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

 

 

 

Most of the commentators of the Qur’an interpreted the point about zulm to conclude that genesis of Riba is zulm. Hence, they went on to rationalize the prohibition of Riba. Many reasons are offered. In the case of consumption loans, lending on interest is equated with exploiting the needy In the case of production or commercial loans, it is suggested that Riba gives the capitalist an opportunity to enjoy the fruits of the borrowers’ effort without either putting in any effort of his own or taking any risk. Some others have used this ayah to defend their case for indexation of loans for inflation (in order to compensate lenders for loss in the purchasing power of their loans). Respectfully, both lines of interpretation take the meaning of the ayah out of the context. The factual position is as follows.

 

 

 

Actually the verse 279 contains an order from Allah that both creditors and debtors should avoid zulm. Technically speaking, zulm occurs when any party is denied its rights as per the Injunctions of Shariah. Thus the question one needs to ask is: what were the (relevant) Injunctions of Shariah, from the creditors’ and the debtors’ perspectives, at the time of revelation of al-Baqarah 2:278--281? Quite clearly, these injunctions are given in Aal-i-Imran 3:130 and AI-Baqarah 2:275--277. On both these previous occasions, there is no mention of zulm or its equivalent. Therefore, when Allah decrees that both creditors and debtors avoid zulm, it means adherence to the said injunctions, and nothing else.

 

 

 

The above conclusion has significant implications for guiding the thinking on Riba. First, Riba may lead to zulm, but zulm per se is not the reason behind its prohibition. Second, there is no room for generalizing the interpretation of “lender’s principal” in order to seek a compensation for decline in the value of loans due to inflation during their pendency.

 

 

 

In order to understand the true spirit of gradual prohibition of Riba, it is necessary that all the relevant verses of the Qur’an are seen in a chronological order. A look at these verses would clearly show, as rightly noted by the participants of the IIIE workshop, that the process of the elimination of Riba during the time-of the Holy Prophet (peace be upon him) had the following features:

 

 

 

(i)         Riba was formally prohibited with a directive for the believers in Aal-i-Imran 3:130, in late 3 A.H.- soon after the Battle of Uhud. Notwithstanding the linguistic style of this decree, the prohibition of Riba was absolute, regardless of whether the transactions were for satisfying personal or business needs and whether Riba was simple or compound.

 

 

 

(11)      The above decree left no doubt about the status of the new Riba-based contracts. However, two issues arose: (a) the status of the existing loans and debts, and (b) a need for review of all existing exchange practices in order to bring them into line with the Qur’anic decree on Riba.

 

 

 

The issue of the then existing loans and debts was tackled with a directive from Allah in al-Baqarah 2:275. The believers were ordered to honour the relevant contracts after deleting the Riba clauses in them while ignoring Riba already charged or given. The unmistakable message was that the switch-over to a Riba-free State, in respect of the existing loans and debt, has to be instantaneous. No gradualism was allowed.

 

 

 

As to the issue of rationalizing other exchange practices, there was the case of trading with, generally speaking, homogeneous items of both ends of the exchange. This happened, for example, when a party had gold in the form of pieces, ornaments or crockery and. the other had it in the form of Dinars. Likewise, among other things, there was the question of trading dates of one variety for those of another. Technically speaking, these were special cases of loan transactions with no time lag in the give and take back process. Thus, when lenders were called upon to concede all costs associated with loan transactions, it put a question mark on the permissibility of unequal exchanges in the aforementioned and similar other cases. Therefore, in order to bring the said trading transactions into line with the Qur’anic Ahkam, the Holy Prophet (peace be upon him) also took steps and prescribed rules for trading exchanges. The Ahadith of Fadalah bin Ubaid confirm the existence of such instructions in Muharram 7 A.H. In other cases, one cannot be definite because no event of a historic significance is mentioned in the texts of the Ahadith. However, the following two things support the contention that the Prophet (peace be upon him) gave the necessary Ahkam quite early after the prohibition of Riba in 3 A.H:--

 

 

 

First, given the seriousness with which Allah views dealing in Riba (al-Baqarah 2:278-279), it is inconceivable that any necessary legislative action was delayed. Second, texts of the various Ahadith on Riba have internal evidence to support the above view. Hazrat Ubadah ibn Samit was incharge-cum-instructor of the first teaching institution of Islam established by the Holy Prophet (peace ,be upon him) for the residents of Suffah, a raised platform in the Masjid of the Holy Prophet (peace be upon him). His narrations on the subject are by far the most comprehensive, and their tone and tenor unmistakenly authoritative. Against the background of his narrations, it is easy to see that the aforementioned narrations of Hazrat Fadala have an “explanatory” character. This is, while trading of gold for gold on unequal terms was forbidden much earlier, as in the Ahadith of Hazrat Ubadah, the scope of the proviso “gold for gold” was not equally clear to all the Companions of the Holy Prophet (peace be upon him). Thus, a need for clarification arose on the eve of the Ghazwah of Khyber in 7 A.H. which the Holy Prophet (peace be upon him) made - as reported by Hazrat Fadalah..

 

 

 

(iii) With the revelation of al-Baqarah 2:275 and the enforcement of the adjunct guidelines, as above, by the Holy Prophet (peace be upon him), the process of the elimination of Riba was officially completed. However, sometime in late 9 to 10 A.H. but before the departure of the Holy Prophet (peace be upon him) for Hajja-tul Wida’, some new Muslims sought exception to the Ahkam in lieu of their outstanding debt claims. The matter was referred by Hazrat Attaab bin Aseed, the then Governor of Makkah, to the Holy Prophet (peace be upon him) in Madinah. Thereupon al-Baqarah 2:278--281 were revealed. These ayaat not only confirmed the above Ahkam but also warned of retribution against those who hesitated to close the chapter on Riba. This decree also explicates  some additional, though not fresh, guidelines for the elimination of Riba. That is, while the lenders were restricted to the principal in lieu of their existing claims in al-Baqarah 2:279, in very next ayah they were ordered to give grace period to the debtors to meet their payment obligations to the extent of the principal; however, any written-off loans were to be treated as sadaqah (charity). This decree just formalized what was already in practice among the veteran Companions of the Holy Prophet (peace be upon him) since the revelation of al-Baqarah 2:275.

 

 

 

The background of al-Baqarah 2:278--281 also raises some questions. Was there not gradualism in the process of the elimination of Riba from the then Islamic economy? That is, was it not the case that the said process officially started toward the end of 3 A.H. but completed, albeit gradually, sometime in 9 or 10 A.H? In particular, was it not that the formal completion of this process coincided with the abrogation of the Riba claims of Hazrat Abbas, among others, by the Holy Prophet (peace be upon him) during Hajja tul-Wida’ 10 A.H? The answer to these points in favour of the gradualism thesis is “no” for the following reasons:

 

 

 

(i) One must differentiate between the enforcement of a law and its violations. The latter may take place after the enforcement of the law, and this is where the law comes into picture. The incident behind the revelation of the verses 278--281 falls in the category of violation of the then existing law. The unique thing about this case was that it was referred to the Holy Prophet (peace be upon him), the supreme legal authority at the time, and settled by a decree from Allah.

 

 

 

(ii)        Indeed, the Holy Prophet (peace be upon him) declared annulment of RIM claims of Abbas, among others, in Zul Hijjah 10 A.H. But it is wrong to conclude that Abbas or any other Companion of the Holy Prophet (peace be upon him) continued to charge Riba as a Muslim despite its prohibition. This point may be seen as follows:

 

 

 

When the Holy Prophet (peace be upon him) made the said announcement, it was the third of three declarations made by him, at that time. The first was about the prohibition of unlawfully killing someone or depriving him of his property, and the second was about the revocation of blood claims dating back to the days of Jahiliyyah (Ignorance)-the pre-Islamic period. In lieu of the second, the Holy Prophet (peace be upon him) also specifically mentioned the annulment of blood claims of his family, Banu Hashim, in lieu of the murder of infant Ibne Rabi’ah that took place before the dawn of Islam. These two decrees have never been taken to conclude, and rightly so, that the murder of innocent people was either allowed or condoned before these decrees were made in late 10 A.H. Moreover, the factual position is that Banu Hashim never claimed retribution for the murder of Ibne Rabi’ah after the conquest of Makkah in 8 A.H. the time when all of them came into the fold of Islam. The position about Riba claims of Hazral Abbas is likewise. Technically speaking, like the other two decrees of the Holy Prophet (peace be upon him), this too was a retrospective decree. As with the other two decrees, its significance lay in pressing home the message on a few sensitive matters where emotions could prevail and disturb the harmony of the Ummah later on.

 

 

 

(iii) The Ahkam of Riba are not different from the Ahkam of, for example, salah (prayer) and saum (fasting). The Ahkam for none of these were prescribed with the dawn of Islam. However, once ordained, the relevant Ahkam were enforced at once. As to those becoming Muslims, later on, there was and there is no choice but to initiate all ‘relevant’ and, of course, ‘possible’ steps at once.

 

 

 

(iv) The analogy of Sulah Hudabiyah (the Peace Treaty signed at Hudabiyah) cannot be invoked to take a lenient position on the elimination of Riba. This is because the said treaty was between the Muslims and non-Muslims while today in a Muslim country the issue pertains to dealings among the Muslims or their transactions with non-Muslims. In passing, one may note that in the case of Pakistan many target dates for the elimination of Riba have come and gone during the last five decades without any result. Thus, “gradualism” has already lost its meaning, and it cannot be on the agenda any more.

 

 

 

(v)        No doubt the Holy Prophet (peace be upon him) took a lenient view of the request of the tribe of Thaqeef on the payment of Zakah when the latter negotiated with him, the terms for entering into the fold of Islam. But again any conclusions in respect of Rlba are unwarranted for two reasons. First, the Thaqeefs were not given exemption from the payment of Zakah as Muslims. In fact, the entire tribe did not become Muslim when their delegation presented the said demands before the Holy Prophet (peace be upon him). The Thaqeefs embraced Islam over a period of two years after their delegation’s visit to Madinah. Second, while the delegation made the above demand about Zakah, it also sought exemption from the Ahkam on Riba. But this latter demand was categorically rejected by the Holy Prophet (peace be upon him).

 

 

 

(vi)       Finally, the case of khamr (drinking) cannot be cited as an example to justify gradualism in the elimination of Riba for the following reason. In that case, the Muslims were first told to stay away from drinking at the time of salah, and later on ordered to give it up entirely- In the case of Riba, the very first directive to the Muslims (Aal-i-Imran 3:130) prescribes its absolute prohibition.

 

 

 

Riba has been dealt with in the Hadith literature very extensively and the Holy Prophet has thrown light on every significant aspect of it. He declared it to be one of the most heinous crimes and sins. He condemned and cursed those who eat Riba, who pay it, who prepare its document and who attest it as a witness. In a Hadith he said that a single Dirham eaten by a person by way of Riba exceeds in its heinousness and wickedness the commission of the most obnoxious crime of connotting incest with one’s own mother thirty-six times.

 

 

 

Apart from the Riba al-Nasiah which was in vogue in pre-Islamic Arabia and clearly and expressly prohibited by the Qur’an, the Prophet took several preventive measures to close all the possible avenues which may in any eventually lead to the commission of the Riba par excellence. This preventive Riba is called by different names. It is called Riba al-Hadith because it has been mentioned in the Hadith as against Riba al-Nasiah which is called Riba al-Qur’an. It is also called Riba al-Buyu because it is mostly applicable in contracts of sale or exchange of property, as against Riba al-Duyun, i.e. Riba payable on debts. It is also called Riba Khafi or Tacit or

PAGE 510-511

 

 

 

mithlin (like for like) and yadan-bi-yadin (hand to hand or on spot) basis. Thus, whosoever gave more or demanded more, verily he dealt in Riba. Both the taker and the giver are equal i.e., equally guilty-in this regard.” (Muslim, 2971).

 

 

 

(xii)      Ubadah b. Samett (r.a.a.) directly reports the Prophet (peace be upon him) as saying: “Buy and sell gold for gold, silver for silver, dates for dates, wheat for wheat, salt for salt and barley for barley on the mithlan-bi-mithlin (like for like) basis. Whosoever gave more or took more, verily he made a Riba deal. However, trade gold for silver as you wish subject to the condition that the exchange be yadan-bi-yadin (on spot). Trade wheat for dates or barley for dates also likewise,” (Tirmizi, 116).

 

 

 

(xiii)      This narration is from Abu Qilabah. He told that he was sitting in Syria in a circle that also included Muslim bin Yasar. There came Abul Ash’ath. According to Abu Qilabah, everybody exclaimed: “Abul Ash’ath!” Abul Ash’ath joined the circle. Abu Qelabah asked him to narrate the Hadith of Ubadah b. Samett (r.a.a.) for a brother there. Abul Ash’ath agreed. His narration is as follows:

 

 

 

We (i.e., Abul Ash’ath and his colleagues) were on a military mission under the command of Mo’aawiyah (r.a.a.). We gained a lot of spoils of war. Among them, there was a silver utensil. Mo’aawiyah directed a person to auction it against the salary due in favour of the soldiers. People showed great interest in the auction. When the news reached Obadah bin Samett, he stood up and said: “I heard the Prophet (peace be upon him) forbidding the sale of gold for gold, silver for silver, wheat for wheat, barley; for barley, dates for dates and salt for salt except on sawa’amm-bi-sawaa’ (equal) and ainamm-be-ain (like for like) basis. The Prophet (peace be upon him) further said that if someone gave more or took more, he entered into Riba.” As soon as the people heard this, they withdrew from the auction. When the news reached Mo’aawiyah, he got up and addressed the people as follows: “What is the matter with the people that they attribute to the Prophet (peace be upon him) the Ahadith that we did not listen even though we also saw the Prophet (peace be upon him) and kept His company?” Obadah stood up and repeated the whole thing. He then angrily said: “We will narrate what we heard from the Prophet (peace be upon him) even though it might be unpleasant for Mo’aawiyah (or, he said: even if it is against the will of Mo’aawiyah).” Obadah further said: “I don’t care even if it (i.e., contradicting Mo’aawiyah) costs me my stay with Mo’aawiyah’s army on this very dark night.” (Muslim, 2969).

 

 

 

(xiv)     This narration is from Fadalah b. Ubayd (r.a.a.). He said that he and other companions of the Prophet (peace be upon him) were with Allah’s Messenger on the eve of the conquest of Khyber. They were trading one wuqiyyah (=7 mithqal) of gold for two or three Dinars with the Jews. When this came to the notice of the Prophet (peace be upon him), He ordered: “Don’t trade gold for gold except on the basis of waznan-bi-waznin (equality in terms of weight).”

 

 

 

(xv)      This narration is from Fadalh b. Ubayd al-Ansari (r.a.a.) who reports as follows: When the Prophet (peace be upon him) was in Khyber, a gold necklace studded with precious stones was brought to him (peace be upon him). This necklace, a part of the war booty, was up for sale. The Prophet (peace be upon him) ordered that gold content of the necklace be separated from the rest. Thereafter, the Prophet (peace be upon him) directed that the gold (of the necklace) be sold for gold on the basis of waznan-bi waznin (equality in weight). (Muslim, 2978).

 

 

 

(xvi)     This Hadith is narrated by Ma’mer b. Abdullah (r.a.a.). He said that he used to hear the Prophet (peace be upon him) as saying: “Exchange meal for meal mithlan-bi-mithlin (like for like).” (Muslim, 2982).

 

 

 

(xvii)     This Hadith is narrated by Abdullah b. Amr (r.a.a.). Allah’s Messenger (peace be upon him) directed him to make provisions for the army. When Abdullah ran out of camels, the Prophet (peace be upon him) asked him to acquire camels against those of zakah. Accordingly, Abdullah acquired one camel for two camels to be paid from the future zakah proceeds. (Abu Daud, 2913).

 

 

 

(xviii)    According to Samurah (r.a.a.), the Prophet (peace be upon him) prohibited trading of animals for animals on credit. (Tirmizi, 1158).

 

 

 

(xix)     This Hadith is from Ibn-i-Umar (r.a.a.). He reported that he used to sell camels in the market of Baqi’ for dinars (gold coins) but received payment in dirhams (silver coins). He went to see the Prophet (peace be upon him) in the house of Hafzah (r.a.a.h.), wife of the Prophet (peace be upon him), in order to inquire about the validity of his practice. He said: “O Prophet of Allah! With all due respect, I want to know the Shariah position of my trading of camels in Baqi’ whereby I sell camels for dinars but accept dirhams towards payment.” The Prophet (peace be upon him) said: “There is no problem if you accept the payment in the form of dirhams provided that it is according to the exchange rate (agreed) at that time and that the transaction is fully settled i.e., payment also cleared-before both you and your client part company.” (Nasa’i, 4506).

 

 

 

(xx)      This Hadith is narrated by Anas b. Malik (r.a.a.). He reported that Allah’s Messenger (peace be upon him) said as follows: “If someone among you lends something to another person, the former should not accept from the latter any gift or a ride except when both have such dealings between them before the loan.” (Ibn-i-Majah, 2423).

 

 

 

(xxi)     This Hadith is by Saeed b. Abi Burdah (r.a.a.), who reported it from his father. When the latter came to Madinah, he met Abdullah b. Salam (r.a.a.) who said to him: “You (i.e., Abu Burdah) come from a land where Riba is common. If you have a claim against someone, don’t accept from his anything-be it some sickle, barley or grass-because that would be Riba.” (Bukhari 3530).

 

 

 

(xxii)     This Hadith is reported by Abu Qatadah (r.a.a.). He said that a person inquired from the Prophet (peace be upon him) as follows. If that person was killed in the path of Allah while he remained steadfast self-critical and moved forward in the way of Allah without ever turning his back, would Allah forgive his sins? Allah’s Messenger (peace be upon him) answered in the affirmative. However, when that person was leaving, the Prophet (peace be upon him) called him back, and said as follows: “Yes, all sins would be forgiven except outstanding debt. This is what Jibrail has told me.” (Muslim, 3497).

 

 

 

(xxiii)    This Hadith is narrated by Amr b. Shareed on the authority of his father who, in turn, reported it from the Messenger of Allah. The Prophet (peace be upon him) said that delay in the repayment of debt by a person, who can afford to repay, legitimizes dishonouring him and punishing him. (Abu Daud,’ 3144).

 

 

 

(xxiv)    This Hadith is reported by Abu Hurairah (r.a.a.). The Prophet (peace be upon him) said as follows: “If a person is in a position to meet his debt obligations but delays repaying the debt (as per schedule), he is zalim (one who commits zulm). If someone is referred by the creditor to a malie’ (a debtor who is willing to pay back the debt but cannot afford to do so at the moment), that person should accede to the request.” (Bukhari, 2125).

 

 

 

The nutshell of these Ahadith is that the exchange of gold with gold, silver with silver, dates with dates, wheat with wheat, barley with barley, salt with salt should take place only when both the commodities are fully similar and exactly equal to each other in terms of weight and measure and are delivered and received then and there hand by hand. Any increase or decrease on either side or any deferred payment or delivery will render the transaction as Riba-based and will be disallowed. There has been a consensus among the Muslim jurists about the prohibition of Riba al-Fadl right from the days of the companions. There are reports about two companions namely Abdullah ibn Umar and Abdullah ibn Abbas who did not initially hold this view because they either were not aware of the prohibition of such transactions or interpreted the prohibition differently. Their counter-rulings are found in some Hadith books but it has been established about Ibn Umar that he had reviewed his earlier position and joined the consensus when he came to know about the Ahadith prohibiting Riba al-Fadl. The same thing is reported about Abdullah ibn Abbas. It has been narrated by Imam Hakim that when the companion Abu Said Khudri (who is one of the main narrators of the Ahadith on the prohibition of Riba al-Fadl) informed him about the Hadith on this subject he immediately changed his view and started vehemently opposing it. It seems that he was initially mistaken about the real meaning of another Hadith reported on the authority of Usamah by Bukhari and Muslim that the Riba is in deferred payments (Nasiah). Companions and jurists have differently interpreted the Hadith of Usamah. The well known authority on Hadith and the leading commentator of Bukhari, Allamah Ibn Hajar Asqalani says that there is no doubt about the soundness and validity of the Hadith of Usamah; yet there is a difference among the Ulema as to how it is to be reconciled with the Hadith of Abu Said. Some say that the Hadith of Usamah (being of an earlier period) is abrogated. But Allamah Ibn Hajar dismisses this view by saying that abrogation cannot be proved by mere possibility. Some scholars are of the view that the wording. “There is no Riba except in Nasiah” simply means that the worst, the most heinous and the most strongly prohibited Riba is the Riba on deferred payments. This is similar to the Arab style of saying that there is no scholar in the city except so-and-so. It does not mean that there are no scholars in the city at all. It simply means that there is no scholar of that calibre and perfection, and hence it is not a negation of the existence of any scholar ab initio Moreover, the negation of the prohibition of Riba al-Fadl on the basis of the Hadith of Usamah is only by way of indirect inference while the Hadith of Abu Said is clear and express and therefore will have preponderance over the former. However, the fact that Ibn Abbas and Ibn Umar had abandoned their earlier point of view and had agreed to the general consensus on the prohibition of Riba al-Fadl has closed the door for any further discussion on the grounds and implications of this initial and short-lived difference of opinion. Imam Shawkani has quoted a report from Ibn Abbas to the effect that his earlier ruling was based on his own personal opinion and when he heard Abu Said Khudri narrating the Hadith of the Messenger of Allah he abandoned his opinion and surrendered to the Hadith. It may be pointed out that the narrators of the Ahadith on the prohibition of Riba al-Fadl include more than two dozen companions leading among them being Abu Bakr, Umar, Usman, Anas and of course Abu Said Khudri.