Under the Dayabhaga Law, the manager can contract debts for the family purposes and business, and such debts are binding on all the members of the family. (Incidentally, the position is also the same under the Mitakshara Law.)
When a Hindu under Dayabhaga Law takes a lean for his private purpose, the liability to pay the debt is as follows:
(i) The separate property of a Hindu is liable for the payment of his debts in his life-time, as well as after his death. (The position is much the same under the Mitakshara Law also.)
(ii) Under the Dayabhaga Law, each coparcener takes a defined interest in the joint family property, which on his death, passes to his heirs by succession, and not by survivorship. Such interest is liable for the payment of his debts, not only in his life-time, but also after his death.
(iii) Since sons, grandsons and great grandsons do not, under Dayabhaga Law, acquire any interest by birth in the ancestral property, the father can sell or mortgage even the whole of the ancestral property in his hands for the payment of his debts, whatever may be the character of his debts.
(iv) If a Hindu governed by the Dayabhaga Law dies leaving debts, the heirs are bound to pay the debts out of the property left by the deceased, but they are not personally liable for the debts of the deceased, not even if they be the sons, grandsons or great grandsons of the deceased.
(Abdul Rahman v. Gajendhralal, 1 Cal. 132)
Thus, in short, the Dayabhaga Law of Debts is very simple, for no question can arise under Dayabhaga Law as to the special liability of the sons, grandsons and great grandsons, as it did under the Mitakshara Law before the 2005 Amendment of the Hindu Succession Act. In other words, the doctrine of pious obligation was never recognised under the Dayabhaga Law.
The reason is that, under the Dayabhaga Law, sons do not acquire, by birth, any interest in the ancestral property, as they did earlier under Mitakshara Law. Further, each coparcener under the Dayabhaga Law takes a defined share in the coparcenary property, which he can deal with at his pleasure, and which, on his death, passes to his heirs and not to the surviving coparceners.