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

 

“Anas Ibn Malik reports: The Prophet (s.a.a.w.s:) said: `When one of you grants a loan and the borrower offers him a dish, he should not accept it; and if the borrower offers a ride on an animal, he should not ride, unless the two of them have been previously accustomed to exchanging such favours mutually.”

 

 

 

(Kitab al Buyun).

 

 

 

If, therefore, any such favour, as above, is ascribed to the Prophet (s.a.a.w.s.) that may directly be relatable to his generally gracious conduct (customarily disposed towards Ahsan i.e., conferment of favours), always being at the giving and never at the receiving end. The foregoing Ahadees is also a pointer that, as a rule, no mala fide accretion on a loan, howsoever small, is admissible. To this neither any Government nor a State is an exception. In fact, to allow any leeway on the point, subject to the Ahadees above-quoted, would serve little purpose other than to allow entry to Riba through a back door.

 

 

 

15. Having identified the foundations of the institution of Riba in Islam, it remains to be reiterated that the prohibition was nothing new and had devolved and descended from the earlier religious thought and teachings. It is for this reason alone that the earlier Qur’anic revelations on the subject only implicitly invoked the prohibition for the Muslims. Thus, for the Jews the Old Testament (Exodus 22: 25--27) prescribed as under:---

 

 

 

“25. If thou lend money to any of My people that is poor by thee, thou shalt not be to him as an usprer, neither shalt thou lay upon him usury.

 

 

 

26. If thou at all take thy neighbour’s raiment to pledge, thou shalt deliver it unto him by that the sun goeth down.

 

 

 

27. For that is his covering only, it is his raiment for his skin: wherein shall he sleep? And it shall come to pass, when he cricth unto Me, that I will hear; for I am gracious.”

 

 

 

Much the same is enjoined in LEVITICUS 25:35--38:

 

 

 

“35. `And if your brother becomes poor and cannot maintain himself with you, you shall maint4in him; as a stranger and a sojourner he shall live with you. 36. Take no interest from him or increase, but fear your God; that your brother may live beside you. 37. You shall not lend him your money at interest, nor give him your food for profit. 38. I am the Lord your God, who brought you forth out of the- land of Egypt to give you the land of Canaan, and to be your God.”

 

 

 

The edict, however, seems to have been relaxed for strangers (nonbelievers) when the Old Testament (Deuteronomy 23: .19-20) provided thus:

 

 

 

“ 19. Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of anything that is lent upon usury.

 

 

 

20. Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury: that the Lord thy God may bless thee in all that thou set test thine hand to in the land whither thou goest to possess it.”

 

 

 

At the time, there does not appear to have been any distinction between interest and usury and the concept was uniformly covered by the Hebrew word Neshe, which meant gain, arising from a loan, whether in money or in kind. The later day Jewish practice of trading and even monopolizing in usury or interest-bearing transactions, ostensibly and historically, owes a great deals to the Jews being discriminated against in the matter of employments and other lawful callings. Money-lending business, therefore, seems to have been found as an escape route by that down-trodden community in the then Western society. On the other hand, such Jewish pursuits, of the time, came extremely handy to the autocratic rulers, holding sway in Christendom, whose Christian subjects were precluded from obligingly catering to their financial needs. Read here autocratic Muslim rulers and their Muslim subjects, as a later day addition if not substitution. Co-relate the declaration: “No Christi4n is an usurer 1551” (Shorter Oxford Dictionary, Vo1.II, p.2326, 3rd Edn.)-the condemnation of Gibbon: “The usurer, who derived from the interest of money a silent and ignominious profit” and the criticism of Ruskin, “I know myself to be an usurer as long as I take interest on any money”.

 

 

 

Specific to the Christian thought on usury, interest or Riba, the doctrine does not seem to have been explicitly related to Jesus (s.a.a.w.s.) but was evolved, partly, upon some direct reflections attributed to him and, generally, on the basis of his life and teachings, taking firm root in the philosophy and thinking of the Church and the mediaeval scholastics (9th to 14th Centuries), known as the Schoolmen. In point, ascribed to the Messiah (New Testament, Luke 6:35), is the observation, “No! Love your enemies and do good to them; lend and expect nothing back”. (Compare the Qur’anic exhortation), “If the debtor be in difficulty, grant him time till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew”. (Al-Baqarah II: 279). In turn, Popes and Councils alike consistently decried all kinds of payments for the use of money lent, since, to them, money had little purpose other than as a medium of exchange and its principal use lay in consumption, whereby it was .sunk in exchange. Augustine placed usury in the category of crime and denounced usurers as a breed of vipers that gnaw the womb that bears them. (See the hadith, which goes):

 

 

 

“Jamil bin Daraj reports Imam Jafai Sadiq (r.a.a.), saying:

 

 

 

In the sight of Allah the sin of one Dirham of Riba is greater than the sin of incest. If that sin is divided into seventy parts, the sin of the lightest part would equal the sin as of one, gone into his mother within the Ka’ba”. (Al Burhan by Bahrani; a similar version also in Baihiqi).

 

 

 

The early Fathers totally disapproved usury, as inclusive of later day interest. A canon of the Third Lateran Council (1179 A.C.) directed that manifest usurers shall not be admitted to Communion nor, if they die in their sin, shall receive Christian burial. (A priori, refer the Ahadees of the Prophet (s.a.a.w.s.), where he is reported to have declined to lead the funeral prayers of a Muslim, who had died in a state of indebtedness and the successors to the estate left the debt unrequited. Islam, in theory and practice, discourages even contracting of loans what to say of indulging in Riba). Pope Clement V made the prohibition of usury absolute and declared all legislations, even remotely, countenancing usury as void (1311 A.C.). To elaborate, in Christendom interest, in its pristine form, denoted “money paid for the use of money lent the principal) or for forbearance of a debt, according to a fixed ratio (rate per cent.) 1545”. (Shorter Oxford Dictionary, Vol.l, p.1026, 3rd Edn.) Correspondingly, “the crime of usury, before the Reformation, consisted in taking of any interest for the use of money; and now in taking any higher rate of interest than is authorised by law 1754”. Subsequently, the statutes -against usury were repealed (in Britain) so that one may take for one’s money whatever amount of interest one can get: (ibid). Vol.II, p.2326. Correspondingly, Encyclopaedia Americana (1970) records:---

 

 

 

“Interest is a charge for the use of money----Interest has not always been considered a legitimate or even moral payment. Until the end of middle ages, any charge for a loan was generally considered to be usury. The teachings of Christian, Judaic and Islamic religions, all condemned in varying degrees, the taking of interest. In recent times, however, usury has come to be regarded as only the charging of illegal rates of interest-----”

 

 

 

It, thus, becomes plain that, in the context of Judaism as well as Christianity, there initially was no distinction between interest and usury, the last being a derivative of the Latin words usus, uti, meaning “to use” and signifying “the fact or practice of lending money at interest”, as also, “the premium or interest on money (or goods) lent”. Only in its later day adaptation did “usury” denote “the practice of charging excessive or illegal rates of interest for money on loan”. It was riot until 1830 that the holy Office allowed interest to be lawfully taken for money lent to merchants, who engaged in profitable trades.

 

 

 

Because Islam was revealed at a time when society did not recognize any difference between interest and usury, each denoting an excess, whether large or small, over and above the principal advanced and because the word usury, from the beginning, has, commonly, been used in translations of the earlier Scriptures the same word has been preferred in the translated versions of the Qur’an, herein cited. Accordingly, for the purposes of this discourse, usury and interest, are words used interchangeably, unless, of course, the context otherwise suggests.

 

 

 

16. Viewed in this background and demonstrated through the relevant Qur’anic texts and Ahadith of the Prophet (s.a.a.w.s.) Riba, in Islam, encompasses every return and all excess arising purely in consideration of time allowed for the use of money or of any other thing of value lent as also every such increase on goods exchanged violative of any or all of the mandates of Sawa’amm-bi-sawaa’, (meaning equal for equal), Mithlamm-bi-mithl (like for like) and Yadamm-bi yad (hand to hand or on spot), where the exchange, subject to the Ahadith, is of like commodities or at least that in Yadamrn-bi-yad, if such exchange be in dissimilar articles. Upon the first part of this analysis, for the second (Riba al-Fadl) has not been found relevant by the Federal Shariat Court, bank interest as also other similar returns, such as interest on Government securities etc., have been found to fall by that Court in its judgment, impugned before us, to be within the mischief of Riba. This ex facie is correct so far as it goes. We have, however, already seen that Qur’an co-relates Bai sale) and Riba but allows the first while prohibiting the second. Indeed, let it be stated here, even at the pain of repetition, that the meaning and significance of Bai (sale) in Islamic law (Fiqh) is broad enough to include all exchanges, loans being but one of them. Invoking the Qur’an and Sunnah, therefore, the early jurists construed Riba as a form of Bai and forestalled any gulf being developed between Ri6a al-Nasi’ah and Riba al-Fadl, each emerging from a common reading of the Qur’an and Sunnah. The standard definition on the subject is that of al Sarakhsi in al-Mabsut, a commentary of Imam Muhammad’s pioneering work, also carrying the same name but distinguished as Al asl. There, as reflected above in passing, it is, thus, stated:

 

 

 

“Riba in its literal meaning is excess and in the technical sense in the Shari’ah, Riba is the stipulated excess without a counter-value in Bai’ (sale).”

 

 

 

As analysed by Nyazee, (supra) the quoted definition of Riba carries the following ingredients:---

 

 

 

“(1) Riba is excess.

 

 

 

(2) .It is an excess that is stipulated in a Bay’ exchange).

 

 

 

(3) It is an excess that is without a counter-value. “

 

 

 

This then remains the classical definition of Riba and treats with the subject, in all its forms, without any distinction. The definition, besides being endorsed by the terminology in the Qur’an and Sunnah, is also logical because even in excesses on loans (nasi’ah) a thing of value is parted against a corresponding, though inadequate, return, the increase being matched with delay.

 

 

 

17. Having, said as much, let us now turn to the caveats entered in favour of interest simpliciter or of bank interest or of interest carried by Government securities etc., claiming such to fall outside the four corners of the institution of Riba, as ordained in Islam: Apparently, to categorise oppressive and so called non-oppressive interest separately, it has been argued that the illat, or the juristic cause, behind the prohibition lies in the element of Zulm or inequity peculiar to usurious transactions (carrying an excessive rate of interest) and to interest derived from loans advanced for personal consumption, as distinct from loans designed to undertake or continue a productive activity, interest transacted by banks and State institutions supposedly suffering from neither infirmity. The simple answer to this purported distinction is that while Zulm indisputably, as recognized by the Qur’an, may furnish something in proximity of the hikmat, or wisdom, resultant upon which Riba has fallen into disrepute that element in itself cannot be the Mat or touchstone to determine whether a particular charge or accretion on the specified exchange (Ba’i) constitutes or does not constitute Riba, beoause ail that has to be seen is whether or not such return is or is not covered by the parameters of Riba reflected in Qur’an and determined in the Ahadith. Here may be identified the difference between the concepts of hikmat and Mat. The various precepts of Shariah are founded on the common expedients of ensuring benefit and precluding harm to mankind, the generation of benefit and prevention of detriment assuming varying forms and carrying the nomenclature of public welfare. Such expedient equals the hikmat or raison d’etre of many a Shariah the (hukm) or command. Often, however, hikmat behind a command is either not manifest or is subject to vicissitudes. This has led fuqaha to discover a common factor of a somewhat lower order, which they term as the Mat behind a Shariah rule. A couple of illustrations would establish the point. Take the case of limited postponement of fasting during Ramadan (month of fasting). This option occurs while one is journeying or has fallen ill. The reason for the exemption (hikmat) can arguably be to save the affectee from hardship. Yet there may be plenty of hardships, which believers, while fasting, may otherwise encounter and on occasions a traveler may, individually, be exposed to no hardship, none of which would attract the exemption or alter the rule. Hence the juristic necessity of discovering the Mat for the exemption, which in the case of hand is simply the contingents of a journey or sickness. Another example is furnished by the law of pre-emption, where a joint owner or neighbour of the seller of an immovable property may successfully stake a claim to a preferential purchase against an ordinary buyer. Hikmat behind the entitlement may again be discomfort or inconvenience to the vendor’s co-sharer or neighbour; as the case may be. Yet, in actual fact,, there may be found no detriment or there may be plenty in another sale involving neither a co-sharer nor an immediate neighbour none of which would affect the rule. Here hikmat for the law is disruption but the illat lies in the special linkages with the seller in the way of co-ownership or neighbourhood. Now, take the case of a common and day to day sale and purchase transaction. The seller sells his merchandise because such is the source of his livelihood and the buyer buys because he is in need of the commodity, which is the subject-matter of the transaction. The objectives, aforementioned, may furnish the hikmat of the transaction. Yet, in a given case the seller, being well-provided for, may not require the transaction for maintaining himself or, likewise, his buyer, being well-stocked of the commodity may, actually, be in no need thereof. The illat for the deal, therefore, may be no more than the plain offer and acceptance, manifestation of which transfers the title of the goods sold from the vendor to the vendee. As correctly identified by Hafiz Abdur Rehman Madani, during the course of the hearing, for a consideration to be treated as Mat behind a particular thing, deed or transaction it is essential that such, contextually, remains ever present in all things, deeds or transactions of the genus. That may not be the position of Zulm in relation to ribe, because some Ribawi transactions could be free of Zulm, at least, in the conventional sense. It is difficult, however, to locate bank and Government interest beyond the pale of common-place Zulm. At times, recourse is taken to the command in 111:130, condemning the devouring of Riba, doubled and redoubled and argued that it is only this kind of Riba, extortionist, in effect and substance, which is prohibited. Even if the objection is honestly taken, it still lacks in “good faith” because the message is to be read as a whole and in II:279 (ibid.) Allah has expressly permitted only the realization of the capitals loaned and categorically prohibited all excess thereon. Indeed, analysed closely, every interest bearing loan has the potential of doubling and redoubling. Regarding the simple and compound interest encountered, generally, in public advances or loans Shahid Hasan Siddiqui in his “Islamic Banking” analyses:

 

 

 

“It is important to appreciate that a loan of $100 at 10% per annum simple interest in 100 years comes to $ 1100 only, whereas at compound rate of interest, it comes to $1.378 million. This reflects the magnitude of the problems being faced by developing and underdeveloped countries of the world, which depend on foreign long-term loans and are unable to pay the instalments of interest and principal amounts, due to poor economic conditions.”

 

 

 

As distinguished from Zulm qua Riba, the potential to intoxicate is the illat behind the prohibition of al-khamr (wine prepared from grapes) and, apparently, for that reason the prohibition has been read into all intoxicants. Accordingly, as to the un-acceptability of Riba, it is really the Masaleh-e-Shari’ah or Maqasid al-Sharf’ah (the expedients or objectives of Shari’ah), that equal its hikmat or raison d’etre. Those, in turn, hit the peculiar offer and acceptance in a Ribawi transaction, the peculiarity of the contract emerging from the hikmat, constituting the Mat, relative to the  targeted dealing. Some-times, however, hikmat also can become Mat, as possibly in the above case of khamr.

 

 

 

18. The question, therefore, that must be grappled with is as to what are the Maqasid al-Shariah or Masaleh-e-Shariah, retraction whereof throws up such peculiar transactions, which, in themselves, constitute the Mat or cause for the Islamic prohibition of Riba. For one thing, Maqasid alShariah are a constant and pivot around public welfare. They do not change, either with time or with location. No better description thereof can be cited than that of Al Ghazali, who says:

 

 

 

“The objective of the Shari’ah is to promote the welfare of the people, which lies in safeguarding their faith, their lives, their intellect, their posterity and their wealth. Whatever ensures the protection of those five serves public interest and is desirable.”

 

 

 

M. Umer Chapra, in his notable work, “Islam and the Economic Challenge”, rightly draws attention to the comparative importance ascribed by the Imam to the elements of faith and wealth, the former having been cited as the first and foremost and the latter, the last factor for ensuring welfare. Such is and remains the basis of Islamic thought and teachings, the spirit being accorded pre-eminence and matter relegating to the bottom, signifying the ordained priority of mind over body. What, therefore, applies to all Islamic concepts and institutions applies equally, if not more, to the principle of Riba.

 

 

 

19. We have Already noticed the Qur’anic declaration that there is naught for man except that for which he strives: (39:53). Relative to this very aspect two of the Ahadees from the Holy Prophet (p.b.u.h.) may also be quoted:--- ‘

 

 

 

“To strive for legitimate earnings is an obligation only next, after the ordained prayers/religious duties. “

 

 

 

“There is no better livelihood than that derived by employing one’s own hands.”

 

 

 

Clearly, Riba or interest on money or other things loaned does not involve any effort on the part of the lender and the very commodity loaned is returned together with the agreed addition solely against the time factor, which intervenes between delivery of the thing lent and the return thereof. It is elementary that allocated time is all that living beings have and yet time has little value unless productively utilized. Store anything of value, e.g., gold or silver, for decades on end, nothing would grow out of either. Hence the epitaph of Aristotle that money is “barren” or the condemnation of Gibbon: “The usurer, who derived from the interest of money a silent and ignominious profit” Dr. Waqar Masood Khan, Vice-President, International Islamic University, Islamabad, who appeared before us, correctly contrasted Riba with Bai (sale), saying that all wealth is generated through exchange of dissimilar things, the only exception being Riba, which represents Bai of money against money i.e., an exchange in the same commodity, the sole difference being moneys at two different time periods, present against the future. Neither the Qur’an nor the Sunnah nor the Fuqaha have accepted moneys of different time-frames as dissimilar articles, legitimately allowing any premium in their exchange. What is more, in such an exchange of similars, no risk to the lender is involved, no attention is riveted to the pecuniary state of the borrower and no weight attaches for the general good or well being of the society as a whole. Is all this just, fair and equitable? It will be instructive here to recall that Nassau Senior addressed the question whether profit and interest were paid for anything and whether there was an identifiable product of society that would not emerge if this form of income was not paid. He identified such function and called it abstinence. Karl Marx denied the existence of any such function and argued that the social product must be attributed entirely to acts of labour, capital being merely the embodied labour of the past. In the opinion of Professor Mehmood Ahmad (see his pioneering work, Man and Money, published by the Institute of Islamic Culture, Lahore), who has, upon sound reasoning, exploded these theories, savings would be generated yet, and capital formation  would take place still, even when the so-called incentive of interest stands removed. Now, capital is a word of many meanings. They all imply that capital is a stock by contrast with income, which is a flow. In the modern view, it is capital and income rather than capital and interest that are the related concepts. Even so, the foregoing theorization constitutes mere semantics. Capital, quite arguably, is certificate/store of applied labour and its in-put (statedly often equaling abstinence), if and when worked upon, may end up in generating income, which, in turn, could either be profit or interest. It is another matter though that interest may accrue yet even if capital, parted with, is not employed gainfully at all. Profit, these days, is defined broadly to signify “gain resulting from the employment of capital”. This, obviously, also embraces interest within its fold. Profit, in its original signification, however, was a variable or uncertain positive return from capital invested (set apart, = purported abstinence) in an agricultural, industrial, commercial or other purposeful activity, where the contributor of capital stood to enjoy or share the gain as also to suffer or partake in the loss, if any, in the enterprise. The Islamic version of profit is still the same. Correspondingly, but without distinction, interest has been and is nothing but a definite return on the unit of a given store of value (money or goods), belonging to the lender against no more than parting with the same (supposed abstinence) for a stipulated quantum of time without the least effort forthcoming on the part of the lender and usually no anticipated risk attaching either-to the thing lent or to the projected return thereon. Manifestly, such transactions, where idle money attracts and generates more idle money, lead to inequities in society, making the rich richer and the poor poorer. That which applies to individuals applies equally to their institutions, big and small, local, national or international. It is, thus, that the inequities and injustices so generated have transcended geographical frontiers and engulfed nations, states, communities alike. Two inter-connected aspects may be mentioned here. One, as adverted to earlier, Islam discourages contracting of loans themselves because of the potential dangers inherent therein. Qarood-e-Hasana apart, Caliph Ali (r.a.a.) is reported to have equated debt with slavery and its discharge with emancipation. Second, domestic loans bad as they are, at the international level wealthy nations first habituate poor ones of the so-called aid and then of gratuitous loans, finally coming down to usurious disbursals, leading invariably to a degenerative stage, where, what to say of the ability to repay the loans, the poor debtor countries cannot even service them, compelling the victims to contract more and more loans and survive only to pay---a status even worse than slavery, as predicted by the last of the four pious Caliphs. This is the worst form of neo-colonialism yet known to man.