KARTA OF HUF
The Karta is the manager of HUF and have wide powers by way of controlling the affairs of the HUF. The Karta enjoys his position in the HUF by operation of law without any agreement and consent of other members of HUF. He stands in a fiduciary relationship with other members, but he is not accountable to anyone.
Article 236 of the Mulla Hindu Law defines “Karta” as follows:
“Manager – Property belonging to a joint family is ordinarily managed by the father or other senior member for the time being of the family: The Manager of a joint family is called Karta.”
The Karta is entrusted not only with the management of properties of the family but is also entrusted with the general welfare of the family. Karta is the head of the family and acts on the behalf of all members of the family but an agent of members of the family.
Who can be ‘KARTA’?
1. The Karta is the senior most male coparcener of the HUF.
Even if the Karta becomes aged, infirm, ailing, or even a leper, he may continue to be Karta. Where the senior most member is not Karta, the next senior male member takes over as Karta. [Man vs. Gaini ILR (1918) 40 All 77].
2. A junior coparcener can be Karta
Only if the senior most member gives up his right, a junior coparcener can become Karta of the HUF, with the consent of all other members as held by Supreme Court in Narendra Kumar J. Modi Vs CIT (1976) 105 ITR 109 (SC).
3. There can be more than one KARTA of a HUF
Darshan Vs Prabhu ILR (1946) All 692
4. Only Coparcener can become Karta
The Supreme Court in CIT vs. Seth Govindram Sugar Mills [1965] 57 ITR 510 (SC) held that coparcenership is a necessary qualification for the managership of a joint Hindu family.
5. Minor as Karta
In absence of the father, the elder minor son could act as the Karta of the family. Therefore, a minor can be the managing member of a Hindu undivided family.[BudhiJena v. DhobaiNaik (AIR 1958 Orisss 7)]
POWERS OF KARTA
- Managing the affairs of HUF
- Control & become custodian of the finances
- Can borrow money for & on behalf of HUF
- Spend money for the family & not accountable for it.
- NOT liable to submit account to anybody.
- Can make partition of the family suo moto.
- Quantum of partition shall be with KARTA’s liking.
- HUF cannot enter in to contracts, or form partnership firm, or represent except through Karta, however Karta may allow others to represent HUF.
- Can Gift away the movable properties of HUF for natural love & affection but within reasonable limit.
- May transfer immovable properties for pious purposes or for the benefit of the family.
BACKGROUND MATERIAL ON DIRECT TAXES
Position of Female in HUF
After amendment made by Hindu Succession (Amendment) Act, 2005, daughter can be coparcener of HUF like the sons of HUF. After her marriage she becomes member of her husband’s HUF and continues to be a coparcener of her father’s family. Being a coparcener, she can also seek partition of the dwelling house where the family resides and she can also dispose of her share in coparcenery property at her own will. If a Hindu dies, the coparcener property shall be allotted to the daughter as is allotted to sons. If a female coparcener dies before partition, then children of such coparcener would be eligible for allotment, assuming a partition had taken place immediately before her demise. A widow of a pre-deceased son even though remarried is now eligible for share in property as legal heir of the pre-deceased son of the family.
Female as Karta
Many courts had held that only a coparcener can become Karta of HUF. Since, a female was not considered as coparcener, she was not empowered to act as Karta prior to amendment in Hindu Succession Act. However, w.e.f. 6thSeptember, 2005, after amendments made by Hindu Succession (Amendment) Act, 2005 in respect of position of female member, the daughter of coparcener shall by birth become a coparcener in her own right in the same manner as the son.
Powers of Alienation
The power of alienation cannot be exercised except by Karta the joint family property can be alienated for the following three purposes only:
a. Legal necessity(Apatkale)
b. Benefit of estate of the family(Kutumbarthe)
c. Acts of Indispensable duty (Dharmamarthe)
The Karta can alienate the joint family property with the consent of the coparceners even if none of the above exceptional cases exist and if all the coparceners are adult, the alienation is binding on the entire joint family.
[Kandasami V. Somakanda ILR (1912) 35 Mad 177]
Legal Necessity–
The cases of legal necessity can be so numerous and varied.Some of the instances of a necessity may be outstanding revenue dues, ancestral debts, marriage expenses, discharge of outstanding decrees, personal necessities arising from poverty, sickness, incapacity for work, etc., legal expense in defending estate, litigation to protect estate, etc..
Property sold and mortgaged for an unlawful purposeand immoral purposes cannot be said to be legal necessity. As the property was alienated for the purpose of marriage of minor daughters, it cannot be called as lawful alienation. [DevKishan v. Ram Kishan AIR 2002 Raj 370]
a. Alienation Is Voidable
The alienation of property by Karta without any legal necessity/ benefit of estate/ discharge of indispensable duties is only voidable at the instance of any coparcenery and not void. [CIT v Gangadhar Sikaria Family Trust (1983) 142 ITR 677]
Where HUF is governed by Mitakshara School of Hindu law and property is alienated by Karta without legal necessity or benefit of minors, it is only voidable and not void, and therefore, any income derived from properties so transferred is not assessable in hands of HUF. [R.C. Malpanivs CIT [1995] 80 Taxman 546 (GA U.)]
b. Benefit of Estate–Itincludes anything which is done for the positive benefit of the joint family property.
c. Indispensable Duties – This term implies performance of those acts, which are religious, pious, or charitable.