P L d 2000 s c 225 (Riba prohibition stayed)
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(tttt) Islamic Jurisprudence--- ---Financing in Islam ---Murabahah transaction---Islamic Banking System is not restricted to profit and loss sharing ---Musharakah is though the ideal mode of financing that fully conforms, not only to the principles of Islamic jurisprudence. but also to the basic philosophy of an Islamic economy, yet there is a variety of instruments that may be used on the assets side of the Bank, like Murabahah, leasing, Salam, Istisna etc.---Some of these models :ire less risky and may be adopted where Musharakah has abnormal risks or is not applicable to a particular transaction---Principles illustrated.
(uuuu) Islamic Jurisprudence --- ----Riba---Financing in Islam---Domestic loan obtained by Government--Suggestions for elimination of interest---All the borrowings of the Government from domestic sources should be designed on the basis of project-related financing, which will, in addition to being compatible with Shariah, help curbing the corruption arid misappropriation of borrowed Funds---Interest cannot be taken as a necessity to continue for an indefinite period, however, area of domestic loan may justify some more time for transformation than the private banking transactions will require.
(vvvv) Islamic Jurisprudence- ---- Financing in Islam---Foreign loans obtained by Government--Elimination of interest---Doctrine of necessity, application of---Scope--Admitted difficulties in resolving the problem of foreign liabilities cannot be taken as an excuse for exempting-them from the prohibition for good or for an indefinite period on the basis of necessity---Doctrine of necessity, therefore, will be applicable to a limited extent as it cannot be denied that it will take more time than the domestic transactions---Principles.
The Debt Boomerang, How the Third World Harms us All by Susan George, Pluto Press, London, 1992; Faith and Credit, The World Bank’s Secular Empire by Susan George, Fabrizio Sabelli, Penguin, 1998, p.141: When Corporations Rule the Earth by David Korten, 1993 as quoted by Michael Rowbtham: The Grip of Death by Michael Rowbotham, pp. 135, 137: The Debt Trap by Cheryl Payer, Monthly Review Press (1974) quoted by Rowbotham, Op Cit, p.137; No. IFC/P-887, dated December 22, 1987, as quoted by the Report of the Prime Minister’s Committee on Self-Reliance, headed by Prof. Khurshid Ahmad, Islamabad, 1991 ref. (wwww) Islamic Jurisprudence---
---- Riba---Concept---Any additional amount over the principal in a contract of loan or debt is the Riba prohibited by the Holy Qur’an termed as Riba-al. Qur’an. (xxxx) Islamic Jurisprudence---
---- Riba---Riba-al-Sunnah---Categories enumerated. The Holy Prophet (p.b.u.h.) has also termed the following transactions as Riba:
(i) A transaction of money for money of the same denomination where the quantity on both sides is not equal, either in a spot transaction based on deferred payment. , (ii) A barter transaction between two weighable or measurable commodities of the same kind, where the quantity on both sides is not equal, or where the delivery from any one side is deferred.
(iii) A barter transaction between two different weighable or measurable commodities where delivery from one side deferred. These three categories are termed t~ the Islamic Jurisprudence as Riba-al-Sunnah because their prohibition is established by the Sunnah of the Holy Prophet (p.b.u.h.). Alongwith the Riba-al-Qur’an, these are four types of transactions termed as ‘Riba’ in the literature of Islamic Fiqh based on the Holy Qur’an and Sunnah.
Out of these four transactions, the last two ones. mentioned above -is (ii) and (iii) have not much relevance to the context of modern business, the barter business being a rare phenomenon in the modern trade. However, the Riba-al-Qur’an, and transaction of money mentioned above as (1) are more relevant to modern business. (yyyy) Islamic Jurisprudence---
---- Riba---Scope---No difference exists between different types of loans so far as the prohibition of Riba is concerned---Fact that additional amount stipulated over the principal loan or debt is small or large does not make any difference for the purpose of prohibition of Riba---All the prevailing forms of interest, either in the banking transactions or in private transactions fall within the definition of “Riba”---Any interest stipulated in the Government borrowings, acquired from domestic or foreign sources, is Riba and clearly prohibited by the Holy Qur’an---Financial system, based on interest being against the Injunctions of Islam as laid down by the Holy Qur’an and Sunnah, has to be subjected to radical changes to bring the same in conformity with Shariat---Modes of financing as developed by Islamic Scholars. Economists and Bankers can serve as a better alternative to interest. There is no difference between different types of loans so far as the prohibition of Riba is concerned. It also does not make any difference whether the additional amount stipulated over the principal loan or debt is small or large, Therefore all the prevailing forms of interest either in the banking transactions or in private transactions do fall within the definition of ‘Riba’. Similarly, any interest stipulated in the Government borrowings, acquired from domestic or foreign sources is Riba and clearly prohibited by the Holy Qur’an.
The present financial system based on interest, is against the Injunctions of Islam as laid down by the Holy Qur’an and Sunnah, and in order to bring it in conformity with Shari’ah, it has to be subjected to radical changes. A variety of Islamic modes of financing has been developed by Islamic Scholars, economists and bankers that may serve as a better alternative to interest. These modes are being practised by about 200 Islamic financial institutions in different parts of the world.
These alternatives being available, the transactions of interest cannot be allowed to continue for ever on the basis of necessity Many experienced bankers are unanimous on the point that Islamic modes of financing are not only feasible, but are also more beneficial to bring about a balanced and stable economy, for which they have produced detailed proof based on facts and figures. Some outstanding economists have supported this view in their detailed discourses. There is ample evidence to prove that quite a substantial ground work has been done to suggest the strategy for the transformation of the existing financial system to the Islamic one and the present interest-based system cannot be retained for an indefinite period on the basis of necessity. However, the transformation may take some time which can be allowed on that basis.
Dr. M. Aslam Khaki in person (in C.Sh. Appeal No. 1 of 1992). Hafiz S.A.Rehman. Senior Advocate Supreme Court and Ejaz Muhammad Khan. Advocate-on-Record for ADBP.
Syed Riazul Hasan Gilani, Advocate Supreme Court and Kh. Mushtaq Ahmad Advocate-on-Record for ABL. Noorul Arfin. Advocate Supreme Court, Mansoorul Arfin, Advocate Supreme Court and Abdul Saeed Khan Ghauri. Advocate-on-Record for UBL.
Khalid M. Ishaque, Senior Advocate Supreme Court for MCB, National Bank of Pakistan and State Life Insurance Corporation of Pakistan. Abu Bakar Chundrigar. Advocate Supreme Court and M.S. Ghauri, Advocate-on-Record for HRL.
Ch. Muhammad Farooq, Attorney-General for Pakistan (on notice, but slid not argue); Maulvi Anwarul Haq. Deputy Attorney-General (at initial stage). Syed Riazul Hassan Gilani, Advocate Supreme Court (appeared froth 213-6-1999 to 2-7-1999 and thereafter did not appear despite notice to him); Ch: Zafar Iqbal, Advocate Supreme Court (appeared on behalf of the Federal Government but not argued), Ch. Akhtar Ali, Advocate-on-Record and Mehr Khan Malik ; Advocate-on-Record for Federation of Pakistan. Ejaz Muhammad Khan, Additional Advocate-General and M.A. Qayyum Mazhar, Advocate-on-Record for the State/N.-W.F.P. Government.
Altaf Elahi Sheikh, Additional Advocate-General, Punjab and Rao Muhammad Yousaf Khan, Advocate-on-Record for the State/Punjab Government. Muhammad Iqbal Vehniwal, Advocate Supreme Court and Ch. Mehdi Khan Mehtab, Advocate-on-Record for Nawab Industries etc.
Respondent No. 1 in person (in S.A, No. 1 of 1992). Muhammad Ismail Qureshy in person with Syed Abul Aasim Jaferi, Advocate-on-Record.
Syed Afzal Haider, Advocate Supreme Court (in S. As. Nos.96 to 102 of 1992,). Dr. Waqar Masood Khan. Director-General (Planning). International Islamic University’ Islamabad. Dr. Syed Muhammad Tapir. International Islamic University, Abdul Jallbar Khan. firmer President, National Bank of Pakistan. Dr. Umar Chapra. Ibrahim Sidat, Dr. S. Muhammad Hussain, Dr. Irshad zaman, (‘bartered Accountants/Economists, Maqbool Soomroo, Dr. Shahid Hussain, Abdul Wadood Khan, ‘Hafiz Abdur Rehman Madni, Chairman Islamic Research Council, Dr. Aslam Khaki, Prof. Khurshid Ahmad. H.U Beg (Retired Finance Secretary, Government of Pakistan), Prof. Syed Nawaz Haider Naqvi. Muhammad Yahya (Deputy Secretary-General. Mutahida Ulema Council of Pakistan Maulana Gauhar Rehman, Iqbal Khan (Foreign Expert Managing Director Global Islam Finance: HSBC Investment Bank Plc. United Kingdom). Dr. Ahmad Muhammad Ali (President, Islamic Development Bank, Jeddah) alongwith his delegation namely, Muad Ali Umar. (Vice-Presedent. I.D.B.). Dr. M. Alfatah (Legal Adviser I.D.B.). D.M. Qureshi (Adviser Treasury. I.D.B.), Muhaad Al-Jehri (Director, I.D.B.), Dr. Hussain Hassan (Head of Shariah Board, Dubai Islamic Bank) and Adrian A1 Bahr, Managing Director and Chairman, International Investment Company, Kuwait), Ismail Qureshi, Advocate Supreme Court. Faheem Ahmad (Marketing Coordinator, Financial Research and Analysis, Credit Rating Company Ltd., Pakistan, Karachi) and Maulana Abdul Sattar Niazi: Experts on Court’s Notice.
Dates of hearing: 22nd to 26th February; 1st to 5th, 8th, 9th (Islamabad), 17th to 19th, 22nd to 26th (Karachi) March: 3rd to 7th, 17th to 21st, 24th to 28th, May; 14th to 18th, 28th, 29th, June; 1st, 2nd: 5th and 6th, July, 1999. ORDER OF THE COURT
For the detailed reasons recorded in the three separate, judgments authored by Khalil-ur-Rehman Khan, J., Wajihuddin Ahmed, J. and Muhammad Taqi Usmani, J., it is hereby held that any amount, big or small, over the principal, in a contract of loan or debt is “Riba” prohibited by the Holy Qur’an, regardless of whether the loan is taken for the purpose of consumption or for some production activity. The Holy Prophet (p.b.u.h.) has also termed the following transactions as Riba: (i) A transaction of money for money of the same denomination where the quality on both sides is not equal, either in a spot transaction or in a transaction based on deferred payment.
(ii) A barter transaction between two weighable or measurable commodities of the same kind, where the quantity on both sides is not equal, or where the delivery from any one side is deferred. (iii) A barter transaction between two different weighable or measurable commodities where delivery from one side is deferred.
These three categories are termed in the Islamic jurisprudence as Riba-al-Sunnah because their prohibition is established by the Sunnah of the Holy Prophet (p.b.u.h.). Alongwith the Riba-al-Qur’an, these are four types of transactions termed ac ‘Riba’ in the literature of Islamic Fiqh based on the Holy Qur’an and Sunnah. Out of these four transactions, the last two ones, mentioned above as (ii) and (iii) have not much relevance to the context of modern business, the barter business being a rare phenomenon in the modern trade. However, the Riba-al-Qur’an and transaction of money mentioned above as (i) are more relevant to modern business.
In the light of the detailed discussion above, there is no difference between types of loan, solar as the prohibition of Riba is concerned. It also does not make any difference whether the additional amount stipulated over the principal loan or debt is small or large. It is, therefore, held that all the prevailing forms of interest, either in the banking transactions or in private transactions do fall within the definition of Riba. Similarly, any interest stipulated in the Government borrowings, acquired from domestic or foreign sources, is Riba and clearly prohibited by the Holy Qur’an. The present financial system, based on interest, is against the Injunctions of Islam as laid down by the Holy Qur’an and Sunnah, and in order to bring it in conformity with Shariah, it has to be subjected to radical changes.
A variety of Islamic modes of financing has been developed by Islamic scholars, economists and bankers that may serve as a better alternative to interest. These modes are being practised by about 200 Islamic financial institutions in different parts of the world. These alternatives being available, the transactions of interest cannot be allowed to continue for ever on the basis of necessity. Many experienced bankers, to name a few, such as Dr.Ahmad Muhammad Ali, President, Islamic Development Bank, Jeddah, Mr.Adnan al-Bahr, Chief Executive International Investor, Kuwait, Mr.Iqbal Ahmad Khan, Chief Executive Islamic emit of the Hong Kong Shanghai Banking Corporation (HSBC) based in London from outside Pakistan and Mr.Abdul Jabbar Khan, the former President of the National Bank of Pakistan, Mr.Shahid Hasan Siddiqi and Mr.Maqbool Ahmad Khan from Pakistan are the bankers who have long experience of banking in different parts of the world, appeared before us. All of them were unanimous on the point that Islamic modes of financing are not only feasible, but are also more beneficial to bring about a balanced and stable economy and in support of this view material containing facts and figures was produced Some outstanding economists like Dr.Umar Chapra, the economic advisor Saudi Monetary Agency, Dr.Arshad Zaman, the former Chief Economist of the Ministry of Finance, Government of Pakistan, Prof- Khurshid Ahmad, Dr. Nawab Naqvi, and Dr. Waqar Masood Khan also supported this view in their discourses.
We have also gone through the detailed reports of the Council of Islamic Ideology submitted in 1980, the Report of the Commission for Islamization of Economy constituted in 1991, and the Final Report of the same. Commission, reconstituted in 1997 which was submitted in August, 1997. We have also perused the, report of the Prime Minister’s Committee on self-reliance submitted to the Government in April, 1991. There is, thus, ample evidence to prove that quite a substantial ground work has been done to suggest strategy for the transformation of the existing financial system to the Islamic one, and the present interest based system need not be retained for an indefinite period on the basis of necessity. However, the transformation may take some time which can be allowed on that basis.
We now proceed to examine the provisions of the statutes in the context of the reasoning given in the impugned judgment. 1. The Interest Act, 1839
This enactment confers power on the Court to allow interest to the creditor, upon all debts or ascertained sum payable which the Court gets recovered. The Federal Shariat Court has declared the Act repugnant to Injunctions of Islam as even the Council of Islamic Ideology had recommended its repeal in its Session held on 11th November, 1981. The question of allowing interest by the Court while granting decree has been exhaustively dealt with by the Negotiable Instruments Act, 1881 and the Civil Procedure Code, 1908 as amended from time to time and as such there is no need to retain the Interest Act, 1839 on the Statute Book, so the same for this reason alone needs to be repealed. Even otherwise an undefined, naked and generalized power to allow interest on a debt is repugnant to Injunctions of Islam for the reasons already discussed above. We would, therefore, hold that Interest Act, 1839 being repugnant to Injunctions of Islam was rightly directed to be repealed.
II. The Government Savings Bank Act, 1873 This Act provides for nomination and payment of deposit on death of the depositor and such payment to be a full discharge- However, it provides for the savings of rights of executor and creditor etc.
Section 10, as challenged, reads as under:--- “Any deposit made by, or on behalf of, any minor may be paid to him personally if he made the deposit, or to his guardian for his use if the deposit was made by any person other than the minor, together with the interest accrued thereon.”
The provision, on account of the use of the word “interest” which is payable alongwith the amount of deposit was held as repugnant to Injunctions of Islam. Learned Judges of the Federal Shariat Court did not examine the nature of the amount, which is to accrue to the deposit made. If the accrual is caused through permissible mode of investment, obviously no objection can be taken. The emphasis should be on adoption of Islamic modes of finance and conduct of business following Islamic principles. We would, therefore, recommend that the word `interest’ appearing in section 10 of the Act is repugnant to the Injunctions of Islam and shall be substituted with the words ‘Shariah compliant return’. III. Negotiable Instruments Act, 1881
The discussion on various provisions of the Negotiable Instruments Act, 1881 is contained in paragraphs 242 to 278 of the impugned judgment. Sections 79 and 80 of this Act, as amended, adopted the concept of “markup” system, which system as in vogue has been held to be repugnant to the Injunctions of Islam and the direction made is that the words “mark-up” be deleted from the provisions of sections 79 and 80 of the Act. The opinion of one of us (Mr. Justice Maulana Muhammad Taqi Usmani) expressed in a booklet on the “mark-up” system as is in vogue and is being practised in the banks and the effect of it is that it obviously amounts to Riba (interest prohibited in Islam, has been referred to. This opinion as quoted reads as under:----- So, what has been pointed out is that the practice adopted in the garb of “mark-up” is violative of the conditionalities attaching to Bai-Muajal as the permissibility of such a transaction is dependent on fulfilment of the above conditions. The other thing pointed. out is that change of heart and commitment to follow the Qur’anic Injunctions in letter and spirit is not only needed but is necessary for enforcement and implementation of the Islamic economic system. Neither lip service nor mere use of nomenclature will bring the desired change.
It is apparent that errors of omission and commission which crept into the PLS operation have been the cause for suggesting removal of “Bai’ Mu’ajjal” from the list of permissible methods following the principle that anything leading to that which is prohibited stands itself prohibited. It is therefore, argued that anything which leads to “Ribs” must be foreclosed and disallowed. Jurists, it will be noted, have prescribed following conditions for the validity of Murabaha/Bai’ Mn’ajjal:--- (i) The time of payment of consideration must be known; and Institution
Total
Finance
(US$MN) MURABAHA MUSHARAKA MUDHARABA LEASING OTHER
Al Baraka Islamic Bank for investment 119 82 7 6 2 3
Bahram Islamic Bank 320
93 5 2 0 1
945 69 9 6 11 5
Bangladesh Islamic Bank Ltd 309
52 4 17 14 14
1300 88 1 6 0 6
Fasial Islamic Bank Egypr 1364
73 13 11 3 0
574 62 4 0 5 30
Kuwait Finance House 2454
45 20 11 1 23
580 66 1 1 7 24
Qatar Islamic Bank 598
73 1 13 5 8
8563
Weighted Average 66 10 8 4 13
(ii) the seller has to possess the commodity involved before it is delivered to the purchaser. The Council of Islamic Ideology in its report on the Elimination of Interest had approved the use of the mark-up system, Bai’ Mu’ajjal, to a limited extent in unavoidable cases in the process of switching over to an interest-free system and warned against its wide or indiscriminate use in view of the danger attached to it viz. of opening a backdoor for dealings on the basis of interest. It is unfortunate that this warning was not properly Heeded and the system of mark-up adopted in January, 1981 did not conform to the standard stipulations of Bai’ Mur’ajjal. It is, however, pertinent to note that Bai’. Mu’ajjal/Murabaha is one of the most popularly used modes of financing used by the Islamic Banks in the world. The following table demonstrates that Murabaha is the most widely used mode of financing by the Islamic Banks. The weighted average of the share of that mode in total financing provided by Islamic Banks, as per data provided to the Bench by the Islamic Development Bank amounts to 66 per centum. A Table showing Distribution of Financing provided by Islamic Banks among the Various Modes Average during 1994-1996, reads as under:---
Table Missed 308 Murabaha mode of Finance or the “mark-up” system with the conditions attached thereto is permissible mode of Islamic finance and this mode cannot, therefore, be held to he repugnant to the Injunctions of Islam if the conditions prescribed are not being practised by some of the parties. It is to be noted that such violations occurred as there was no monitoring system in existence to check such errors of omission and commission and H violations. In the system proposed to be adopted with Shariah Board in existence in the State Bank of Pakistan as well as in the financial institutions themselves, such violations as and when noticed shall be pointed out and eradicated. Moreover, such errors will be eliminated where the system as a whole will be geared up to enforce Islamic Laws with commitment and dedication. The adoption of the mark-up system within the limits prescribed appears m he the need of the economic system in the transitional period and till the time more and adequate number of Shariah-compliant financing modes are developed In the light of the foregoing, let us examine the provisions of Negotiable Instruments Act, 1881 (hereinafter referred to as Act, 1881). , Yüklə 2,28 Mb. Dostları ilə paylaş:
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