P L d 2000 s c 225 (Riba prohibition stayed)

 

 

 

(vii) In spite of all this wealth of thought and wisdom the Muslim world of today presents no true image of the transaction of Riba. It only “~’’’’ offers by way of substitute the misleading concepts of interest, usury and slid.

 

 

 

(viii)Riba is essentially a concept which deals with economic problems and is meant to save the Ummah from cruel exploitation of the needy by the rich and of the weak by the powerful.

 

 

 

(ix)       The learned jurist quoted from Encyclopaedia Brirmrnica: “In ancient and medieval times, the main focus of inquiry into the theory of interest was ethical and the principal question was the moral justification of interest. On the whole, the taking of interest was regarded unfavourably by both classical and medieval writers. Aristotle regarded money as “barren” and the medieval school-men were hostile to usury. Nevertheless, where interest fulfils a useful social function, elaborate rationalizations were developed for it”.

 

 

 

(x)        The Prophet (peace be upon him) encourages debtors to voluntarily return more money or a better animal than was borrowed. He himself acted on this principle.

 

 

 

(xi)       The need of clarifying the concept of Riba has been so persistent that to this day it has not been differentiated from the concept of sud or interest, although, they are clearly different in nature and far apart. Muhammad Asad has pointed out that the word “usury” too is not synonymous with Riba. Riba is more often translated into English as “usury” than “interest”, because the word “usury” means in the modern usage charging unconscionable interest rather than the ordinary interest.

 

 

 

(xii) Impartial observers who have a worldwide reputation for their knowledge of Islamic thought like Joseph Schacht and Mixim Rodinsen have noted in the Shorter Encyclopaedia of !slam and in Islam mid Capitalism respectively, that the concept of Riba which has been banned by the Qur’an has not been precisely delineated by the Muslims.

 

 

 

(xiii) The concept of interest also has features which are wholly absent from the concept of Riba. For example, there can be simple interest and compound interest (i.e. the maximum permissible rate of interest) as well as gross interest (i.e., interest inclusive of administrative cost and expenses).

 

 

 

(xiv) Riba was never completely and practically forbidden to Islamic history. Prof. Dr. Hamidullah has said: “As far as my study is concerned during the life of the Prophet (peace be upon him), and in the regimes of the four righteous Caliphs there were Muslims who borrowed [money on interest] from non-Muslims”. Justice (Retd.) Sheikh Aftab Hussain, a former Chief Justice of the Federal Shariat Court, has, in an interview given to the daily Muslim stated as follows: “For the last 1400 years except for the period of the first four Caliphs, interest was not forsaken. None of our Ulema ever felt disgusted by the payment of interest of a Muslim to (non Muslim) money-lenders. Not only ordinary Muslims but Governments and Abbasi Caliphs used to take loans and hypothecate to the Jews the income of some territory which always far exceeded the principal amount. The Turkish Caliphs who presided over the destinies of the Ottoman Empire borrowed money in millions in the nineteenth and twentieth centuries at exorbitant interest rates from England and other European countries.

 

 

 

(xv) The transactions that are prohibited by the Qur’an are those in which there was injustice, wickedness, inequity and demand for doubled and redoubled amounts of money. Lending money is not always an act of injustice or wickedness. It can be a blessing to a poor person in whose dark day nobody is prepared to pay any heed to his needs.

 

 

 

(xvi)     The conclusion is that Riba is not the interest of modern times, if we carefully read together the two verses of the Qur’an, provided that the word usury, or interest or sud (which is a Persian word meaning profit) is not arbitrarily introduced into them in the place of the Qur’anic word, Riba. There seems to be no doubt that according to the Qur’an the word Riba does not mean the additional amount of interest or usury or sud. The context shows that it means the capital sum which was doubled or redoubled.

 

 

 

(xvii)     For us the choice is clear because we have in support of our view the acts of the Prophet (peace be upon him). It is well known that he sometimes paid more money to his creditors than that was borrowed by him and termed the excess to be a gift. The practice of charging Riba which obtained in pre-Islamic Arabian society, is found to be peculiar to those times and to that territory. It no longer exists in any Muslim country, nor in any other country of the world. The upshot of his discussion is that Riba was not a system of charging interest, in the sense in which the term “interest” is understood and used today.

 

 

 

These were the main points raised by late Mr. Justice Qadeeruddin Ahmed in his oft-quoted essay. - Now we take up these points for a careful examination. In this examination we have benefited from the writings of Mr. Anwar Ahmad Meenai, Dr. Tanzilur Rehman and Maulana Mufti Muhammad Shafi.

 

 

 

The contention of the late jurist that the alternatives so far suggested to replace interest do not adequately meet the requirements is superfluous as according to him neither the bank interest is Riba nor it requires to be substituted by any alternative. Moreover, the mere claim that the alternatives are not adequate cannot be accepted without any supporting argument. Today, when more than one hundred and fifty banking and non banking financial institutions are working around the globe on the basis of these alternatives it is strange to assert that these are inadequate. Furthermore, these alternatives have been suggested not by traditional Ulema but by professional bankers and trained economists. But the most significant assertion of late Mr. Justice (Retd.) Qadeeruddin Ahmed is that the term Riba as used in the Qur’an is very peculiar and is undefinable and untranslatable. Let us see whether the Qur’an has left the term, Riba, undetermined and unspecified, because no formal definition occurs in spite of the stern warning issued to its perpetrators. When we read verses 278-279 in Surah al-Baqarah, we get the following message: “O believers, fear Allah and give up whatever is left of Riba if you are believers. But, if you do not desist, then take notice, of war from Allah and His Messenger; and if you repent you can have your. capitals or Ra’s al-Mal”. In this verse, the plural of Ra’s al-Mal, namely, Ru’us-u-Amwalikum has been used. Ra’s al-Mal (singular) literally means the capital or the amount originally invested in a business by the financer or the investor. In the case of loan, it simply means the principal amount, i.e., the amount originally lent. It is more than obvious in this verse that Qur’an prevents the Muslims from claiming anything over and above the principal amount. Even the literal meaning of M the word Riba clarifies that it means the increased amount paid or claimed in excess of the principal by the borrower or the lender. It has been called Riba which is exactly what interest means.

 

 

 

It may be emphasized here that the style of the Qur’an is neither that of a dictionary nor of a law book in the technical sense. It is a guidance revealed for the benefit of the entire mankind and is couched in a language which is easily understandable even by the common reader. It has been revealed in clear and express Arabic, or Arabiyy Mubin. It always uses Arabic terms which were well known to the people to whom it was first addressed. These terms conveyed the popularly understood meaning unless the context suggested otherwise or the Prophet (peace be upon him) guided his followers to the real meaning or the actual intent if it was different from the obvious or apparent meaning. Qur’an has used many other terms like Shirk, Kufr, Zina, Khamr, Maisir and Sariqah’ to cite only a few examples; but nowhere these terms have been defined in the Qur’an in the technical style of a law-book or a lexicon. Yet, with the help of Arabic dictionaries, the practical demonstration by the Holy Prophet (peace be upon him), the explanations given by the Companions and the Followers (or Tabi’un), the interpretations given and the details worked out by the Muslim jurists and scholars, each of these terms stand fully defined, candidly explained and clearly understood. The Prophet (peace be upon him) and his Companions around him and the Followers and the disciples of the Companions did not need any lexicons to understand and interpret these terms, since Arabic was their native language and they had the taste of the language. As soon as a verse was revealed they, both friend and foe alike, understood its meaning and received the message. They knew that the style of the Qur’an was to provide only the fundamental axioms while the Sunnah enunciated the detailed principles. On the basis of these two foundations the Companions and their disciples developed the elaborate law. The Qur’an and Sunnah, thus, do not provide such details of the matters relating to each principle as may be developed by the jurists. The function of divine revelation is not to suspend human mind and to take over the province of independent human reasoning too. Its function is to provide the basic guidelines and to leave the matters of detail to be decided by human reasoning.

 

 

 

The learned jurist here has totally ignored the meaning of the term Ra’s al-Mal (the plural of which is Ru’us al-Amwal used in verse 279). If the Qur’an is to set limit to fundamental axioms then it categorically requires that the lender is entitled only to claim his Ra’s al-Mal. Abdullah Yusuf Ali. whose translation has been relied upon by late Mr. Justice (Retd.) Qadeeruddin Ahmed, has translated the term Ra’s al-Mal as “capital sums”. Here, a question may be raised in line with the thinking of the late jurist as to how can one define the capital sum; more importantly, how can one prove that capital sum includes “reasonable” amount of interest which, according to him, is not Riba. But this very verse has provided a clear answer to this question. By restricting the claim of the lender to claiming his Ra’s at-Mal only, the Qur’an has categorically and explicitly declared that even a single penny paid or claimed in excess of Ra’s at-Mal is Riba. This is precisely what present day interest means irrespective of the name given to it. Immediately after restricting the lender’s claim to the Ra’s al-Mal to the exclusion of any other sum, the Qur’an has added La Tazlimuna wa la Tuziamun (neither you deal unjustly nor you should be dealt with unjustly). This phrase lays further stress on the principle that claiming anything in excess of Ra’s al-Mal is unjust. Similarly, borrower’s refusal to pay back the Ra’s al-Mal is equally unjust. In the verse that immediately follows the above verse, the Qur’an says: “but if he (the borrower) is in financial difficulties give him time to repay until his circumstances improve and if you remit by way of charity (i.e., write off the Ra’s al-Mal) it is better for you, if you understand” (2:280). This verse further clarifies that Riba includes anything paid in excess of Ra’s al-Mal (irrespective of the name given to it). The Qur’an has urged upon the lender to even remit the Ra’s at Mal if the borrower is facing financial difficulties. It is again a categorical indication of the philosophy that Qur’an wishes to foster and inculcate in the minds of the Muslims.

 

 

 

This concern of the Qur’an can hardly be compatible with the mentality the interest-based system creates. It is difficult to agree to the contention that on the one hand, the lender is asked to remit even the Ra’s al-Mal and at the same time, he is allowed on the other hand to charge a “reasonable or conscionable” interest as advocated by the learned jurist. Another question may also arise: What is the definition of “conscionable” and “reasonable” interest? Who and under what authority will lay down this definition’.’ The commercial rates of interest range between 10% to 22’’% per annum in Pakistan. In the past, lease financing was available at the annual rate of 28--32 per centum. Will this rate be accepted as a reasonable rate? If so. then what would be the unreasonable and unacceptable rate?

 

 

 

The claim that the Prophet of Islam, peace be upon him, provided no explanation or guidance to solve the important problem of how to define Riba is an extremely serious statement which borders on irresponsibility if not anything more serious. Towards the close of the worldly mission of His Messenger, Allah categorically declared, “Today I have completed for you your Diet and have perfected My blessings and chosen Islam as , a Din for you”. (Qur’an, al-Ma’idah: 3). During the Farewell Pilgrimage in the year l0A.H., the Prophet (peace be upon him) delivered the celebrated Farewell Address and asked everyone present: “Have I conveyed to you the message of Allah in its entirety?” The unanimous reply from more than 1,00,000 Companions was “Yes” to which the Prophet (peace be upon him) is reported to have raised his finger to the sky and said “O Allah! Be a Witness to this (affirmation)”. It was on the same occasion that the Prophet (peace be upon him) declared that all outstanding claims of interest, including those due to his own uncle Abbas ibn Abdul Muttalib were null and void, and were given up. Even more queer is the claim that the Prophet (peace be upon him) tacitly and by implication approved the payments of increase over and above the principal amount loaned. This claim has been based on a report found in the Hadith books that the Messenger of Allah returned voluntarily something better or more than he had actually borrowed. One cannot and should not be oblivious to the obvious difference between a voluntary payment and a compulsory demand as a matter of right. Today a lender has the right to get this increase paid to him through the Courts’. There is a world of difference between this and the action of the Prophet. What the Prophet (peace be upon him) did was in keeping with the Islamic principal of Ihsan which is an important cornerstone of the social teachings of Islam and which seeks to promote better dealings among members of the society. Present day interest, on the other hand, is stipulated as a contractual obligation. Nowhere the Prophet (peace be upon him) or any of his Companions ever borrowed with even the slightest hint of a promise, not to speak of a contractual obligation, to repay with something better or more than the quantity borrowed.

 

 

 

The assertion that Hazrat Umar did not know what Riba was, is again a very strange claim. To say the least it amounts to impose an opinion on the Shariah rather than submitting to the clear and emphatic Injunctions of Qur’an and Sunnah. Hazrat Umar accepted Islam at the grown up age of thirty-one years. Prig to it and even after having embraced Islam, he earned his livelihood through trading and business for which his family was known throughout Arabia. At this time the practice of charging Riba was common and was well known among the merchants in Makkah as well as other parts of Arabia. Riba to them clearly meant stipulated increase on the amount payable in a loan or credit transaction, in consideration of time. The meaning of Riba as understood by the Arab traders before Islam is evident from the following definitions and explanations given by leading Muslim authorities of the early centuries of Islam. To quote only a few of these authorities only by way of illustration: According to Qatadah ibn Di`amah Q (d. 120 A. H), a Tabi`i and a known authority on Tafsir and Hadith, Riba of the period of Jahiliyyah was as follows: a person would sell something to another and allow a moratorium for payment of the price. If the buyer did not pay on the agreed date, the period was extended and the amount was. increased. This was Riba. According to Mujahid ibn Jabr (d. 86 A.H), a disciple of the Companion, Abdullah ibn Abbas, Riba of Jahiliyyah was that a person would borrow from another and promise to repay more if he was given a certain period of time to repay. Imam Abu Bakr Jassas (d. 390 A.H.), a Hanafi jurist of note and fame, has established that during the period of Jahiliyyah when people used to borrow from each other, it was usually agreed that a specific amount more than the sum borrowed would be repaid. Imam Fakhruddin Razi (d. 606 A.H.) an authority on rational interpretation of the Qur’an, has also established that during the period of Jahiliyyah, people used to lend for a specific period. Interest was charged from the borrower on a monthly basis. Upon maturity of the term, the repayment of the principal amount was required. If the borrower was unable to pay, the loan was rescheduled and the amount of interest was increased.

 

 

 

These were the forms of business on interest which were in vogue in Arabia. Arabs used the term Riba for such transactions. This is exactly what was prohibited by Qur’an. These definitions referring to different kinds of transactions involving Riba have one thing in common: the element of increase over and above the amount borrowed, demanded in consideration of a specific time period allowed for repayment. With all the wealth of thought and wisdom about the modality of Riba and the rationale of its prohibition preserved for us by the early doctors of Islam, it is difficult to agree with the contention of late Mr. Justice Qadeeruddin Ahmed that the Muslim world presented no true image of the transactions of Riba and that it only offered by way of substitute the misleading concepts of interest, usury and sud.

 

 

 

It seems that the learned writer erred in quoting late Maulana Mufti Muhammad Shafi. In his article he quotes Mufti Sahib as admitting that there was some confusion or ambiguity about the true meaning of Riba. Mufti Sahib’s approach is poles apart. In his masterly treatise entitled Maslah-e-Sud, he has categorically stated: “Upon hearing verses of the Qur’an everybody immediately realized that Qur’an referred to the obvious well known meaning of the term Riba, i.e. charging of anything in excess (of the principal) in credit or loan transactions. Everybody took it as prohibited and gave it up immediately”. Same is true about the claim that verses of al-Baqarah 279--281 clearly prohibiting Riba were revealed only 9 or 30 days before the death of the Prophet (peace be upon him). This statement was never made by late Mufti Sahib. In this book Masalah-e-Sud, he has categorically stated that it was around 8th year of Hijrah that the last verses in respect of Riba were revealed and through which Riba was categorically and finally prohibited in its all forms.

 

 

 

As to the claim that Hazrat Umar lamented the lack of sufficient and adequate guidance by the Holy Prophet about Riba and that his statement “Shun all those transactions which clearly involve Riba as well as those reeardina which there may be doubt that Riba is involved in them” was a precautionary measure to put the anxiety at rest. It is also not only misleading but amounts to a thoughtless assertion about one of the closest companions and most trusted disciples of the Holy Prophet. A careful and deeper look into the statement of Hazrat Umar, is correctly attributed to him, shows the weakness of the conclusions drawn by late Mr. Justice Qadeeruddin Ahmed. If really Hazrat Umar did not know what Riba or Riba al-Jahiliyyah was, how could he advise, “shun all those transactions which clearly involve Riba”? The people around him could have asked him as to how they could shun those transactions which involved Riba when the very meaning of Riba was not clear. If really Hazrat Umar and no one else present at that time knew what Riba or Riba al-Jahlliyyah was, either he would himself said that he could not define Riba or someone else would have definitely asked him to first define Riba in order to enable people to avoid that which he was asking people to shun. If this were the case, Hazrat Umar’s advice should have been considered something ridiculous and more confusing. On the one hand, he was not aware of what was to be avoided, and on the other, he directed the people to shun all those transactions which involved Riba or had a doubt or possibility of Riba.

 

 

 

The fact is that the concern of Hazrat Umar as reflected in this statement does not relate to Riba al-Jahiliyyah or Riba al-Nasi’ah i.e. the Riba par excellence. It relates only to Riba al-Fadl. The Prophet (peace be upon him), had fully explained to his Companions that in addition to the excess amount charged on loan or credit sale, the term Riba would also apply to certain barter exchanges. This new kind of Riba came to be known as Riba al-Fadl. Any difference in quantity or any deferment of delivery by one party in a barter dealing on the same commodity is termed as Riba al Fadl and tantamounts to Riba. It was this Riba al-Fadl about which Hazrat Umar felt the difficulty in outlining the details because the saying of the Prophet (peace be upon him) apparently specified only six commodities. It was not clear to many whether the prohibition applied only to these six specific commodities or similar things could also be included in the list to which the principle of prohibition could be applied. The fact is that the Companions of the Prophet (peace be upon him) did not ask for further details about this kind of Riba. Later on, Hazrat Umar expressed the wish that it would have been better if he or other Companions had found out further details from the Prophet (peace be upon him). The gist of the matter is that in addition to the well known and commonly accepted meaning of Riba (i.e., charging excess on amount loaned or offered as credit), the Prophet (peace be upon him) also explained that there is always a possibility that an element of Riba may be found in various forms of sale and purchase transactions. As such, the two kinds of Riba namely, (i) Riba al-Nasl’ah or Riba al-Qur’an and (ii) Riba al-Fadl or Riba al-Bai or Riba al-Naqd or Riba al Hadith should be clearly understood and differentiated. According to R some scholars, Riba al-Jahiliyyah included both these kinds because during, the period of Jahiliyyah, it was common for people to exchange a certain quantity of good quality dates with a larger quantity of inferior quality dates. This was mostly done by the Jews of Madinah who through such tricks controlled the economy and the agriculture of Madinah. This kind of Riba was prohibited to close the door of their exploitation and injustice. (See for details Islam ke Ma’ashi Nazaviyye by Dr. Yusufuddin, Vol. II, Karachi, 1984).

 

 

 

Late Mr. Justice Qadeeruddin Ahmed also emphasizes the point that during the days of the four Righteous Caliphs, some Companions of the Prophet (peace be upon him) borrowed money on interest from non-Muslim lenders and that the Abbasi Caliphs and Rulers of the Ottoman Empire also borrowed on interest. As regards the Companions of the Prophet (peace be upon him) the learned Judge has made contradictory claims. On the authority of Dr. Muhammad Hamidullah, it is claimed that during the life of the Prophet (peace be upon him) and of the four Righteous Caliphs there were Muslims who borrowed (money on interest) from non-Muslims. The words “money on interest” appears in parentheses. It is not clear whether these have been added by Justice (Retd.) Qadeeruddin Ahmed or these are found in the original writing of Dr. Hamidullah. In the same paragraph, it has been claimed on the authority of late Mr. Justice Shaikh Aftab Hussain, a former Chief Justice of the Federal Sharait Court, that for the last 1400 years, except for the period of the first four Caliphs, interest was trot forsaken. Notwithstanding the obvious and glaring contradiction between the two statements, one wonders as to why should Dr. Hamidullah’s claim be accepted on face value without examining his arguments. Moreover, it is not clear whether Dr. Hamidullah has really said it or not. As far as mere borrowing from non-Muslims is concerned it continued till the last moment of the Holy Prophet (peace be upon him). Even when he passed away he was to pay back a certain amount of money to a Jew with whom his coat-of-arm was mortgaged. As regards the Companions, some of them, such as  Hazrat Abbas and Hazrat Khalid ibn al-Walid, had wide-scale interest-based business before Islam. We find several reports about their business in the Hadith literature. But one should not forget that it was in pursuance of the policy of gradualism or Tadrij adopted in respect of all major Islamic reforms, that the prohibition of Riba was also brought about in stages. An obvious indication of this gradualism is that the verse 130 of AI-Imran was revealed in 3A.H. which prohibited charging of Riba doubled and redoubled. It may be observed here that the term Ad’aafan Muda’afah qualifies the term Riba and not defines it. As pointed out elsewhere in this judgment, the final prohibition as contained in verses 278-279 of Al-Baqarah was revealed in 6 or 7A.H. before the conquest of Makkah. No historical record supports the contention, even indirectly, that the Prophet (peace be upon him) condoned the usurious dealings and borrowing by Muslims after this prohibition. As to the remaining part of the statement attributed to late Mr. Justice (Retd.) Shaikh Aftab Hussain that the practice of Riba was prevalent after the period of the first four Righteous Caliphs, it may be said that the statement is not substantiated by historical record; and, even if it does have the support of history, the practice of later rulers, hundreds of years after has no legal or normative value. The authority to legislate and lay down the law or the norms belongs only to Allah. (Qur’an 6:57; 7:54; etc.). In the presence of clear and emphatic Injunctions of the Qur’an and unequivocal pronouncements of the Holy Prophet (peace be upon him) one cannot rely on the precept practice of non-practising Muslim Rulers what to speak of non-Muslim writers, particularly of those whose unfriendly attitude to Islam is well-known. The statement of “impartial” observers like Joseph Schacht and such-like scholars about the meaning and application of Qur’anic terms like Riba cannot be relied upon. The claim that the verses relating to the prohibition of Riba were revealed just few days before the death of the Prophet (peace be upon him) seems to be based on some misunderstanding or on inadequate study of the chronology of the Qur’anic verses on Riba. We have dealt with this question elsewhere in this judgment and discussed the order and the timing of the revelation of these verses. The assertion that till the Farewell Pilgrimage, Riba was practised and it was prohibited during the Farewell journey has already been refuted. In the light of our discussion, it is well established that Verses 278-279 of al-Baqarah were revealed in 6 or 7A.H. before the conquest of Makkah (8A.H.) and even before the expedition of Khyber (Muharram 7 A.H.). It has been reported by Imam Sarakhsi and several others, that during the expedition of Khyber, the Prophet (peace be upon him) instructed two of his Companions to refund any interest that they had charged.