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

 

Justice Qadeeruddin Ahmed also raised the issue of Mukhabarah, Muzara’ah or crop-sharing and contended that Muslims underplayed its prohibition and overplayed the prohibition of Riba. This contention is not only highly confusing but also misleading and needs a further examination.

 

 

 

Since the learned judge has raised an important and difficult question which may lead to confusion it is necessary that the problem may be discussed in some detail. He has picked out a Hadith on the subject of crop-sharing perhaps to show that the prohibition of crop-sharing as understood by him has been neglected by the Muslims in general and by the jurists in particular He has also contended that the jurists have not given due importance to the condemnation of Mukhabarah by the Prophet of Islam (peace be upon him implying thereby that the prohibition of Riba which was also in similar terms has unduly and unnecessarily been played up. It appears that the author has not gone into other Ahadith on the subject and has not had opportunity to study the Ahadith on the subject as a whole and to arrive at a definite and sound conclusion. It may be mentioned that the Ahadith reported by Rafi ibn Khadij have been profusely misquoted and misinterpreted during the recent decades by the upholders of socialism for various motives. Efforts were made to give the impression that Muslim jurists collectively and wilfully violated the injunction of the Holy Prophet in respect of the prohibition of crop-sharing and insisted to legalize something forbidden by the Prophet (peace be upon him?. This impression is far from truth.

 

 

 

In fact, there were several ways of land management and agricultural administration prevalent in Madinah, the details of which are found in the Hadith books under the chapters on Muzaraah. A cursory glance over these Ahadith shows that there were four major methods of crop-sharing and land tenure in Madinah. Out of these four the Prophet. (peace be upon him) prohibited three and permitted one. The methods prohibited by him were the following:

 

 

 

(a) As reported by Bukhari, a landowner would give a tract of land to the tenant on lease on the condition that the tenant would cultivate not only the land leased to him but will also cultivate the land not leased to him by the landowner. the produce of the two pieces of lands would be respectively divided between the landowner and the tenant. According to Rafi ibn Khadij, this was prohibited by the Holy Prophet (peace be upon him) because sometimes the produce of two pieces of land was different both in terms of quality and quantity. It was injustice either to the tenant or to the landowner.  (See the Sahih of Bukhari, Chapter on Muzara’ah and Harth). It was always possible that only one piece of land would produce which the other piece of land would fail to produce anything at all. In this case the party to whom the latter piece was to be allocated was to be at an obvious disadvantage.

 

 

 

(b) In some cases the more fertile part of the land or the one nearer to the course of water was allocated to the landowner while comparatively barren part of the land or the one farther than the course of water was left for the tenant with the result that the landowner received higher quality and larger quantity of the produce and the tenant was left with lower quality and lesser quantity of the produce. In some cases the part allocation to the tenant did not give any produce at all and the landowner took the entire produce. Such arrangements were also prohibited by the Holy Prophet (peace be upon him) as reported by Muslim (chapter on Sales). However, if the. landowner did not fix any particular piece of land for himself and the produce of the whole of the land was divided on the basis of same proportion it was allowed.

 

 

 

(c) In some cases the tenant was required to pay to the land-owner a certain amount of some other produce such as dates etc. other than the one grown on the land. This was also prohibited by the Holy Prophet (peace be upon him) because it also involved injustice to the tenant as nobody could foresee whether his share in the produce would be equal, less or more than the value of the commodity demanded.

 

 

 

(d) As reported by Bukhari on the authority of Jabir ibn Abdullah, some people leased out their land to the tenant on the condition that a certain percentage of the produce would go to the tenant. This arrangement was allowed by the Holy Prophet (peace be upon him). Not only a large number of Companions but also the Holy Prophet himself entered into this kind of arrangement with their respective tenants. This is a kind of agricultural Mudarabah which was in practice in pre-Islamic Arabia and continued to be in practice after Islam. A similar arrangement was made by the Holy Prophet (peace be upon him) himself with the tenants working on his land situated in Khyber. Many lady companions, particularly the wives of the Holy Prophet (peace be upon him) who were allotted agricultural lands in Khyber and other conquered areas had made similar arrangements with the tenants working in their respective lands. This view has been held by the overwhelming majority of the Companions and other jurists including Imam Malik, Sufyan Thawri, Layth ibn Saad, Imam Sahfi’i and Imam Abu Yusaf and Imam Muhammad from amongst the Hanafis.

 

 

 

In the Hadith literature, a large number of Ahadith have been quoted dealing with different kinds of land tenure mentioned above. The Ahadith in which prohibition has been quoted apply to the earlier three categories mentioned under (a), (b) and (c) above. On the other hand, the kind of arrangement mentioned under (d) has been allowed and was practised by the Companions themselves. It may be mentioned that there were some big landowners in Madinah whose land was either neglected or under utilized. The owners, because of their affluence or otherwise, did not bother either to cultivate it themselves or to put it to proper use. To such people the Holy Prophet (peace be upon him) advised that they should give away their land to those who could use it for the benefit of the society and to generate economic and productive activity out of it. A number of such Ahadith in which such advice was given by the Holy Prophet (peace be upon him) have been reported by Imam Muslim and other compilers of the Ahadith. Such Ahadiths were always considered by the Companions as motivations and moral recommendations because nowhere the Prophet (peace be upon him) forcefully took away from anyone any unutilized land owned by him. During the recent decades mostly under the spell of communism, these Ahadith were interpreted by some writers to mean the abolition of private ownership of land or to prohibit the system of crop sharing. Dr. Muhammad Yusufuddin has discussed this question in detail in his masterly work titled ‘Islam ke Muashi Nazariyyea’ (Karachi 1984, pp.328--350). He has discussed the economic implications of the modes prohibited by the Holy Prophet (peace be upon him) and has given also the details of crop-sharing system during the days of the Prophet (peace be upon him) and during the period of his immediate successors. In the light of this brief discussion on crop-sharing it becomes clear that it is only a kind of agricultural Mudarabah and is allowed in Islam. The conclusions drawn by late Mr. Justice Qadeeruddin Ahmed are unfounded and without any valid argument.

 

 

 

Another scholar whose views were quoted before us is late Dr. Fazlur Rahman. It was said that Dr. Fazlur Rahman was known for his opinion of considering bank interest to be different from Riba and considered it to be allowed under Shariah. Dr. Fazlur Rahman was a profound scholar of Muslim philosophy and had served as Director of the Central Institute of Islamic Research, then situated in Karachi. He had written an article on Riba and Interest in 1963 which had created a stir in the academic circles of the country. His was considered to be the first strong voice in favour of holding that bank interest was not the Riba prohibited by the Qur’an. His views endorsed the views earlier expressed by Maulana Muhammad Ja’far Shah Phulwarwi and Syed Yaqub Shah. The arguments advanced by the latter two are, by and large, a paraphrasing of the arguments found in the said article of Dr. Fazlur Rahman. Dr. Fazfur Rahman has developed his thesis on the assertion that the Riba of the Qur’an is totally different from the Riba of the Hadith. Thus, he adopts a wrong line of argument from the very beginning by considering different terms used for the convenience of discussion and facility of understanding by some jurists to be the basis of a distinction in the nature and substance of Riba. After making a survey of the relevant Qur’anic verses and the order in which these were revealed, the author tries to explain the meaning of the Riba in the light of the established maxim that or one part of the Qur’an explains another. On the basis of .the relevant Qur’anic verses, interpreted in the light of each other, the author concludes that:--

 

 

 

(i) The Riba of the pre-Islamic days was a system whereby the principal sum was doubled and redoubled through a usurious process;

 

 

 

(ii)        because of this process of doubling and redoubling the principal, the Qur’an refused to admit that Riba was a kind of fair business transaction; and

 

 

 

(iii)       while permitting the commercial profit, the Qur’an encouraged the spirit of cooperation as opposed to that of profiteering.

 

 

 

Dr. Fazlur Rahman contends that the historical evidence possessed by him corroborates his conclusions. In support of his contention he selects the tradition recorded in the Muwatta of Imam Malik on the authority of Zaid ibn Aslam which is as follows: “In the pre-Islamic days Riba operated in this manner: if a man owed another a debt at the time of its maturity the creditor would ask the debtor: will you pay up or will you increase? If the latter paid up, the creditor received back the sum; otherwise the principal was increased on the stipulation of a further term”. It is significant to note here that Dr. Fazlur Rahman does not agree with Maulana Abul A’la Maududi who, according to Dr. Fazlur Rahman, assumed that for the first term the credit was granted free of interest. Disagreeing with this view he says “one fails to understand how this is intelligible in a social set-up such as the commercial Makkahn society or the Jewish Medinise society, where the Riba system was quite normal. How could the usurers, who were keen in doubling and redoubling their capital forego the initial interest by way of charity, so to say”. This comment shows that Dr. Fazlur Rahman agreed that the initial increase was also interest and that the usurers would not forego it.

 

 

 

However, Dr. Fazlur Rahman, following the line of Rashid Rida, contends that since the initial increase or interest in itself was not usurious it was not disallowed and cannot, therefore, be considered Riba. In reaching this conclusion he relies on the report of Zaid ibn Aslam quoted above. As pointed out earlier, the report of Zaid ibn Aslam does not make even the slightest hint that the first and the initial increase was not to be treated as Riba and only the second, third or other subsequent increases were meant to be prohibited. Apart from being logically unsustainable, this contention is contrary to the express Qur’anic Injunction which allows only the repayment of Ra’s al Mal, i.e. the capital or the principal sum. Under no logic or linguistic interpretation or through any stretch, of imagination the first increase can be legitimately included in the principal sum and the subsequent increase excluded. Either each and every increase is to be treated as part of the principal sum allowing thereby all increases even what is considered to be usury at exorbitant rates doubling and redoubling the principal amount as something pure and permissible, or each and every increase irrespective of the rate, amount or order in which it was demanded is to be included in the definition of Riba and to be prohibited. This contention of Dr. Fazlur Rahman also contradicts his own views about the chronological order in which the verses relating to Riba were revealed. According to him, verse 39 of Chapter 30 of the Qur’an was the first statement of the Qur’an about Riba. This verse which passes a moral stricture on Riba was revealed in Makkah in the 4th year of Prophetic mission. The learned scholar rightly points out that it is not at all surprising that Riba is condemned in so early a revelation; rather, the absence of such early condemnation could have not only been surprising but also contrary to the wisdom of the Qur’an. The Makkahn verses of the Qur’an arc replete with the denunciation of the economic injustices of contemporary Makkahn society, the profiteering and stinginess of the rich and their unethical commercial practices such as cheating in the weight and measurements etc., how is it possible then that the Qur’an would have failed to condemn an economic evil such as Riba, However, here it passes only a moral stricture on Riba. it does not yet declare it legally prohibited, for Islam had not yet attained political power by which it could eradicate this evil. Dr. Fazlur Rahman goes on to say that when Islam became politically dominant after the Prophet’s (p.b.u.h.) migration to Madinah, Riba was categorically prohibited in the following words of the Madinise Surah Al-i-Imran: “O ye who believe, do not consume Riba with continued redoubling and protect yourselves from Allah, per chance you may be blissful” [Qur’an III: 130].

 

 

 

This shows that, even according to Dr. Fazlur Rahman, the prohibition of compound interest was revealed soon after the migration of the Prophet (p.b.u.h.) to Madina where Islam had become politically dominant. This prohibition was later reasserted in very emphatic terms in a series of revelations which were revealed in three or four instalments. As has been discussed elsewhere, the Qur’anic verses 275-276 of Al-Baqarah reasserted the prohibition of every kind of Riba. In these verses Ribs has been mentioned in juxtaposition to trading which was declared to be lawful. It is significant to note that the mention of the permissibility of trading in this verse precedes the prohibition of Riba. which fact signifies that the alternative of Riba is trading and Allah’s hook has already identified the alternative to Riba even before totally and fully prohibiting it. This juxtaposition of Riba and Trading excludes all discussion about the compound or simple rate of interest because both kinds of interest fall outside the purview of trade. However, the learned scholar’s contention missed this clear and significant message of this verse and he concluded that Riba of the pre-Islamic days was a system whereby the principal sum was doubled and 1’edoubled through a usurious process and because of this process of doubling and redoubling the principal amount, the Qur’an refused to admit that Riba was a kind of fair business transaction. Without prejudice to our discussion on the real meaning, of the term ‘doubling and redoubling’ to the context of Qur’anic diction and style, the very simple statement that Allah has prohibited Riba takes away the force of the arguments, if any. It is strange that, on the one hand, the learned scholar admits that the revelations regarding the prohibition of Riba came gradually and through a series of Qur’anic verses whose chronology has been determined by himself; on the other hand, he overlooks the fact that the qualified statement of verse 130 of Al-i-Imran has been followed by an unqualified and generalized prohibition in verses 275 -276 of Al-Baqarah. If the chronology determined by the late scholar is correct, as it undoubtedly is, then the earlier revelation will have to be interpreted in the light of the later revelation under the principal acknowledged by the late scholar as well that one part of the Qur’an explains another. In support of his contention, Dr. Fazlur Rahman has concluded that the Riba prohibited by the Qur’an was only that which has been explained in the well-known tradition recorded in Muwatta of Imam Malik, reported on the authority of Zaid ibn Aslam according to which the Riba during the pre Islamic days operated in this manner: if a man owed another person a debt, at the time of its maturity the creditor would ask the debtor will you pay up will you increase’? If the latter paid up, the creditor received back the sum; otherwise the principal was increased on the stipulation of a further term”. As mentioned above, the author insists that even the first term of the credit was not granted free of interest and considers it unintelligible in a social set-up such as the commercial Makkahn society or the Jewish society of Madinah where Riba was quite normal to presume that for the first term the credit was granted free of interest. This being the situation there arises no question of restricting the prohibition of Riba to what Dr. Rahman considers the doubling and redoubling rate. The Qur’anic injunction that you can receive back only your principal sum clarifies that even the simplest form of Riba and the lowest rate of interest was prohibited as it involved $ increase on Ra’s al-Mal or the principal sum. There is strong evidence in the early Islamic literature, some of which has been quoted by Dr. Fazlur Rahman himself which negates his contention. For example, he has quoted another statement of Zaid ibn Aslam showing that the Riba of pre-Islamic days consisted in its doubling and redoubling in terms of cash in the case of barter of money and age in the case of barter of cattle. This simply shows that in the repayment of a cattle bigger in age than what had been initially taken there was no question of any doubling or redoubling. This is a case of simple Riba or increase over and above the principal amount payable. The force of the historical evidence has indeed been testified by Dr. Fazlur Rahman himself who concedes that in fact all interest has been abolished by the Riba Ordinance of the Qur’an. Contrary to his earlier contentions Dr. Fazlur Rahman admits at the end of his article that the capital was not doubled or redoubled in each and every given case of loan and that it remained within a great deal of variation in individual cases depending on the circumstances such as the nature. of investment, the amount of risk etc. The author of the article concedes that since all these individual cases were part of one Riba system in whose nature it was to be so exorbitantly usurious that it had to be banned. It was the system as a whole which was abolished by the Qur’an and hence no exception could be made in individual cases.

 

 

 

When the entire system was banned, the milder cases were also naturally abolished since the system itself was tyrannical. On the basis of this last hypothesis the author tries to conclude that the bank interest of today should not be condemned. It is not possible to agree to this view which is based only on mere conjecture. The Qur’an has never differentiated between the milder or harder forms of Riba. It has prohibited Riba or Al-Riba which includes all forms whether harder or milder. The Prophet (p.b.u.h.) has equated one Dirham by way of Riba to be as bad and heinous as the commission of adultery. There can be no two opinions that one Dirham increase can neither be considered exorbitant or exploitative by any stretch of imagination. Therefore, the express prohibition of one Dirham indicates that the Holy Prophet (peace be upon him) places the so-called milder interest at par-with the so-called harder one.

 

 

 

Dr. Fazlur Rahman has also discussed the well-known tradition attributed to Caliph Umar in which he has been alleged to have said that the last verse of the Qur’an to be sent down was the one prohibiting Riba but the Messenger of Allah (p.b.u.h.) passed away without having expounded it to us: so leave aside Riba and Reebah i.e. whatever is doubtful. After having relevant reports on the subject of the last revelation examined, the author has refuted the report attributed to Caliph Umar, because this as well as the other such reports prevent the correct appreciation of the nature of Riha prohibited by the Qur’an. It means that Dr. Fazlur Rahman does not agree with.the opinion that there are gray areas in the prohibition of Riba where a confusion or difference of opinion may arise. The paper also deals with the question of Riba al-Nasiah and Riba al-Fadl, the two well-known categories of Riba discussed elsewhere in this judgment. In this context reference has also been made to the question of crop-sharing which is not directly relevant to the subject of bank interest. The author has quoted a host of early Islamic authorities on the definition of Riba. But, strangely enough, he disagrees with almost all of them by claiming that Riba is only that exorbitant increment whereby the capital sum is doubled several-fold against the fixed extension of term of payment of the debt. It seems that the underlying purpose of confining Riba only to exorbitant rate is ‘to legitimize bank interest and interest rate prevalent in the present day economy. He seems to be in agreement with the upholders of the legitimacy of interest who claim that if the rate of interest i-e. the price of loaning money is reduced to zero one would be faced with a limited supply of money against infinite demand and that, in such a situation, it would become impossible to control the rationing of the credit available, The author also agrees with the western economists in their claim that the rate of interest occupies the same place as price and performs the all important function that any price mechanism performs, namely, regulating the supply and demand of credit and rationing it among the consumers. To him, the rate of interest functions as an objective standard for allocating the credit and determining the real need for a loan. He dismisses the belief that the interest rate is arbitrary as absolutely groundless. However, it is again strange that after going through a long discussion on the justification of bank interest, it seems that the author considers bank interest and the banking system as a whole to be something alien to the spirit of Qur’an. He admits that the system of economy which the Qur’an requires us to establish is based on the spirit of cooperation for which a total reconstruction of the society is needed in accordance with the teachings of the Qur’an. Once this objective is achieved it “would make bank interest and the present banking system quite superfluous which is just what is the spirit of the Qur’an and the Sunnah requires of us. As long as our society has not been reconstructed on the Islamic pattern outlined above, it would be suicidal for the economic welfare of the society and the financial system of the country and would also be contrary to the spirit and intention, of the Qur’an and Sunnah to abolish bank interest. In accordance with the principle of Tadrij or “graduation” and “the easing of the way”, it would be necessary to enact legislation against such grave social inequities as feudalism and hoarding, etc. before proceeding to abolish bank interest. It would be necessary for every citizen of Pakistan to work arduously and with an untiring zeal to reach the desirable goal of reducing bank interest to the zero point, in other words, to eliminate it completely. For this end, it would be necessary to increase the volume of real wealth and credit capital in the country to such a point that an equality or near equality comes to exist between the supply and demand of money in credit, and credit becomes very easy. In such ideal circumstances the motive for bank interest, and indeed, the profiteering motive may become extinct”.