Who is a Karta/Manager? Explain the power/duties of a Karta or Under what circumstances can a Karta alienate the property of joint family without the consent of coparceners?[M.P.J.S 2014]

Karta:

The manager of a joint family is called karta. The Hon’ble SC has held that only a coparcener can be the karta/manager of a joint family.

Property belonging to a joint family is ordinarily managed by the father or other senior member for the time being of the family. However, where the senior member gives up his right of management either expressly or impliedly, a junior member may be appointed as karta.

The only respect in which a karta has a superior right is that a karta has a power of disposition for causes recognised as just and proper under Hindu law of the whole family property including the interest of the junior members.

Position of Karta:

The karta being the head of the joint family acts on behalf of the members of the joint family. The position of the Karta is “sui generis”. Sui generis in the sense that his position is not that of the Manager of a Commercial Firm and his relationship with the other members is not that of the principal and agent or firm and partners.

In Chandrakant vs. C.T.R, the Hon’ble SC observed that there can be a partnership between Karta and other members. The karta may contribute capital while the members may contribute labour and skill.

However, the powers of karta are not absolute or unlimited. Within the ambit of his sphere, he possesses such vast powers which no once can possess.

Power / duties of a Karta:

Following are the powers/duties of a Karta:-

1. Power over income & expenditure

2. Liability to account on partition or otherwise

3. Power to Contract Debts for family purpose and family business

4. General powers over joint family business

5. Alienation for legal necessity

6. Power to refer to arbitration

7. Power to compromise

8. Power to give valid discharge for debts

9. Family arrangement or family settlement

10. Power to acknowledge and part payment of debt

11. Relinquishment of debt

12. Parties to suits

1. Power over income & expenditure:

A Karta has control over income and expenditure and is a custodian of surplus if any. So long as the karta spends the income for the purposes of maintenance, education, marriage, shraddha and other religious ceremonies of the coparceners and of the members of their respective families he is not under obligation to economise or save. But, if the karta spends more than the income, the remedy is to demand a partition.

In case of misappropriation of income or expenditure for purposes other than those the joint family was interested in, the karta is liable to make good for the same to the joint family.

2. Liability to account on partition or otherwise:

In the absence of proof of misappropriation or fraudulent and improper conversion by the karta, he is liable to render accounts on partition only for assets which he has received and not for what he ought/might have received if the family money had been profitably dealt with.

But, it has been held in Bengal that any coparcener may without bringing a suit for partition require the karta to render accounts for his dealings with coparcenary property and the income thereof.

3. Power to Contract Debts:

A karta has implied authority to borrow money for family business and where a joint Hindu family has no business at all the karta may contract debts for a joint family purpose.

If a karta borrows money on a promissory note for a joint family business or to meet a joint family necessity, the other members of the joint family may be sued on the note though they are not parties to the note but in such a case their liability is limited to their share in the joint family property unless it is shown that they are contracting parties.

In Balaiah vs. Budagaiah, the father incurred debts for curing his venereal disease. The sons contended that the debts would not bind them since they were avyaharika debts

The Court observed that curing venereal disease is only for health purpose which would not constitute avyavaharika and held that the sons were liable.

4. General powers over joint family business:

Besides the power to contract debts for the family business, the manager has the power of making contracts, giving receipts and compromising or discharging claims ordinarily incidental to the business.

5. Alienation for legal necessity:

Alienation means conveyance or transfer of property to another. Legal necessities have been held to be:

(i) Payment of government revenue and of debts which are payable out of the family property

(ii) Maintenance of coparceners and of the members of their families

(iii) Marriage expenses of coparceners

(iv) Performance of the necessary funeral or family ceremonies

In Gangi vs. Tammi, the Privy Council has said that a dedication of a small portion of family property for the purpose of religious charity may be valid if made by a karta.

(v) Costs of necessary litigation in recovering or preserving the estate

(vi) Costs of defending the head of the joint family or any other member against a serious criminal charge

(vii) Payment of debts incurred for family business or other necessary purpose

(viii) Property sold in order to fulfill tax obligations incurred by a family business

(ix) Selling of joint property for the purpose of migrating to a new place for a better living

The karta has wide discretion in arriving at a conclusion as to legal necessity and as to in what way such legal necessity can be fulfilled best, by mortgage or sale. An aggrieved coparcener who thinks it is not for legal necessity can pray for partition and for recovery of possession of his share.

6. Power to refer to arbitration:

A Karta or a father has power to refer to arbitration disputes relating to joint family provided such reference is for the benefit of the family. The other members of the family including minors are bound by the reference and by the award made upon it. [ Check - Jagan Nath vs. Mannu Lal, (1894) 16 All 231 ]

The reference may be in respect of disputes between the family and an outsider or disputes between the members of the family themselves an example being as to shares on partition.

7. Power to compromise:

A karta has power to compromise for the benefit of the family. It binds the other members of the family including minors.

8. Power to give valid discharge for debts:

A karta has powers to give a valid discharge for a debt due to the joint family. Hence, if one of the members is a minor, he cannot claim the benefit of S. 7 of the Limitation Act.

9. Family arrangement or family settlement:

A family arrangement or settlement occupies a position different from a commercial one. Members of a joint Hindu family may to maintain peace or to bring about harmony in the family may enter into such a family arrangement. A family arrangement must be entered into by all parties thereto. If such document is not signed by all parties, it will not be construed as a family arrangement.

10. Power to acknowledge and part payment of debt:

A Karta is competent to acknowledge a debt or to pay interest on a debt or to

make part payment of a debt so as to extend the period limitation but has no power to revive a time barred debt by passing a promissory note.

11. Relinquishment of debt:

A Karta has no power to give up a debt due to the joint family.

12. Parties to suits:

A Karta who mortgages the entire interest of the family it must be deemed that he has acted in the transaction on behalf of the family. In such a case, other coparceners are not necessary parties to the suit and are bound by the decree in the suit.