If a member of a Hindu joint family decides to do business in partnership with other persons who are not members of that family, the case will be governed by the provisions of the Indian Partnership Act, and not by the special provisions of Hindu Law.
In such a case, neither the other members of the family become partners, nor can the family, as a unit, be regarded as a partner in such a business. As such a partnership will be governed by the Partnership Act, the death of one of the partners will (in the absence of a contract to the contrary) dissolve the partnership.
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ADVERTISEMENTS:
Similar observations apply when the manager of a joint family enters into a partnership and contributes capital from the joint family funds. Even in such a case, contractual relations are established between the third party and the manager, and no privities of contract exists between the third party and the family as a whole. Therefore, the manager will be accountable to the family for his share of the profits and business assets. However, upon his death, the surviving members cannot claim to continue as partners; nor can they institute a suit for the dissolution of the partnership. (Sokkanadha v. Sokkanadha, 28 Mad. 344).
Likewise, the other partner (who is not a member of the family) cannot sue the surviving members as partners for the manager’s share of the loss in the business. His only remedy in such a case would be to proceed against the manager’s estate, if any.
If, however, the manager of a trading family enters into a partnership with strangers for the purpose of carrying on the same kind of business as that of the family, the members of the family would be liable to the extent of their interests in the family property.