Execution of document by Joint Hindu Family :

There are a number of legal complications in making advances to a Joint Hindu Family concern. In law, the Karta of a Joint Hindu Family has an implied authority to borrow money, execute documents and give securities for the ordinary purposes of Joint Hindu Family letter signed by all the adult coparceners. Wherever operation on the account by coparceners other than the Karta are permitted in terms of the provisions of the aforesaid letter. Branch Manager will endeavour to obtain periodical ratification of the transactions from the Karta and record it at the branch. All important documents, such as Cash Credit Agreements, Demand Promissory Note etc. must as a rule be executed by the Karta on behalf of the family. In very exceptional cases, however, such as when the Karta is physically disabled or is likely to be absent from the station for the long period, the Branch Manager may permit, with the prior approval of controlling authority, the execution of documents by such other member(s) of the family as has/have been specifically authorized to sign on behalf of the family in terms of relative Joint Hindu Family letter. Before doing so, the Branch Manager will satisfy himself that Joint Hindu Family letter is on record duly signed by all the adult coparceners. The Joint Hindu Family letter stipulates notification to the Bank of any change in the constitution of the firm and also the coming of age of its minor members. The dates on which minor members come of age should be diarized and a fresh letter taken whenever a minor attains majority. He should also be asked to sign the existing Joint Hindu Family letter. While dealing with Joint Hindu Families, the Bank has to distinguish between an ancestral business conducted by the Karta of the family on behalf of the family as a whole and a new business undertaken by one or more of the adult members individually or in ordinary partnership. Although the later is often erroneously described as the family business, the family as such may not be liable for its debts. The Joint Hindu Family letter binds the signatories personally in the event of business undertaken by the firm proving to be outside the scope of the family’s ancestral business. In such case, however, it must be realized that minor members may escape liability for business which is not ancestral; this must not be overlooked when accommodation is granted, particularly when the Karta is the only adult member of the family.