Ministry of Corporate Affairs

Ministry of Corporate Affairs has issued a Clarification that Hindu Undivided Family cannot be a Partner/Designated Partner but its Karta or any individual of Hindu Undivided Family can be a partner in a partnership firm/Limited Liability Partnership in its individual capacity and not the Hindu Undivided Family.

Ministry of Corporate Affairs took the view from Rashiklal & Co. vs Commissioner Of Income Tax where the Hon’ble Supreme Court has held that even if a person nominated by the Hindu Undivided Family joins a partnership, the partnership will be between the nominated person and the other partners of the firm and if a Karta or any other member of the Hindu Undivided Family joins a partnership, he can do so only as an individual. His rights and obligations vis-a-vis other partners are determined by the Partnership Act and not by Hindu law