Extent of Karta’s Personal Liability for Decretal Debts of a Hindu Undivided Family

Position of the Karta

Under Mitakshara law, which governs most Hindus in India, the HUF is a joint family consisting of lineal descendants and their wives and unmarried daughters. The coparcenary, now inclusive of daughters after the Hindu Succession (Amendment) Act, 2005, is a narrower body within the HUF.

The Karta is the senior-most coparcener and acts as the manager of the family. His position is not contractual but arises from status. The Supreme Court in State Bank of India v. Ghamandi Ram recognised that a coparcenary is a creature of law and that its incidents flow from Hindu law rather than agreement. The Karta enjoys extensive powers of management, including the authority to incur debts, alienate property for legal necessity, and represent the HUF in litigation.

However, with these powers come corresponding responsibilities. Unlike ordinary coparceners, whose liability is generally limited to their share in the coparcenary property, the Karta has traditionally been treated as personally liable for obligations incurred on behalf of the family.

Decretal Debts and Execution Against an HUF

A decree or arbitral award against an HUF is executable in accordance with the Code of Civil Procedure, 1908 (CPC). Order XXX Rule 10 of the CPC specifically recognises that an HUF carrying on business may be sued in its name, akin to a firm. Nevertheless, Order XXI Rule 50, which governs execution against partnership firms, does not apply proprio vigore to HUFs, reinforcing their distinct legal treatment.

In the case under discussion, a substantial arbitral award was passed against an HUF engaged in the business of construction contracts. During execution, it was revealed that the disclosed assets of the HUF were grossly insufficient to satisfy the decretal amount. The judgment creditor, therefore, sought to proceed against the personal assets of the Karta.

The Karta resisted this attempt on the ground that no personal decree had been passed against him and that the HUF should be treated as a separate juristic entity whose liabilities could not automatically be imposed on its Karta.

HUF as a Juristic Entity: Limits

One of the central arguments raised against personal liability of the Karta was that the HUF is recognised as a distinct juristic or corporate entity under various statutes, including tax laws. Reliance was placed on decisions recognising the HUF as a “person” for limited statutory purposes.

The Bombay High Court decisively rejected an overbroad application of this doctrine. Drawing upon Supreme Court jurisprudence, including M. Siddiq v. Suresh Das (Ram Janmabhoomi Temple Case), the Court emphasised that the conferral of juristic personality in certain contexts does not automatically grant a complete set of corporate attributes or immunities. Juristic personality is context-specific and cannot be used to defeat well-established principles of Hindu law governing the special position of the Karta.

Thus, while an HUF may be treated as a distinct taxable unit or as a “person” under certain statutes, this does not negate the personal and unlimited liability of the Karta for debts incurred on behalf of the family.

Personal and Unlimited Liability of the Karta

The Court reaffirmed that the liability of the Karta for unsatisfied debts of the HUF is both personal and unlimited. This principle has been consistently recognised in Indian jurisprudence.

In Mulgund Co-operative Credit Society v. Shidlingappa Ishwarappa Mavi, the Bombay High Court drew a clear distinction between a decree passed against the manager of a joint family in a representative capacity and a personal decree. Nevertheless, it held that once it is admitted that a person is the Karta, execution can proceed against his personal assets for family debts.

Similarly, in Shiv Bhagwan Moti Ram Saraogi v. Omkarmal Ishar Dass, a Division Bench of the Bombay High Court recognised the unique status of the Karta and held that his liability is personal, unlike that of other coparceners, whose liability is generally limited.

The Delhi High Court, in A. Khandelwal & Sons (HUF) v. Saradar Mall Ashok Kumar (HUF) reiterated that the Karta’s liability is always personal and that the only factual inquiry is whether such liability can be extended further to other coparceners. The Bombay High Court relied on this reasoning to hold that the personal assets of the Karta could be reached in execution.

Trading HUF and Business Debts

An important aspect highlighted by the Court was that the HUF in question was admittedly carrying on business. The arbitral tribunal itself had recorded that the HUF was engaged in construction contracts. While the Court observed that the Karta’s personal liability exists regardless of whether the HUF is a trading HUF, the fact that the family was engaged in business made the application of this principle even clearer.

Judicial precedents have consistently held that in the case of a joint family business, it is ordinarily only the managing member or Karta who is personally liable for debts contracted in the course of such business. This position was articulated in Yeshwant Dattatraya v. Shripad Sadashiv, where the Bombay High Court contrasted the liability of partners in a partnership firm with that of coparceners in a joint family business.

Absence of Personal Decree: Is It a Bar?

A significant contention raised by the Karta was that, since the arbitral award had not expressly imposed liability on him personally (except for costs), his personal assets could not be proceeded against. The Court rejected this argument as fundamentally misconceived.

It held that the question of whether the Karta’s personal assets can be reached in execution arises not from the wording of the award alone but from the operation of Hindu law principles governing the Karta’s status. The arbitral tribunal was not called upon, nor competent, to adjudicate the extent of the Karta’s personal liability under Hindu law in execution proceedings. Consequently, principles of res judicata had no application to this issue.

The Court reiterated the settled rule that an executing court cannot go behind the decree, but equally emphasised that it must give effect to the decree in accordance with substantive law. Enforcing the decree against the Karta’s personal assets did not amount to altering or adding to the decree; it merely recognised the legal consequences that flow from a decree against an HUF under Hindu law.

Distinction Between Karta and Other Coparceners

The judgment carefully distinguished the liability of the Karta from that of ordinary coparceners. While the latter are generally liable only to the extent of their share in the coparcenary property, the Karta’s liability extends to his personal assets. This distinction flows from the special powers and responsibilities vested in the Karta.

The Court noted that many authorities relied upon to argue that the HUF is a separate entity were, in fact, concerned with attempts to fasten liability on ordinary coparceners. Such cases had no application where execution was sought only against the Karta.

Conclusion

The extent of a Karta’s personal liability for decretal debts of an HUF is no longer res integra. The Bombay High Court’s detailed exposition reaffirms that the Karta bears personal and unlimited liability for unsatisfied debts incurred on behalf of the HUF, particularly where the family carries on business. The recognition of the HUF as a distinct entity for limited statutory purposes does not dilute this principle.

For judgment creditors, the decision provides clarity and reassurance that enforcement against an HUF will not be rendered illusory by strategic asset structuring. For Kartas, it serves as a reminder that the extensive powers conferred by Hindu law are inseparably linked with corresponding personal responsibility.

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