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

 

 

 

Ibn Qayyim al-Jawziyyah had dealt with the subject of Riba in his juristic chef d’ouvre, I’lam al-Muwaqqi’in, basically with a purpose to highlight the rationale of the prohibition of Riba and the juristic principles which regulate this prohibition and demarcate its limits. In this context, Ibn Qayyim has tried to differentiate two kinds of Riba from each other. The Riba par excellence was to be distinguished for facility of understanding and argument from the Riba by way of extended meaning. For the first category he uses the term manifest Riba showing thereby that this is the Riba which is expressly and manifestly prohibited by the Qur’an. On the other hand, he calls Riba al-Fadl as Hidden Riba prohibited by the Prophet (peace be upon him) under the principle of Sadd al-Dhariah or preventive measures. Dr. Nabil Saleh has given a faithful summary of the views of Ibn Qayyim which may profitably be quoted here:---

 

 

 

“In one of his treatises, Ibn Qayyim differentiates between “hidden Riba” (Riba khafi) and “manifest Riba” (Riba jah). Manifest Riba is Riba by way of deferment (Riba al-Nasi’ah) and hidden Riba is Riba by way of increase (Riba al-Fade. Hidden Riba is not forbidden in itself but only when it is a way to gain manifest Riba, which is forbidden in itself. Because of such a distinction, Ibn Qayyim saw that the degree of prohibition was not the same in both categories: it was much stronger in manifest Riba or Riba alNasi’ah than in hidden Riba or. Riba al-Fadl. As a consequence, manifest Riba (Riba al-Nasi’ah) cannot become lawful except in the case of pressing necessity (darura mulji’a), like that which allows the eating of carrion. On the contrary, hidden Riba (Riba al-Fadl) can become lawful in case of need (haja) only, which is obviously governed by less stringent conditions than “pressing necessity”. In other words, Riba al-Fadl or hidden Riba is a “gray area”. it is prohibited when there is a fear that it may be allowed in case of need”. [Page 27: Unlawful Gain and Legitimate Profit in Islamic Law, Cambridge University Press, 1986 (Quoting Flam-alMawaqqrin, Vol-II, p.154ff)].

 

 

 

These views of Ibn Qayyim leave no doubt that Ri ba al-Nasi’ah is manifestly and emphatically prohibited by Islam. As such, there W is no difference between the views of Ibn Qayyim and the views of the overwhelming majority of Muslim jurists. The plea that Ibn Qayyim’s views support the contention that bank interest is not Riba is not substantiated by the writing of Ibn Qayyim himself or even by the summary of his views given by the Labanese author. To this extent, the contentions of Mr. Khalid M. Ishaque are unfounded.

 

 

 

Mufti Muhammad Abduhu and.Sayyid Muhammad Rashid Rida have been referred to by Mr. Khalid M. Ishaque in support of his submissions to the effect that bank interest was not prohibited under the principles of Islam. We have already discussed the views of Sayyid Rashid Rida as contained in his own booklet on the subject of usury and bank dealings in Islam. Let us now take up the view of Mufti Muhammad Abduhu as reported by Dr. Nabil Saleh. According to his summary of the views of Mufti Muhammad Abduhu, the Riba disallowed is only the Riba al Jahiliyyah (pre-Islamic Riba) which is manifest (Jali) Riba and consequently is prohibited not as a way of leading to an usurious transaction but as an usurious transaction in itself. As for the two other sorts of Riba, namely (Riba al-Fadl and Riba al-Nasi `ah) both provided for in the Hadith and not in the Qur’an, their prohibition tends to close the loophole which otherwise might permit manifest Riba (Riba Jali). Thus, Riba al-Fadl and Riba al Nasi’ah are under a presumption of prohibition and this presumption is not conclusive but rebuttable. Thus, again the sale of any of the six articles mentioned in the Hadith, with an increase and whether in a hand-to-hand transaction or in a deferred one, is disallowed only if it is intended to lead to manifest Riba (Riba Jali), which takes place when interest accrues on interest already accounted by the time the transaction was concluded. The  net result of the views of Mufti Muhammad Abduhu as quoted by the author is that the first increase on the termed loan is lawful even though agreed in consideration of the delayed term of payment but if, at maturity date, it is decided to postpone that maturity date against a further increase, that is the unlawful Riba al-Nasi’ah.

 

 

 

It is difficult to critically examine and assess the views of Mufti Muhammad Abduhu as to the basis of differentiation between the Riba al Jahiliyyah and Riba al-Nasi’ah. No original writings of Mufti Muhammad Abduhu have been quoted by Dr. Nabil Saleh nor identified by Mr. Khalid M. Ishaque. These views have been recorded by his disciple Sayyid Muhammad Rashid Rida in one of his Fatawas. Moreover, in the presence of such an overwhelming evidence and scholarly authorities which establish beyond any shadow of doubt that Riba al-Jahiliyyah and Riba al-Nasi’ah were identical and were always considered to be one and the same thing, it is not possible for any responsible student of Islamic Law to agree to the views of Mufti Muhammad Abduhu. If Riba al-Nasi’ah  is not the Riba prohibited by the Qur’an then what is the Riba against which a declaration of war has been made by Allah and His Messenger? It is strange that Mr. Khalid M. Ishaque seems to uphold the views of Mufti Muhammad Abduhu and Sayyid Rashid Rida at the same time, while the former does not consider the Riba al-Nasiah to be the Qur’anic Riba, the latter is clear on this point and concedes to the views of the majority. Again, the statement attributed to Abdullah       ibn Abbas and heavily relied upon by all the defenders of the Bank interest also goes against the view attributed to Mufti Muhammad Abduhu.

 

 

 

An  attempt to find out whether the Riba in the Pre-Islamic Arabia was paid on personal and consumption loans or on commercial and productive loans as well, was undertaken by the Institute of Islamic Culture, Lahore in late fifties and early sixties of this century. The Institute had published a book under the title “COMMERCIAL INTEREST KI FIKHI HAISIAT” which consisted of articles written mostly by Maulana Muhammad Jaafar. Shah Phulwarwi and Syed Yaqoob Shah, a former Auditor-General of Pakistan. The latter had further elaborated his ‘article and got it published as an independent book by the Institute of Islamic Culture itself. The arguments advanced by the learned contributors to this.book seek to prove that commercial interest was unknown to pre-Islamic Arabia and that the Qur’anic prohibition of Riba is applicable only to the interest charged on personal and consumption loans. By claiming that pre-Islamic Arabs were not aware of commercial and productive loans, the learned writers tried to establish that neither Bank interest nor the interest paid by the Government on loans received by it or the securities and certificates issued by it falls within the ambit of Riba prohibited by the Qur’an. Without going into the merits of this argument at this stage it has to be observed that the foundation on which the argument has been raised is very shaky and uncertain. The approach of the learned writers is not supported by valid arguments accepted for a historical inquiry. A historian may establish the existence of a practice or an institution at a certain stage of past history in the light of the available data and recorded evidence. But it is extremely difficult, if not at all impossible, to establish the absence or negate the existence of a practice or institution in the ancient history. Secondly, either the available data establishing not only the existence but general prevalence of commercial loans in pre-Islamic Arabia was not known or available to the learned writers or they purposely chose to ignore it which seems to be the case in view of the internal evidence of their own writings. They have taken for granted as a basic postulate that commercial and productive loan is the invention of the western capitalism and that the institution of financiers and financial intermediaries was unknown to other civilization particularly the Arab-Islamic civilization.

 

 

 

Before we take up the examination of the material relevant to the existence or otherwise of commercial loan in pre-Islamic Arabia, we should be clear in our minds about the extension of the Qur’anic prohibition of Riba to such forms and practices of Riba which were not known to pre-Islamic Arabs. Nowhere the Qur’an restricts the prohibition of Riba to the form or forms prevailing at that point of time in Arabia. It prohibits Riba with the definite article `al’ which is used to denote all-inclusiveness (Istighraq) which means that all forms and categories of Riba are prohibited as long as they fall within the description of Riba given by the Qur’an. Nowhere the Qur’an or the Sunnah of the Holy Prophet (peace be upon him) refer to the purpose or the object of loan as something relevant to the prohibition of Riba. The Qur’an declares each and every increase over the principal sum as Riba irrespective of the object or purpose for which the principal sum was borrowed. The exercise to find out whether the Arabs of pre-Islamic Arabia were aware of productive and commercial loans is, therefore, merely an academic exercise. However, when examined carefully there is found an abundant fund of evidence to establish beyond any shadow of doubt that the Arabs were not only aware of the concept of commercial loans but also practised it at such a wide scale that almost the entire trade of the pre-Islamic Arabs was mainly run on the basis of commercial loans taken on the payment of interest or Riba which was later prohibited by the Qur’an. Not only the express wording of the Qur’an in Verse No. 279 of Chapter II but also the commentators of the Qur’an, compilers and scholars of the Ahadith, the jurists and the lexicographers are unanimous and clear that Riba means any increase over and above the principal sum required to be paid in consideration of time. Some examples of how Riba was defined by earlier authorities have been quoted in the judgment of the learned Federal Shariat Court as well. Some of these may be reproduced here:

 

 

 

The word “interest”, by and large, has now been accepted and is understood as Riba (See Stiengass English - Arabic Dictionary, Lahore 1979, the word ‘interest’). Riba Usury, as defined in `A Dictionary of /slam’ by Thomas Patrick Hughes, (Lahore, 1964, page 544) “Means “an excess according to a legal standard of measurement or weight, in one or two homogenous articles opposed to each other in a contract of exchange, and in which such, excess is stipulated as an obligatory condition on one of the parties without any return”. The word Riba appears to have the same meaning as the Hebrew neshec, which included gain, whether from the loan of money or goods or property of any kind. In the Mosaic law, conditions of gain for the loan of money or goods were rigorously prohibitert See Exold, xxii. 25; Lev. XXV. 36 (Usuri). Therefore, Riba includes both ‘usury’ and ‘interest’ as known in English terminology. In legal sense, it is that excess amount which a “Creditor” settles to receive/or recover from his “Debtor” in consideration of giving time to the said debtor for re-payment of his loan. Imam Tabari (d. 310 AH) in Tafsir Tabari (Vol. III, p.64) commenting on the Qur’anic verse (Baqarah: 275) writes that: “Riba is that increase which the owner of money or the financier receives from his debtor for giving him time to repay his debt”. Ibn al-Athir, in his famous work Kitab al-Nihayah fi-Gharib al-Hadith wa’l-Athar, Cairo, 1322 AH. Vol. lI, p. 66 says: “The original meaning of Riba is excess and in the terminology or the Shariah, it means increase over and above the principal without any contact of sale having taken place”. Ibn ‘Arabi in his noted work, Ahkam al-Qur’an, (Cairo, 1957, Vol. I, p. 242) has defined Riba to be the name of every increase in lieu of which there is no consideration. Allama Burhanuddin al Marghinani (d. 593 AH) has defined Riba in his book, Al-Hidayah as : “Riba, in law, signifies an increase in a (loan) contract in which such increase is stipulated as an obligatory condition on one of the parties, without any return, i.e. without any corresponding property (Mal), in exchange. (See also Book XIV on Sale, Chapter VIII on Riba or usury. Hidayah, English Translation by Hamilton, Lahore, p. 289). Imam Fakhr al-Din Al-Razi (d. 606 AH) in his well-known Tafsir al-Kabir writes that the meaning of the word Riba is increase but it does not mean that to recover every kind of increase is Riba and is unlawful. The forbiddance of Riba relates to a special kind of contract which was known amongst the Arabs as Riba al-Nasi`ah i.e., increase on debt. (The other kind of Riba called Riba al-Fadl is, outside the scope of the present discussion). Allamah Jassas in his Ahkam al-Qur’an (Istanbul, 1335 AH. Vol. I, p. 469) defines the term Riba as the loan given for a specified period on the condition that on the expiry of the period, the borrower will repay it with some excess. Even in common law parlance “interest” has been held as the excess over and above the original advance paid to the creditor in consideration of the time allowed for repayment. The fact that it is not described in so many words as interest will not alter its-character”. (AIR 1944. Mad. 243). Halsbury’s Laws of England, (Para 106, Vol. 32, 4th Edition) defines interest as follows:

 

 

 

“Interest is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another .... “

 

 

 

These examples, taken from the impugned judgment of the learned Federal Shariat Court, .provide sufficient and ample evidence to establish that the purpose of loan is totally irrelevant in the context of the definition of Riba as the prohibition of the Qur’an extends to both the categories of Riba, namely interest charged on commercial loans and the interest charged on personal or consumption loans. Precedents of the pre-Islamic and early Islamic Arabia also establish that the Arabian Riba did include excess paid in commercial and productive loans. The economic history of the city of Tayef, the habitat of the tribe of Thaqif, provides examples of different kinds of loans prevailing in pre-Islamic Arabia as well as the kinds and modes of interest charged on such loans. As against the city of Makkah, the city of Tayef was known for its agricultural produce as well as industry and handicrafts in addition to trade and commerce. As reported by the historian al-Baladhuri (Futuha al-Buldan, Cairo 1932, page 67), there was a sizeable Jewish population in the city which also participated in the trade and business of the city. They, alongwith the members of the tribe of Thaqif, had organized their trade and commerce on the basis of interest. There were sections of the population which had specialized in Riba as recorded by the well-known commentator of the Qur’an; Abu Hayyan al-Andulasi in his well known commentary of the Qur’an known as al-Bahr al-Muhit (VoI.II, p.335). He also records that the tribe of Thaqif was in the forefront of all the Arab tribes in their involvement in interest. The traders and businessmen of Tayef not only provided money on interest to the people of their own city but also provided interest-bearing loans to the traders and businessmen of Makkah. This interest was received both in cash as well as in kind. According to the earliest authorities (such as al-Tabari, commentary of the Qur’an, Vol. IV, p.55), the tribe of Banu Mughirah, a branch of the tribe of Quresh of Makkah were regular and permanent clients of the traders of Thaqif and regularly received interest-bearing loans from them. 1n fact, the interest-bearing business of the people of Tayef prosperred mostly because of the Makkahn traders who received loans from Tayef. Makkah was neither an agricultural town nor there were goods and minerals nor any major industry. The main source of their affluence was trade and commerce for which they borrowed money on interest from others particularly from Tayef. It was because of this exceeding involvement of the people of Tavef in Rib, and interest that on their submission to the political authority of the Holy Prophet (peace be upon him) immediately after the conquest of Makkah in the 8th year of Hijrah the Holy Prophet (peace be upon him) expressly provided in the agreement of peace that they would stop all interest-bearing transactions, would also give up their claims of Riba against others and would not pay others’ claims involving Riba. This express provision of the Treaty of Peace with Thaqif as well as other non-Muslims groups such as the Christians of Najran clearly and unequivocally lays down the principle that no Muslim or non-Muslim citizens of the Islamic State is allowed to indulge in any Riba-based ‘transaction. It may be pointed out here that the meaning of the application of the term Riba had already been extended by the Holy Prophet (peace be upon him) to include what is known as Riba alFadl, Riba al-Sunnah or Riba Khafi. This kind of Riba was prohibited much earlier than the conquest of Makkah and had become well-known among the Muslims. The fact that the Prophet of Islam prohibited the non-Muslims of Tayef from all Riba without restricting it to the pre-Islamic mode or brand negates the argument of the learned counsel for the Federation that the non Muslims in an Islamic State are allowed to practise Riba al-Fadl.

 

 

 

When the Prophet (peace be upon him) left for Madinah after completing the conquest of Makkah and signing the Treaty of Peace with Tayef, there was a dispute between some traders from Makkah and Tayef about the payment of certain pre-Islamic outstanding claims. It seems that the newly converted Muslims of Makkah were not clear about the extension and application of the prohibition of Riba to the outstanding claims of preIslamic days. Some of them thought that the prohibition of Riba was not retrospective and that they could still claim the outstanding amounts due on others. The dispute was referred to the Qadi of Makkah, Attab Ibn Usaid who was appointed by the Holy Prophet (peace be upon him) after the conquest of the city. The young Qadi dismissed the claim but on the insistence of the claimants he was forced to refer the matter to the Holy Prophet (peace be upon him) himself. Among the tribe of Thaqif four brothers were known for their interest-based trade. They used to give loans on interest to Banu Mughirah. When the Holy Prophet conquered the city of Tayef, all the four brothers accepted Islam. They had some outstanding claims of interest payable by Banu Mughirah who now refused to pay interest and said that Islam had prohibited interest and, thus, they are no more liable to pay it. It was this dispute which was taken up to Attab ibn Usaid’ the new Qadi of Makkah appointed by the Holy Prophet. Upon this the verses 278-280 were revealed in which all the outstanding claims of Riba were abolished in very strong and emphatic terms and the creditors were allowed only to receive back their capital or the principal sum.

 

 

 

As pointed out earlier, the city of tayef was particularly famous for its commerce and trade on the basis of Riba. Most of the data available about Riba in pre-Islamic Arabia relates to Tayef. According to historian alBaladhuri (Futuh al-Buldan, Leiden, p 56, Tayef), the people of Tayef were known for their usurious practices. The tribe of Thaqif, out of Tayfian tribes, was notorious in this practice which had become a profession for them. This usurious trade was not confined to Tayef; it was, rather, extended to Makkah. The Makkahn traders used to get loans from the Tayefians on interest which was paid both in cash and in kind. The tribe of Banu Mughirah„ a rich sub-tribe of Quresh tRibal group, used to get loans on interest from the Thaqifite traders. The main component of the deal was the extension of period .of repayment of the principal sum (see further details in the commentary of the Qur’an by Tabari under verse 130 of Al-Imran). In the context of this discussion, Tabari reports that the mode of charging interest in pre-Islamic Arabia by the tribe of Thaoif was that whenever they advanced loan to a debtor to be repaid after a fixed period they would tell the debtor at the time of the repayment: “Either pay the loan or increase the amount” If the debtor had money to pay he would pay. Otherwise, he would accept increase and get the period extended for one more year. Thus, if one year old camel was to be originally paid, it was converted into a twoyear-old camel. After the extended period the creditor required the debtor to pay the two-year-old camel instead a one-year old camel. In the event of a third extension for the third year a three-year old camel would become payable while for a forth extension a four-year old camel became payable; thus the chain of increases and the extensions continued. Similar was the practice in respect of cash. Thus, if the debtor failed to make repayment in time, the period was extended by the creditor on the condition that the amount payable would be increased or even doubled, and in case one hundred dirhams or dinars were payable, the debtor was required to pay two hundred dirhams or dinars. At the end of the second year, if the period was extended further the amount was also doubled. These details have been recorded by Tabari on the authority of Ibn Juraij, a disciple of Hazrat Abdullah ibn Abbas. There are other reports found in the early sources with variations about the amount of increase or the rate of interest. These details have been collected by the companions and their followers with the purpose of preserving necessary information and data about the prevalent modes of usury and interest. These reports show that there existed a variety of modes and rates of interest, the common feature being the increase in lieu of time over and above the principal amount payable by way of loan or debt.

 

 

 

It may be mentioned here that the Holy Prophet took special measures to curb the practice of Riba and interest from Tayef because this practice had deeply ingrained in the body social and body economic of the Taifians and needed special measures to be eradicate. One such measure was a clear and express provision included in the agreement signed between them and the Holy Prophet at the time of their conversion to Islam. It has been reported by Abu Ubaid, who has quoted full text of the agreement, that the agreement also included the following provisions: “Whatever debt is payable to them by the people they will not be liable to pay except the principal sum. (Kitab al Amwal by Abu Ubaid al-Qasim ibn Sallam, paragraphs 506-507). A similar provision was made in the covenant issued by the Prophet to the Christian population of Najran in Southern Arabia. It provided that the citizenship of those who indulge in eating Riba would be cancelled (Kitab alAmwal by Abu Ubaid, paragraph 502). The same practice was by and large prevalent in Madinah prior to the conversion of the city to Islam. Imam Malik has reported same details about the usurious practices prevalent in pre-Islamic Arabia in his Muwatta. After Makkah and Tayef, Madinah was also known for its Riba-based practices. Here, the creditors were mostly the Jews while debtors were mostly the peasants of Madinah. The Jews had invented some new modes of charging interest which were not found in other cities and towns of Arabia. In his masterpiece on the history of pre Islamic Arabia, the Iraqi historian Dr. Jawad Ali tells us that the Jews would sell the commodities of common use by the Madinian population such as wheat, barley, dates and salt at a time when their supply was scarce or the season was off on a deferred payment and would charge a larger quantity of the same commodity at the time of repayment to create further scarcity and to resell that very commodity to its own producer again on the deferred payment of a higher amount: Thus the producers, traders and the agriculturists of Madinan continued to be indebted to the Jews. This practice not only increased the power and influence of the Jews but also contributed to the concentration and control of the Madinian wealth and resources in the hands of the Jewish businessmen. Not only this but the Jews also demanded that the properties and goods of the debtors be mortgaged with them or pledged to them. Imam Bukhari reports several incidents which show that the Jews demanded the mortgage of even the children, wives and weapons of the debtors.