family property for legal necessity or for benefit of the estate and for acts of indispensable duties. A Hindu father or any other managing member has the power to make a gift of ancestral immovable property within reasonable limits for 'pions purposes. In Hanooman Prasad Pandey v. Mst. Babooee, (1856) 6 MIA 393 the Privy Council observed, that the owner of the manager for an infant heir to charge an estate, nor his own is under the Hindu law, a limited and qualified power. It can only be exercised rightly in case of need, or for the benefit of the estate.

Legal necessity.-The term 'legal necessity' should be interpreted with due regard to the conditions of life. Instances of legal necessity are:

 

(i) Maintenance of the members of the family.

 

(ii) Payment of family debts.

(iii) Expenditure on education or marriage of the family members.

(iv) Payment of land revenue, taxes and the other dues.

(v) Expenditure on ceremonies such as Shradha, Upanayana etc.

However no exhaustive list can be given of legal necessities.

 

Benefit of estate. The term 'benefit of estate' includes those acts which is beneficial to the estate. In Palanjappa Chetty v. Devasikamoney Pandara, AIR 1917 PC 33 the Privy Council observed:

 

"No indication is to be found as to what is in this connection the precise nature of the things to be included under the description 'benefit to the estate'. It is impossible to give a precise definition of it applicable to all cases. The preservation, however, of the estate from extinction, the defence against hostile litigation affecting it, the protection of it or portions of it from injury or deterioration and such like things would obviously be benefits.

 

The benefits of estate have been held to include the following expenses:

 

(i) To meet the cost of repairs to properties comprises in the estate.

(ii) The sale of a house in a dilapidated condition.

(iii) To meet the expenses of litigation necessary for preservation of the estate.

(iv) To construct and complete an incomplete house.

(v) The sale for adequate price of land which would not be conveniently cultivated with other property of the family.

(vi) Renovation and reconstruction of the ancestral building.

Duties and Liabilities of the Karta or Manager of Joint Hindu Family

The following are the duties and liabilities of the Karta of a Joint Hindu Family.

 

(1) Liability to render accounts: The Karta is duty bound to render accounts to the other coparceners regarding his dealings with the coparcenary property and the income thereof. But he is not liable to account for his past dealings with the family property unless there is clear proof of misappropriation or fraudulent use of the family funds or estate by him. He is liable to account at the partition only and that too only for the family property as it exists at that time. He is not bound to keep accounts unless the nature of the family properties is such as in the case of a trading family, that it becomes necessary to keep accounts.

 

Apart from law, on principles of general equity, the liability to account arises. An implied agency of the one who is in possession of the property for the others can also be inferred either on the basis of tenancy or an equitable consideration. A coowner cannot, therefore, escape liability to account to his other coowners.

 

(2) Duty to realise debts due to family: It is an important duty of the karta to make proper efforts to realise the debts due to the Joint Hindu Family. But, he is not empowered to give-up any debt, however, he is empowered to settle accounts with debtors and to make a reasonable reduction, either towards interest or towards principal in the interest of the family.

 

(3) Duty to spend reasonably: It is the duty of the manager of a Joint Hindu Family to spend the family fund reasonably only for the purposes of the family. If, the manager of a Joint Hindu Family spends the family fund reasonably and it is not approved by other members of the family they could demand partition. He is, however, not under the obligation to economize, save as a paid agent or trustee would do. But he must spend reasonably if not economically for the benefit of the Joint Hindu Family.

 

(4) Duty not to start new Business without the consent of other coparceners :

 

A Karta, whether he be the father or other senior coparceners, has no authority to start a new business as to impose upon minor members the risk of a new business nor can he impose such a risk upon the adult members except with their consent, express or implied.

 

(5) Duty not to alienate coparcenary property: The karta of a Joint Hindu Family is duty bound to obtain the consent of adult coparceners before alienating the Joint Hindu Family property. However, if he alienates the Joint Family property for legal necessity or for the benefit of the estate, no consent of the coparceners is necessary. Whether the transaction is sought to be justified on the ground of legal necessity or benefit to the estate, the real question to be considered is whether it is a fair and proper transaction, such as a prudent owner would enter into, with the knowledge available to him at the time.

 

(6) Liability to compensate: In case of proved misappropriation or fraudulent and improper conversion by the karta of the family property, he is liable to compensate the other coparceners in respect of their shares in property or money so misappropriated.

 

(7) Liability to maintain members: The karta has a liability to maintain all the members of the Joint Family including their wives, widows and unmarried daughters. Maintenance would include in all cases, provision for food, clothing, residence, education and medical attendance and treatment; and in the case of an unmarried member also the reasonable expenses of and incidental to his or her marriage.

Ans  (d) Ans.  The position of Karta is sui generis. The relationship between him and other members are not that of the principal or agent or partners. He is not like a manager of a commercial firm. Needless to say, he is the head of the family. and acts on behalf of other members, but he is not like a partner, as his powers are almost unlimited. Undoubtedly, he is the master of the grand show of the joint family and manages all its affairs and its business. His powers of management are so wide and almost sovereign that any manager of the business firm pales into insignificance: In a sense, he stands in a fiduciary relationship with, other members but he is not a trustee. Ordinarily, he is accountable to none. Unless charges of misappropriation, fraud or conversion are levelled against him, he is the master and no one can question him, as to what he received and what he spent. So long as he manages the affairs of the family, he is not bound to save, economise or invest. In short, he is not liable for his positive failures, such as failure to invest, to prepare accounts, or to save money. He is not bound to pay the income of the joint family in any fixed proportion to other members. Even if he enters into such an arrangement, he can repudiate it with impunity. He is not bound to treat all members impartially, he may discriminate.

 

However large or despotic his powers may be, despot he cannot be. He has blood ties with other members. After all he is a person of limited powers. He has liabilities towards members. Any coparcener can, at any time, ask for partition. He obtains no reward for his services and he discharges many onerous responsibilities towards the family and its members. His true legal position can be understood only when we know the ambit of his powers and liabilities.

 

Karta's liabilities are numerous and multifarious. The Karta of the joint family is responsible to maintain all members of the family, coparceners and others. If he improperly excludes any member from maintenance or does not properly maintain them, he can be used for maintenance as well as for arrears of maintenance. He is also responsible for the marriage of all unmarried members. This responsibility has been particularly emphasized in respect of daughters. If a partition suit is filed, he has to prepare accounts, though this has different mean ing under the Dayabhaga and the Mitakshara schools (see, Chapter XVI). The Karta represents the family. He is its sole representative vis-a-vis the government and all outsiders and in that capacity he has to discharge many responsibilities on behalf of the family. He has to pay taxes and other dues on behalf of the family and he can be sued for all his dealings on behalf of the family with outsiders.

 

Ans. (e) A decree passed against the manager of a joint family as representing the family for a debt contracted by him for family necessities, or for the family business, or in respect of family properties, operates as res judicata under the Code of Civil Procedure, section 11, Explanation 6, and is binding upon all members of the family including minors, and it may be executed against the whole coparcenary property, although the other members were not parties to the suit.

 

The facts of the case are identical to the facts of the case of Baldeo v. Mobarak (1902) 29 Cal 583. Calcutta High Court has held that a decree against the manager of joint family property as representing the family as he borrowed money for the necessity of the family can be recovered.

In the case in hand A and B are the managing members of the Joint Hindu family, and in that capacity, they had borrowed money from P for the legal necessity of the family. Both of them were sued as managers of the joint Hindu family and the decree has been passed against them as such. Therefore, this decree may be executed against the whole coparcenary property including C's interest therein, though C was not a party of the suit, and even if C was a minor. C cannot claim partition and injunction against P from executing the decree against his share.