Lala Baij Nath Prasad
Ram Gopal Lachhmi Narayan
Decided on July 6, 1937, [Last Heard on: 06.07.1937]
The concept of the Joint Hindu Family has significant implications, especially in relation to the Income Tax Act of 1961. The Act recognizes the Hindu Undivided Family as a ‘person’ for assessment purposes. This legal recognition extends to joint family businesses and member protection. In an appeal against a 1936 judgment, a joint Hindu trading family was involved in a dispute over outstanding loans. The case questioned the joint liability of the family, given their partial disruption due to a partition suit in 1926. The issue was whether a contractual partnership persisted among family members, particularly in a business context. The judgment ruled in favour of appellants, represented by Fox & Mandal, stating that even after the family’s legal unity dissolved, adult members continued their businesses in a partnership-like manner, managed by individual branch heads. This inferred agreement formed the basis for the contractual partnership claim. The case established that joint family trading partnerships continue beyond a member’s death. The appeal was dismissed, affirming the existence of an implied partnership agreement among family members to sustain the businesses despite the end of their joint family status. This case also influenced the treatment of Hindu Undivided Families under the subsequent Income Tax Act.