Mufti Taqi Saheb’s Serious Error on “Islamic” Banking
(Maulana A S Desai)
Principles of Business
(Maulana Ashraf Ali Thanwi)
FATWASQ. Is the concept of Islamic Banking tenable or untenable? Is it correct to interpret your severe criticism of Islamic banks to mean that the very concept of a banking system is unacceptable to Islam? Is there no room for banks in an Islamic economic system? It is obvious that due to the complexity of the financial systems of these times, banks are playing a very important role. Is it not possible to evolve a banking system which would fully comply with the Shariah?
We are not saying that it is haraam to open shops and banks. We are only saying that the products such as carrion and liquor sold in the shops, and the riba contracts of the banks are haraam. It is a deficient intelligence which gives to our criticism the construction which you have fabricated. When we say that carrion is haraam, it is stupidity that will infer that we are saying meat is haraam. Similarly when we say that Albaraka Bank for example, deals in riba and its products are haraam, it is gross ignorance to infer that we are negating the banking structure itself. The need for banks in the complex financial ramifications of this age is not denied. Banks do play a pivotal role. But the problem is that Muslims who have initiated socalled ‘Islamic’ banks are western capitalists at heart. Islamic and Muslim societal constraints prevent them from brazenly displaying their true capitalist/riba colours. To overcome these constraints, the Muslim riba capitalists camouflage their riba products with Islamic terminology.
Even a cursory study of the plethora of forms with which they bind borrowers of money will convince a discerning Muslim that every product of these banks is either pure riba or contaminated with riba. ‘Islamic’ banks in our age are essentially and primarily lenders of money. There is really no difference between conventional kuffaar banks and these so-called ‘Islamic’ banks. They all are of the same ilk – riba banks. Islam has its own unique and elaborate economic system which caters for every age and contingency. It is a divine system which is devoid of the exploitation, injustice and ruthlessness which characterize all man-made economic systems. The Shariah’s economic system which has much room for a banking system is heavily impregnated with the Qur’aanic moral code. No facet of the Muslim’s life, even economics, is divorced from Islamic morality. The Sunnah moral code is inextricably intertwined with every mundane department of life. Since man is a being consisting of a physical body and celestial soul, both the mundane and the moral/spiritual elements of Islam will regulate a truly Islamic banking system.
Mere terminology and religious clichés do not transform a haraam system into a halaal order. A transaction or a concept or a venture will be Islamic only if its haqeeqat (reality/nature) is Islamic in the proper meaning of the Qur’aan and Sunnah. To the Muslim capitalists whose understanding has been damaged by western education and influences, the Shariah’s economic precepts as expounded in the kutub of the Shariah are unworkable in this age, and a viable banking system fully compliant with these ‘orthodox’ precepts is untenable, and just cannot function. In fact, they do not believe in the total workability and application of even the Islamic moral code in this era. Kufr is latent in their hearts, hence we see the perennial effort of bending and manipulating the Shariah to conform to the principles and mechanics of capitalism. While they retain Islamic names for their products, the Islamic nature of the transactions is expunged. Their products are nothing but capitalist wine in bottles on which Islamic labels have been affixed like the halaal logos which the carrion halaalizers affix to the carrion products of the kuffaar entrepreneurs.
The finality of Nubuwwat – that no Nabi with a new Law will be coming – is an emphatic declaration of the workability of every Shar’i concept until the end of earthly time. If it is claimed or implied that any ‘orthodox’ concept or system expounded by the early Fuqaha is untenable or unworkable in this age of technology, it will be tantamount to rejecting the finality of Nubuwwat. It will imply the need for a new Nabi with a new Shariah to cater for the exigencies of the times. In fact this is precisely the implication of the call for the reinterpretation of the Shariah. All devices and stratagems whose objective it is to overhaul the Shariah are plots of kufr. Capitalist ‘Islamic’ banks, Muslim Personal Law, Muslim Marriages Bill, Interfaith and similar other machinations are all cogs in the plot of kufr to destroy Islam.
A true Islamic bank will not be a parasite leeching on the economic fibre of the community. It will not exanguinate the community as the conventional riba banks do. An Islamic bank will not be a lender of money in a system where a piece of money is expected to beget another peace of money without active involvement in trade and commerce and without participating in the risks of trade in exactly the same way as the trader. The owners of a genuine Islamic bank will have to roll up their sleeves and get out of their offices and shed all the fat which their bellies have accumulated as a consequence of devouring riba. They will have to become genuine partners in the trade they undertake. A true Islamic bank will not engage in transactions involving non-existent assets –assets which they do not own – as is the case presently in all their so -called muraabaha, mudhaarabah, mushaarakah and ijaarah devices.
There will be no riba – riba which features in a plethora of nomenclature such as finance charges, levies, administration costs and Jahannam costs. The Qur’aanic code will regulate Qardh (loans given) and the relationship between creditors and debtors. The tricks and stunts of the myriad of capitalist conditions and stipulations which clutter and disfigure application forms will not form part of Islamic deals. Just glance through the formidable list of haraam business charges and fees of Al-Baraka Bank and you will wonder at the satanic ingenuity which prepared the multitude of riba charges in the name of Islam. A banking structure in this age can function smoothly, lucratively and successfully while subscribing 100% to the rules and regulations which the Shariah appends to the variety of financial products.
Besides the actual financial structure and dealings which must comply 100% with the Shariah, the bank will not be Islamic and may not be supported by the Muslim community if it does not subscribe to and actively practise Islamic morality. Islam is an elaborate way of life from which not a single command of Allah Ta’ala may be expunged. In addition to these so-called ‘Islamic’ banks being riba banks, they are also zina banks. Just as their trade and commerce dealings are structured on capitalist principles in the light of kufr concepts, so too is their conduct and character modelled and moulded by western zina norms. Free intermingling of sexes is actively promoted. Semi nude female receptionists, typists and secretaries in exact kuffaar style bedevil the bank’s premises. Even molvi employees of these banks freely interact to the degree of zina with these lewd females. They behave as if all the Shariah’s laws of Hijaab are abrogated or not applicable to this zina age. In total and haraam emulation of every zina act and style of their kuffaar counterparts, the ‘Islamic’ banks employ, manipulate and abuse the lewd women in their clutches. The ‘Islamic’ bank sends its scantily dressed female employees unaccompanied by any mahram on ‘educational’ trips to other cities. Yet, Rasulullah (sallallahu alayhi wasallam) said: “It is not lawful for a woman who believes in Allah and the Last day to undertake a journey without a close relative (mahram male).”
These so-called ‘Islamic’ banks are in violation of the Shariah not only in their financial affairs. They are in violent conflict with the Qur’aan and Sunnah in almost every facet of life, especially with regard to females. Even if we assume that a bank’s economic structure is 100% compliant with the Shariah, it will not be permissible for Muslims to deal with the bank if its system of conduct is bedevilled with violation of Hijaab. Filthy immoral secrets of moral turpitude are perpetrated inside the vaults of these so-called Islamic banks. All departments of the bank have to conform fully with the Shariah. In the absence of such conformity, it is a massive deception to describe a Muslim owned bank ‘Islamic’. Our duty in the light of Amr Bil Ma’roof Nahy anil Munkar is to criticize the haraam which the banks shamelessly and flagrantly perpetrate.
Q. Is HBZ Bank which is a subsidiary of Habib Bank an Islamic bank? Are its transactions halaal? In its brochure, HBZ Bank speaks of Islamic Banking Products which it advertises as ‘Shariah Compliant’ . Assuring the Muslim community of its halaal financial products, the Bank states in it brochure: “Our Islamic Banking Division is under the guidance of our Shariah Advisor. All documents have been reviewed and certified by the Darul Uloom Zakariyya as being in compliance with Shariah laws and meet the requirement of Islamic finance.
A. ‘Shariah Compliant’ is a new expletive which the riba-hungry Muslim capitalists have coined to dupe the ignorant Muslim public. The fundamental principle which Muslims should always remember in order to save them from the filth and curse of riba is that there is no such creature as ‘shariah compliant’. All capitalist banks, be they so-called ‘Islamic’ banks are conventional riba banks which mislead stupid Muslims with high and holy sounding Islamic terminology such as muraabaha, mudhaaraba, mushaaraka, etc. All their dealings are heavily impregnated with riba, insurance and uqood-e- faasidah/baatilah (corrupt and invalid transactions). While so-called ‘Islamic’ banks such as Albarakah, are at pains to conceal their riba dealings and deny involvement in riba, HBZ shamelessly and flagrantly indulges in riba. It does not conceal its flagrant interest transactions. If a Muslim is constrained to operate a banking account for conducting his day to day buisiness, it is infinitely better to open an account in a non-Muslim conventional bank rather than in a bank such as HBZ.
Darul Uloom Zakariyyah has rendered the Ummah one of the greatest acts of disservice by halaalizing this riba bank on which the Qur’aan declares war. Allah Ta’ala has, in the Qur’aan Majeed, issued an ultimatum of war against HBZ and all institutions of riba. It truly boggles the Islamic mind, nauseates the Islamic conscience and jars one’s Imaan to read in the brochure that an institution such as Darul Uloom Zakariyyah which is supposed to uphold the Shariah and discharge the obligation of Amr Bil ma’roof, sanctioning and halaalizing riba. In so doing, it has degenerated to a sub-SANHA-MJC level. Halaalizing a riba institution is worse than halaalizing a haraam chicken-carrion producing plant. We call on the Darul Uloom to withdraw its halaal certificate from HBZ Bank which is a flagrant institution of riba. It is Waajib for Muslims to discontinue operating accounts of any kind, even current account, in HBZ Bank. The lesser of the evils when compelled to operate a banking account, is a non-Muslim conventional bank. The function of the Ulama is never to promote the financial interests of entrepreneurs especially such institutions which are soiled with riba and which reek of the stench of haraam.
Q. I attend auction sales to buy goods to resell for a profit. I acquire a loan from friends and give them a share of the profit. I have been told that the way I am doing it is haraam. Please explain a method whereby my dealings will be in compliance with the Shariah.
A. What you are doing presently is haraam. There are two lawful methods open for you. One way is to enter into a partnership with the investor. Give him a share of the profit. This share has to be pre-arranged and stipulated, e.g. 5%, 10%, 20% or whatever percentage is mutually agreed on. Assuming you are going to buy a parcel of goods for R25,000 and you expect to make R5000 profit.. Your intention is to give the investor R1000. Arrange with him at the time of obtaining the money that you will give him 20% of the profit. After you have sold the parcel, the investor will get 20% whether your make R5000, R10,000 or just R1,000. In all cases you have to give him 20% regardless of howmuch profit you made. And, if there is a loss, then the investor will have to sustain 20% of the loss.
The second method is to buy the parcel for the investor. You will be his agent to purchase. In this method, the investor himself or any other person appointed by him should accompany you to the auction, or he may arrive after you have purchased the parcel. After you have purchased the parcel, say for example, R20,000, you will no longer be the agent of the investor since you have already performed the duty for which you were appointed the agent. The investor’s man will arrive and take possession of the goods. On the instruction of his principal, the investor, he (the agent or the investor himself) sells you the parcel for any mutually agreed price. The investor can add his profit to the purchase price and sell it to you. There is no profitsharing in this method. You only have to pay him the price for which he sold the parcel to you. If the goods are pointed out to the investor or his agent and there is no obstacle to him taking physical possession of the goods, the possession will be valid even if he does not physically uplift the goods. In this method, before the investor or his agent sells the parcel to you, ensure that you have already paid for the goods. The second sale between yourself and the investor will be valid only after the goods have been paid for.
Q. The Majlis has always held the view that it is not permissible to stipulate a salary for a partner in addition to his profit-share. A Mufti Saheb holds the opposite view, namely, that in addition to a working partner’s fixed profit-share, a salary may also be fixed for him. The Mufti Saheb has referred me to the fatwa which appears in Ahsanul Fataawa. According to this fatwa, the respected Mufti Rashid Saheb (rahmatullah alayh) is of the view that a salary for a working partner in addition to his profit-share is permissible. Please resolve this conflict.
A. The view of The Majlis is the official view of the Shariah while the contrary view is a personal opinion. The answer in Ahsanul Fataawa is erroneous. The honourable Hadhrat Mufti Rashid (rahmatullah alayh) has erred in his conclusion. Despite his erudite Knowledge of the Shariah and him being an outstanding Aalim of the Haqq, his arguments on this particular question are exceptionally weak. The error is compounded by the fact that in presenting his personal view, the honourable Mufti Rashid (rahmatullah alayh) has overridden the Consensus of the Fuqaha. In fact, he has abrogated a clear-cut ruling which all our Fuqaha have given from the very inception of Islam.
Undoubtedly, Hadhrat Mufti Rashid Saheb (rahmatullah alayh) was a very learned Mufti of superior rank and piety. Nevertheless, every good horse too slips occasionally. Great and illustrious Muftis too err. We have studied many of the erudite fataawa of Hadhrat Mufti Rashid Saheb (rahmatullah alayh). The one pertaining to wages for a partner is truly incompatible with the Knowledge of the honourable Mufti. The weakness and legless nature of this particular fatwa are so astounding that if we did not see it in Ahsanul Fataawa ourselves, we would not have been prepared to believe that he had issued the fatwa.
We must emphasise that the error in no way whatsoever detracts from the authority, the Knowledge and rank of Hadhrat Mufti Rashid (rahmatullah alayh). But, even our illustrious Fuqaha had committed errors which they swiftly retracted and corrected when these came to light. Errors of authorities do not diminish their status in their particular fields. Let us now discuss the question and the fatwa.
There are two types of Shirkat (Partnership) in the Shariah: Shirkatul Amlaak and Shirkatul Uqood.
Shirkatul Amlaak is joint ownership of a commodity. Two persons for example own a property or a vehicle or a bag of rice, etc. This type of partnership is not a trade transaction yielding profit for the partners. It is merely a joint ownership of an asset by more than one person.
Shirkatul Uqood is a business enterprise formed by more than one person for the purpose of gaining profit by means of trade. There are several types of such partnership. The one with which we are concerned here in relation to the question is known as Shirkat-e-Inaan. In this type of partnership, all the partners invest capital and derive profit. In the event of loss, they share proportionately.
Among the conditions (Sharaait) for the validity of Shirkat are the following:
* That the profit-share must be known and stipulated. There must be no ambiguity in this condition. Ambiguity renders the Shirkat contract Faasid.
* That the profit which a partner obtains must be a diffusion in the whole of the profit. In the terminology of the Fuqaha this is termed Juz’an shaaiun fil jumlah. In other words, it is not permissible for the percentage profit-share to operate in only the balance of the net profit after a fixed sum of the net profit has been set aside for a partner for any reason whatsoever. If a partner’s share is 40% for example, he is entitled to 40% of the entire sum of the net profit. In this regard, the following appears in Badaaius Sanaai’:
“Among its conditions (of validity) is that the profit should be a part which permeates the whole (of the profit), not a fixed part. If they (the partners) fix ten dirhams (for example) or a hundred dirhams, etc., (for any partner), the shirkat is faasid.”
Badaai also states: “If the partners stipulate the profit proportionate to their respective capital investment whether their respective capital investment is equal or unequal, then this is undoubtedly permissible. The profit will be between them in terms of the agreement regardless of whether the labour was stipulated on one of them or on both. And (in this case) the loss will be in proportion to their respective capital investment whether their investment is equal or unequal.” (Vol. 6 page 62)
All the kutub of the Fuqaha, both the Mutaqaddimeen and the Muta-akh-khireen, are unanimous in this mas’alah, namely, partners in a Shirkat (trading partnership) are entitled to only profit, not to profit and to a specific sum of the profit regardless of whether the fixed sum is termed wages, salary, bonus, etc. The stipulation of a fixed amount of money for a partner renders the partnership faasid (corrupt and invalid). There is no difference of opinion among our Fuqaha on this issue. It is therefore surprising for some Muftis in our age to present a dissenting view on a mas’alah on which there is consensus.
Hadhrat Mufti Rashid’s error lies in the fact that he has ignored the Nass (explicit ruling) of the Fuqaha on this issue. He further proceeded to nullify the unanimous ruling with his opinion by presenting an exceptionally weak and minority view pertaining to a mas’alah related to Shirkatul Amlaak (the first kind of Shirkat) whereas all the Fuqaha were well aware of the masaail relating to this type of partnership in commodities. Despite the Fuqaha expounding the masaail pertaining to both types of Shirkat and being fully aware of the mas’alah which Hadhrat Mufti Rashid Saheb has made his mustadal (basis of deduction), they categorically ruled that a fixed amount may not be stipulated for a partner.
The argument that the working partner is entitled to a wage in lieu of his labour is baseless because:
(1) It is an argument presented in negation of the consensus of our Fuqaha. For the Muqallideen, the Nass of the Fuqaha is binding and adequate.
(2) Partners in a Shirkat are entitled to profit A partnership is created for this very purpose, not for wages.
(3) The reward of investment of capital is profit, not wages. Such a fixed amount is in the category of Riba since it is an excess which has no material commodity as its equivalent. The reward of the invested money is the profit-share. If the reward is a fixed sum of money as well, this is tantamount to riba.
(4) The analogy of Mudhaarabah partnership illustrates that despite all of the labour being stipulated on the one partner, the Mudhaarib, he is entitled to only his profit-share, not to profit plus a wage.
The issue of stipulation of labour is not a new development of this age.. It had existed at all times in every age. In fact, the Fuqaha have elaborated on the issue of stipulation of labour on either one of the partners or on the others as well. In certain cases the stipulation of labour on a partner, produces different effects. But never has the effect of stipulation of labour in any case been wages for a partner. The effect of labour stipulation on a partner in some cases renders the contract invalid; in some cases valid. But never is the effect wages for the partner on whom the labour is made a condition. The attempt to legalize wages for one partner in addition to his profit-share is in effect to abrogate the fourteen century consensus of the Fuqaha. It is a serious issue. In fact, it is a massive error.
What is indeed surprising is the totally blind eye turned to the Tasreehaat (explicit and categoric rulings) of the Fuqaha of all ages on this issue. The very stipulation of a fixed sum under whatever guise and designation for a partner, nullifies the Islamic concept of Shirkat which provides for sharing of the profits only by the partners.. While the stipulation of a salary renders the partnership invalid, the claim that salary for a partner is permissible is tantamount to the abrogation of the concept of Shirkat.
The rationale that since the working partner applies both labour and capital, he should be entitled to a wage as well, is devoid of Shar’i substance. The Shariah was well aware of the capital plus labour of a partner or partners. It is a simple fact of logic or commonsense that the partners or at least one partner in a Shirkat will have to apply expertise, labour and effort. This commonsense did not emerge in this age. It existed from the very time when the Shariah’s law of Shirkat came into being. Despite this awareness, there has always been explicit prohibition.
Secondly, the haqeeqat (meaning/reality) of Shirkat rationally precludes the stipulation of a fixed sum for a partner. Thirdly, the Shirkat can adequately accommodate and reward the working partner within the ambit of its meaning and terms. The simple solution is to increase the profit ratio of the working partner.
Now when there is ample scope within the existing confines of Shirkat to adequately reward the working partner without corrupting the contract with infringements, what is the imperative need to bend over backwards to search for straws with which to construct a basis for permissibility of an act which the Shariah has prohibited from the very inception fourteen centuries ago?
Categorically refuting the contention of a wage for a partner, Shamsuddin Imaam Sarakhsi (rahmatullah alayh) states in Al-Mabsoot, Vol. 6, page 109:
“Entitlement to profit (in a partnership) is by way of Shirkat, not by way of Ijaarah (employment contract). It is for this reason that in it (Shrikat) the amount of work is not specified nor is the time duration. The worker in the partnership is not entitled to wages.”
This mas’alah stated by the illustrious Imaam is adequate Nass for us on this issue. This mas’alah, we think, cannot be expressed with greater clarity than this Nass of Imaam Sarakhsi. This is a ruling on which there exists Ijma’ of all our Fuqaha of the Ahnaaf. The attempt to negate this consensus in this era with analogies in which the basis has no relevancy to the issue under discussion is inappropriate and erroneous, to put it mildly.
Hadhrat Mufti Rashid (rahmatullah alayh), in his Ahsanul Fataawa, has averred that it is permissible to stipulate a wage for a partner. With due respect to Hadhrat Mufti Rashid Saheb, who was among the senior Ulama of contemporary times, we have to say that he has erred in his fatwa. Hadhrat Mufti Saheb has presented copious narrations of the Fuqaha in justification of his view. However, most of the cited narrations refute his opinion of permissibility. In fact, all the narrations which he has cited pertain to Shirkat-e-Amlaak, not to Shirkat-e-Uqood to which our question is related.
The narrations presented in the fatwa do not deal with Shirkatul Uqood, more specifically with Shirkatul Inaan. He firstly cited a number of narrations from authoritative kitaabs of Fiqh. All these narrations pertain to the question of whether it is permissible to pay a joint owner of a commodity a wage for transporting the jointly-owned commodity. Zaid and Amr jointly purchased a bag of rice. Zaid transported the bag of rice to the destination. Is Zaid entitled to a wage for having transported/carried even Amr’s share in the bag? The senior Fuqaha all say that a wage for Zaid is not permissible in this case. A handful of later-day Ulama aver permissibility.
Even in regard to this issue, the official ruling of the authoritative Fuqaha is on impermissibility of paying a wage to the joint owner for having transported the commodity. By means of extremely weak citations, Hadhrat Mufti Rashid Saheb has averred that it is permissible to pay the joint owner a wage in this instance. After he had declared this to be permissible, he extended the permissibility to the unanimous prohibition of paying wages to a partner in Shirkatul Uqood.
But the analogy is incorrect since the basis on which the permissibility of wages for a partner in Shirkatul Uqood is structured is related to entirely another question which is widely divergent. Furthermore, this defective analogy has been utilized to negate a ruling on which there exists unanimity. In addition it annuls the very concept of Shirkatul Uqood. It also dispenses of a vital shart (condition) imperative for the validity of Shirkatul Uqood.
A great deficiency in the ruling of permissibility for even the question pertaining to Shirkatul Amlaak, is the fact that Hadhrat Mufti Rashid Saheb had simply ignored the view of the Jamhoor Ahnaaf Fuqaha and had opted for the view of a tiny minority of the later Ulama, and that too on entirely another issue.
Besides the fundamental difference between the two questions, the thrust of the Shariah regarding even the cited mas’alah of hamlut ta-aam (carrying the bag of food) is on the prohibition of wages for the joint-owner who carries the jointly owned bag of grain. This mas’alah (of hamlut ta-aam) does not constitute even a weak basis for the issue of wages for a partner in a Shirkat business in which the acquisition of profit is the goal.
Ahsanul Fataawa in opining permissibility of wages for a partner, makes the following sweeping claim: “There is no Nass of the Shariah to prove the impermissibility of engaging a partner as a hired worker.” This averment is indeed preposterous. We have already cited the Nass mentioned in Badaaius Sanaai’ and Al-Mabsoot of Imaam Sarakhsi. Every kitaab of Fiqh clearly and explicitly defines the concept of Shirkat. The Nusoos in all the Kutub of Fiqh are more than adequate to refute the contention of Ahsanul Fataawa.
Ahsanul Fataawa also states: “There is no narration regarding this issue from Hadhrat Imaam (i.e. Imaam Abu Hanifah)—rahmatullah alayh.” If Hadhrat Mufti Rashid Saheb was unaware of a narration which is directly attributable to Imaam Abu Hanifah (rahmatullah alayh), it does not follow that there does not exist any such narration. No man, irrespective of his erudition and vastness of knowledge can claim to have encompassed Ilm in entirety. There are thousands of questions and narrations of which Hadhrat Mufti Rashid Saheb and all Ulama are unaware. The citation of unawareness/lack of knowledge is never a daleel.
Assuming that there truly is no recorded narration of Imaam Abu Hanifah (rahmatullah alayh) reported, then there are narrations of innumerable Fuqaha of the Ahnaaf among whom are the illustrious Mujtahideen such as Imaam Abu Yusuf, Imaam Muhammad (rahmatullah alayhima) and others of the highest calibre. Innumerable fataawa of the senior Sahaabah who were the Ustaads of the Aimmah-e-Mujtahideen are not reported or attributed directly to them. Nevertheless, their illustrious Students transmitted such fataawa to posterity.
Furthermore, it is only reasonable to infer that Imaam Abu Hanifa’s illustrious Students such as Imaam Abu Yusuf and Imaam Muhammad and others must have heard the exposition of their Ustaad on this issue. Moreover, the lack of a riwaayat (narration) from Imaam Abu Hanifah is not a licence for discarding an emphatic ruling of the Shariah, especially when such ruling has enjoyed 14 centuries of consensus and acceptance.
Ahsanul Fataawa in support of its contention states: “It is merely the qaul (statement) of Imaam Muhammad (rahmatullah alayh), but no rationale (illat) is narrated from him (for his view).” If it was not for the seniority of Hadhrat Mufti Rashid Saheb (rahmatullah alayh), we would have been constrained to deal with this averment in entirely a different manner and with a more strident tone. However, taking cognisance of Hadhrat Mufti Rashid’s seniority and Knowledge, we shall restrict ourselves to mere dismissal of his averment as being utterly baseless. It is totally unacceptable to imply that the third highest ranking Mujtahid of Islam after Imaam Abu Hanifah, namely, Imaam Muhammad bandied out views devoid of rationale. If his rationale has not been reported or if it has escaped the research of Hadhrat Mufti Rashid Saheb, it cannot be concluded that there was no rationale (illat) for his view.
It is a simple fact of Islamic logic that a Mujtahid does not speak without daleel. It is quite possible that Hadhrat Mufti Saheb was unaware of such kutub which do expound the illat of the view of Imaam Muhammad (rahmatullah alayh). Of immediate importance for us for practical adoption is not the rationale. It is the hukm— the ruling which constitutes the law to which we have to submit whether we are aware of the illat or not, and whether we understand it or not.
Hadhrat Mufti Rashid Saheb, in his fatwa, has also attempted to bolster his view of permissibility on the basis of Ta-aamul-e-Naas or the prevalent customary practice of the people. While Ta-aamul does have applicability in the Shariah, the ground is extremely delicate and the manner in which men of shallow learning of this era interpret and understand this principle, is quite dangerous. In terms of the understanding of this principle by the Muftis of the era the entire Shariah will be abolished on the basis of Ta-aamul. Riba, maisar (gambling), zina, abandonment of hijaab, immodest dress, exposure of satr, adoption of the salient features of the kuffaar, in short, every baatil and haraam act could be ‘legalized’ on the basis of the understanding of this principle by the men of superficial knowledge in our day and age.
On the basis of present-day understanding of the principle of Ta-aamul every faasid and baatil business deal can be proclaimed halaal. Bank interest in which there is ‘ta-aamul’, will have to be legalized on the basis of the convoluted understanding of this principle displayed in this era. There will then be no need for the Divine Shariah to govern our daily life. The new shariah will be Ta-aamul-e-Naas. Whatever the dumb masses instiutute will be permissible. This is the meaning of Ta-aamul and Urf in today’s minds. Hadhrat Mufti Rashid’s attempt to render permissible wages for a partner in terms of the principle of Ta-aamul has no validity. Firstly, there is no valid Ta-aamul of the People of Islam in this sphere. The Ta-aamul of the Ummah from the earliest era of the Shariah has always been the prohibition of wages for a partner.
The system of capitalism of our age cannever constitute valid Ta-aamul for the abrogation of a 14 century unanimous Hukm of the Shariah. The customary trade practices of the kuffaar do not entitle a Mufti to issue a fatwa cancelling a Shar’i hukm for the sake of conferring Shar’i status to the practice of the kuffaar. There is no substance in the Ta-aamul argument which Ahsanul Fataawa presents for its view of permissibility.
Ahsanul Fataawa also endeavours to substantiate its view by means of an analogy with the muthaarib (the working partner in a Mudhaarabah partnership). Thus the fatwa states: Support for this (view of permissibility) is also from mudhaarabat. The mudhaarib acquires benefit from joint-work.” This succinct statement is highly ambiguous. Firstly, the mudhaarib’s profit-share is predetermined and fixed at the time of the contract. He is not entitled to anything in excess of his fixed profit-share. Secondly, a wage for him in addition to his profit-share has been categorically prohibited by all our Fuqaha. Thirdly, labour/work cannot be stipulated in the contract on the Rabbul Maal (the investor of capital). Such a stipulation invalidates the Mudhaarabah contract. Fourthly, if a wage is stipulated for the mudhaarib in addition to his profit-share, the contract remains valid, but the stipulation of wages is baatil, and it automatically falls away. The mudhaarib is not entitled to a wage and has no such claim regardless of the condition made.
The ‘joint-work’ mentioned by Hadhrat Mufti Rashid Saheb is a reference to the Rabbul Maal assisting the mudhaarib in the business. This ‘joint-work’ produces absolutely no change in the original Mudhaarabah contract. Both partners in this contract receive only their respective stipulated profit-shares. None of the parties in this arrangement is entitled to wages, neither the Mudhaarib nor the Rabbul Maal.
It is significant that inspite of the Rabbul Maal assisting his partner, he cannot claim a wage nor can a wage be arranged for him. Even if he slogs night and day to make the enterprise a success, a wage cannot be arranged for him, neither at the time of the contract nor at a later stage. All the labour and expertise — brains and brawn — which the Rabbul Maal contributes to the joint Mudhaarabah venture are gratis. It should therefore be abundantly clear that the analogy with the partners of Mudhaarabah far from supporting the permissibility postulate, actually negates it. The analogy actually reinforces the view of prohibition. It should be quite clear now that a salary for a partner in addition to profit is not permissible.
Q. A vehicle nowadays is a necessity. Even if it is not solely for business purposes, those who are observant of Purdah find it extremely difficult to move from place to place without their own vehicle. Beside that proper purdah cannot be observed when using public transport, there are too many dangers. There is no need to explain these. The only way most people can acquire a vehicle is through the banks. But the banks all deal in interest. Is there any way in which a bank deal could be made to conform to the Shariah?
A. Undoubtedly, all banks, even the so-called ‘Islamic’ banks deal in riba. But there is a way in which a deal could be made to conform to the Shariah even if the bank is a non-Muslim one. It is really a simple issue. The only requirement is that the bank be made to understand that the contract should be correctly worded. Firstly, the bank has to purchase the vehicle. This is what the bank in any case does. The bank being the owner of the vehicle sells it to the client. The price of the vehicle (not the cash price) should be clearly stated in the contract. The price will be the sum of the deposit and all the instalments. This full amount should be recorded so that the client is fully aware of the purchase price at the time of the transaction. The client should not obtain insurance. Insurance is haraam. The bank should take out insurance if it wishes. The bank should pay for the insurance. It being a non-Muslim institution, it can do as it pleases. The bank knows the total amount it wants for the vehicle at the end of the day. The total amount the bank wants comprises of the cash price, the finance charges (interest), the insurance and whatever other charges there may be. The buyer of the vehicle should be concerned with only the end figure which is his purchase price. This end price must be stated at the time of the transaction. The buyer simply purchases the vehicle for this final amount which is paid in a specified number of fixed monthly instalments. The bank should work its charges, etc. into the price and present a final single figure to the buyer. The following example illustrates this deal:
Cash price of vehicle………… 100,000
Insurance paid by the bank….. 30,000
Finance charges, etc. ……….. 70,000
Total price to customer ………. R200,000
The purchase price is R200,000. This is the amount which the contract/agreement should state. The buyer knows now that he is buying the vehicle for R200,000. It does not matter how the bank structures its calculation to reach this figure. It can do this as it pleases. The buyer is interested in only the R200,000 which he will pay in 60 equal monthly instalments. In fact, the instalments need not be equal. Any amounts could be agreed on as long as the instalments are fixed and known.
There should be no interest (‘penalty’) charged for any late payment of instalments. The bank has to take into consideration all these factors and the “rate of interest” over the 60 months. There should be no hidden charges which will later surface in the statements. If a bank agrees to this simple system, buying a vehicle or even a property in this way will be permissible irrespective of the bank being a non-Muslim bank or a so-called ‘Islamic’ bank. If a bank is made to understand the practicality of this simple method, it will in fact render itself a favour. There is no need for the fancy religious sounding terms of muraabahah, mudhaarabah, mushaarakah, etc., etc. Buying a vehicle or a property on credit is the same as buying a loaf of bread or any item on credit.
The bank may be required by law to follow certain procedures to satisfy certain acts such as the Usury Act, etc. That is the non-Muslim bank’s problem. The bank can draw up its usual agreement to satisfy the law. But as far as the buyer of the vehicle/property is concerned, there are only two elements in the transaction: The fixed purchase price which is declared at the time of the transaction. The specified number of fixed monthly instalments into which the purchase price is divided. There is nothing else. No insurance, no penalty (interest) for late payment and no hidden charges which would cause the instalments to fluctuate. Such a deal is valid and permissible in the Shariah. To secure its interests, the bank can pass an interest-free bond over the item (the vehicle or property, etc.), or have what they term a lien.
Leasing a vehicle or any equipment from a bank can also be validly transacted. Leasing in fact may be simpler than purchasing. Only the monthly rental has to be agreed on. The rental will be fixed monthly payments and the lease term has to be specified. There should be no ambiguity and no hidden charges. The bank has to work all its charges into the fixed monthly rental payment. At the end of the lease term, the bank (the lessor) and the lessee can enter into a sale agreement. The bank can sell the vehicle/equipment, etc. to the lessee for a price which will be mutually agreed on. This should pose no problem as presently the banks sell the leased vehicle to the lessee for a nominal price at the end of the lease term. However, in the leasing system, it cannot be stipulated that the bank is obliged to sell the vehicle to the lessee at the end of the term. The sale is voluntary.
Q. I want to buy a vehicle on credit without paying interest. I was advised to approach Al-Barakah Bank. I was told that the Bank has an Islamic way of doing the deal. I approached the Bank. I received the necessary forms for a Murabaha Installment Sale Agreement. Please study the Agreement and let me know if it is okay to go through with this deal. Does the Agreement comply with the Shariah?
A. Muraabahah is a straightforward sale agreement unencumbered with the many capitalist provisions which the Muslim banks have acquired from their kuffaar counterparts. In a Muraabahah sale, the seller adds a known fixed amount of profit to his cost price. He makes the amount of profit he is charging known to the buyer. The cost plus the known profit amount is the price for which he sells the article. This is the lawful Muraabahah transaction in the Shariah. All other additions to it are baatil (null and void) and not permissible. Instead of maintaining the transaction in the pure unadulterated form the Shariah has given it, the Muslim bank gives a loan, charges interest on the loan and passes it off as a muraabahah deal. The factors which render the deal unlawful in the Shariah are as follows:
(1) The initial payment of R75,000 (in the example given by the Al-Barakah Bank) is made directly to the supplier of the vehicle. The customer does not purchase the vehicle from the Bank. He himself arranges the deal with the supplier and he pays the supplier a deposit of R75,000. The supplier invoices the outstanding balance to the Bank which pays him. So while the Bank’s agreement records the ‘profit’ of R15,000 on the selling price of the vehicle, it is in actual fact an interest-charge on the outstanding balance which the Bank pays to the supplier. The buyer then pays the outstanding balance plus the R15,000 interest over 36 months. This condition by itself renders the deal haraam. It is a plain and simple riba deal.
(2) The sale agreement is entered into at a time when the Bank does not own the vehicle. The vehicle has not yet been acquired by the Bank. It sells a non-existing vehicle, i.e. a vehicle which it does not own. This is Bay’ul Mafqood (Sale of something which does not exist by the seller). Such a deal is baatil. It is imperative for the Bank to first buy the vehicle then only will the sale be valid.
(3) The stamp duties and administration charges for preparing the agreement and the haraam insurance documents are haraam charges. The first of the two should be added into the cost structure and not listed as an additional amount to be paid by the customer. The second charge is haraam in all cases and may not be charged.
(4) The Agreement appoints the buyer of the vehicle as the Bank’s agent to purchase the vehicle and in the same breath appoints him as the Bank’s agent to sell the vehicle to himself. The appointment to purchase the vehicle is valid. But the directive to sell a nonexisting vehicle to himself is baseless. The bank can rectify this incongruency by simply sending a man to purchase the vehicle. The customer can accompany the bank’s man to the supplier. After the purchase has been concluded, he can assign the vehicle to the customer, i.e. the Bank’s customer. In this case he will not be the supplier’s customer. Although the Agreement states that the Bank is the Seller, in reality it is not. The seller is the supplier of the vehicle to whom the initial deposit was made. If he is not the true seller, then why did the customer pay him R75,000? And, why does he invoice the Bank for only the outstanding balance. No matter how the Bank desires to save its skin by the incongruent application of Shar’i technicalities, it cannot escape the fact that it is merely giving a loan and charging a large sum as interest.
(5) The Agreement claims that the supplier is the agent of the Bank in selling the vehicle, But reality belies this contention. The supplier sells his own property. How can he be the Bank’s agent when he is selling an item which is his own property? The Bank has not yet procured the vehicle. It is plain and simple to understand who the true seller of the vehicle is. If the Bank wishes to be known as the seller, it should send its man to the supplier and purchase the vehicle outrightly. By saying that the supplier is the Bank’s agent, he does not become the agent.
(6) The Agreement stipulates that “the Purchaser shall at his own cost procure and take delivery of the goods from the Seller”. This additional cost is negatory of theMuraabahah transaction. This cost has to be borne by the seller and included into his cost structure. He is allowed to reflect his total cost price which he will add to his desired profit made known to the buyer.
(7) The Bank stipulates a he inous and an oppressive clause in its so-called muraabahah agreement. It says: “If the Seller cancels the Agreement or enforces the Agreement and the Purchaser disputes such cancellation or enforcement, the Purchaser shall continue to pay to the Seller all amounts due in terms of this Agreement on the due dates of payment…..” If the deal is cancelled, the purchaser is under no Shar’i obligation to pay the instalments. This is a clear zulm stipulation which allows the seller to usurp the money of the purchaser.
(8) The Bank brazenly stipulates in its agreement payment of riba on late payments made by the purchaser. Actually he is not a purchaser in relation to the bank. He is a debtor to whom the bank has made a loan. The camouflaging tactic of describing the interest charge as a ‘penalty’ does not alter the riba status of the charge. We have written a booklet in refutation of this haraam riba charge ((see Penalty of Default)). The Bank has in vain endeavoured to make halaal this haraam riba by presenting altruistic motives. Such altruism even if sincere does not legalize what Allah Ta’ala has made haraam. Charity does not legalize riba.
(9) The additional two charges of R25 and R50 apart from the interest charge mentioned in No.8 above, are also haraam riba which the so-called Muslim bank levies on late payments.
(10) The Bank in its Muraabahah Agreement stipulates insurance. The purchaser is obliged to “immedialetely and at its expense fully insure and keep insured the Goods against all risk of loss, damage or destruction…..” This flagrant violation of the Shariah effectively renders the agreement haraam.
In view of all these violations, the deal is not a valid Muraabahah transaction. It is not permissible to enter into this riba transaction.
Q. Is the Islamic Insurance scheme issued by Takafol really Islamic?
A. Takafol is conventional riba insurance which is being fallaciously promoted as an acceptable ‘Islamic’ brand of insurance. Proponents and purveyors of this riba insurance disguised very deceptively in the hues of the Shariah’s concept of Waqf, are at pains to convince Muslims that their insurance project is different from the conventional insurance which even they acknowledge is haraam. The two fundamental constituents which render all insurance haraam are Riba (interest) and Qimaar (gambling). Even after laboriously presenting labyrinthal postulation in the abortive endeavour to accord Shar’i legality to the old wine of insurance marketed in the very same old bottle, albeit with a different label of deception, the votaries of this riba insurance have miserably failed to substantiate their fallacy.
One need not be a scholar or a Molvi to see through the extremely thin veneer coating the insurance product offered under the ‘Takafol’ label. The nature of the prohibition of this insurance is so conspicuous that even ordinary laymen will not be deceived. Even after just a cursory perusal of the ‘Takafol’ insurance agreement, if they are concerned about the Shariah and Allah’s command to abstain from riba and qimaar. Before anyone ventures into ‘Takafol’ insurance, it is imperative that he studies the agreement which he has to sign. No one should be deceived by the transparent undercoat with which the ‘Takafol’ insurance agreement is painted. The following terms employed in the agreement are meaningless and deceptive: Waqf, donation, Islamic brotherhood, and the Qur’aanic verse.
‘Shaitaan promises you (scares you with) poverty and he commands you with immorality, while Allah promises you forgiveness from Him and kindness.’ — (Qur’aan)
‘Takafol’ insurance is not a valid Shar’i Waqf institution. The rules of Waqf do not apply to this riba venture. It is abundantly clear from the agreement that ‘Takafol’ is a pure monetary dealing—an exact replica of conventional insurance which is haraam.
‘There will dawn over mankind an age when a man will not be concerned with the source (of his income), whether it be from halaal or from haraam.’ — (Hadith)
Only a meager 10% of the ‘profit’ yielded by investment of the premiums is given to charity. Besides the occasional payout for losses sustained by insured persons, the ‘surplus’ profit is distributed as dividends to those who have purchased insurance cover. The assertion that the Takafol venture is a waqf fund is thus a blatantly fallacious claim.
The claim that the monthly premiums which the insured persons have to incumbently pay in order to maintain the validity of their insurance cover, are ‘donations’ is astonishingly absurd. With unashamed temerity, the ‘Takafol’ insurance agreements stipulates:
‘You must pay the contribution by the contribution due date. Where such contribution is by way if debit order, the onus will be on you to ensure that your monthly contribution is met by the financial institution. If you fail to pay any monthly or annual contribution within 15 days after the due date, you shall no longer be a beneficiary of the Takafol Waqf Fund.’
Yet, this Agreement shamelessly avers that the incumbent monthly and annual ‘contribut-ions’ are ‘donations’. Forfeiture of the paid premiums in the wake of failure to pay a subsequent premium on due date is a brazen act of usurpation of the money which is extracted from the insured clients.
‘A body nourished by suht (haraam) will not enter Jannat. Every flesh (i.e. human body) nourished by haraam—the Fire is more deserving of it.’ — (Hadith)
Those who devour such haraam money acquired by riba and qimaar under guise of ‘halaal’ insurance, ingest into their bodies suht—haraam money which according to the Hadith of Nabi (sallallahu alayhi wasallam) produces ‘flesh suitable for only for the Fire.’
Which concept embodies the factor of the payment of an ‘excess’ when an insurance claim is made for recovery of a loss sustained? Everyone knows that this is a peculiarity of only riba-qimaar insurance. The ‘Takafol’ conventional insurance agreements states:
‘Excess—you will be liable for any excesses as stipulated on your Participation Agreement except to the extent varied in the Statement of Cover.’
Conceding to insurance, the ‘Takafol’ agreement states:
‘If there is any other insurance or Takafol Agreement covering the same item at the time of a loss, The Fund will only pay our rateable proportion of any loss or damage.’
This is their interpretation of Waqf, donation, Islamic brotherhood and compliance with the spirit of the Qur’aanic verse cited in the Agreement. The worst of the blatantly fallacious claims of ‘Takafol’ insurance is the averment that the compulsory monthly premiums are ‘donations’.
The pivot of the ‘Takafol’ insurance scheme, just as all other conventional kuffaar insurance, is the compulsory monthly payment of premiums which the ‘Takafol’ agreement species and emphasises in unmistaken terms. There is absolutely no difference between the ‘Takafol’ insurance premium and the premium of all the other forms of haraam insurance. The only misleading difference is the term ‘donation’. While the non-Muslim financial institutions call the monthly contributions made by the insured persons, premiums, the Takafol traders call it ‘donation’. But in terms of the Shariah these monthly payments are not donations.
Anyone who studies the ‘Takafol’ insurance agreement will understand that this scheme couched with Islamic terminology is the same haraam insurance as every other type of haraam insurance available in the riba market.
‘Traders will be resurrected on the Day of Qiyaamah as immoral persons except those who feared (Allah), were pious and honest.’ — (Hadith)
Q. Please comment on the book, 'Shariah Compliant business Campaign' published by Madrasah In’aamiyyah of Camperdown (Natal).
A. A person or a group of persons has sent us a book, titled, Shariah Compliant business Campaign which is a publication of Madrasah In’aamiyyah of Camperdown (Natal). The brother/s has/have raised objections on two issues from the book, as follows: “
(1) Conventional insurance has been legitimised as “Kafeel” (page 161).
(2) RIBA has been legitimised through the exchange of two different currencies on credit at a higher mutually agreed rate. Moneylenders and conventional banks work out the interest in advance on the loan in rands: Loan R 100,000, Interest R 20,000 over 12 months; Total R120,000, The loan amount of R 100,000 is advanced in dollars, and the total of R120,000 is repaid in rands at a mutually agreed higher rate, and not the ruling rate, to give the interest return in the rand loan.”
The above objections have been reproduced verbatim from the anonymous letter together with the book sent anonymously. Before we comment on the aforementioned two mas’alahs, we deem it prudent to proffer some naseehat to the brother or brothers who had sent the book and the letter objecting to the above two issues. While you have designated yourself, MOVEMENT FOR UPHOLDING PRISTINE SHARIAH, you appear to be defective in knowledge, honesty and basic courage. You have provided neither name nor address, yet you have appropriated a high sounding title for yourself.
We are not implying that anonymity is necessarily cowardice and wrong. Sincere people do have valid reasons for withholding their identity, but the accolade and praise you have conferred to us in your letter ring hollow. From behind the transparent veneer, not even translucent, it seems clear that the motive is not “upholding the pristine Shariah”. Your desire for the “disclosure of the institution” displays a vengeful attitude directed against the Madrasah which authored the book. It is most despicable to utilize the Deen for base personal motives.
We have disclosed the name of the institution not to satisfy your desire and request, but because there is a need to do so. There are several issues in the book with which we are in disagreement, and which we believe are in conflict with the Shariah. One such issue is copyrights and patency rights. Our book on the refutation of the view of permissibility of trading in these baatil imaginary ‘rights’ has just been printed. Anyone interested may write for a copy. There are other issues too. As time permits, we shall deal with them individually, Insha’Allah.
In view of the fact that Madrasah In’aamiyyah has published its views in book form for public consumption and practice, the need has developed to publicly discuss and refute views which we believe are in conflict with the Shariah. Let us revert to the issues raised by the anonymous objector
Objection No.1 “Conventional insurance has been legitimised as “Kafeel” (page 161).” It is abundantly clear that the objector is not from among the Ahl-e- Ilm, hence has drawn erroneous inferences from what is stated on page 161 of the book. The relevant fatwa of Madrasah In’aamiyyah on page 161 reads:
“If a shipping company or insurance company undertakes responsibility to take goods to some specified place, in return for a fee, and undertakes that if the goods get lost, they will be responsible for compensation, then this is permissible. The shipping or insurance company will be liable. However, there is a difference between the status of a shipping company and an insurance company. The shipping company will be Ajir Mushtarak but the insurance company is in all cases Kafeel.”
Although we are in disagreement with this fatwa, nevertheless, it does not purport what the objector has claimed. Nowhere in the fatwa has conventional insurance been legitimised nor has it been said that ‘conventional insurance is Kafeel’. The fact that the objector is unaware of the difference between kafeel and kafaalat, displays his ignorance of the Shariah. While we agree that the fatwa is improper, and that it was imprudent to have published the book which contains ambiguities, incongruenries, displays a clear lack of understanding, and is a recipe for misunderstanding and nafsaani abuse by people who seek loopholes for legalizing Riba, the charge which the anonymous objector levels against the Institution is erroneous and invalid.
The book has not legitimised conventional insurance. What it, however, does is to legitimise a specific activity/dealing of the conventional insurance companies. And, it legitimises the specific ‘insurance’ deal on the basis of the Shariah’s concept of Kafaalah. The scope of these columns precludes a critical dissertation of Madrasah In’aamiyyah’s view on this issue. If Allah Ta’ala bestows the taufeeq, we shall publish our response., Insha’Allah. Here it suffices to say that:
* The anonymous objector has not understood the issue. He is confused. His understanding of the Madrasah’s opinion appearing on page 161 of its book, is confused..
* The publication of the opinion based on an obscure practice discussed in Shaami and some other kutub, has rendered the Deen a great disservice. The layman who reads the opinion will, undoubtedly, believe that all conventional insurance is halaal.
* Insurance companies are in the category of brothels or worse. The degree of desensitisation to evil, riba and immorality to which even the Ulama have fallen, has made them impervious to the obnoxious spiritual contamination and stench of insurance companies which are the bedrock of all institutions of Riba against whom the Qur’aan has issued its ultimatum of war.
* The opinion endeavours to open up a wide avenue for dealings with haraam conventional insurance companies with the provision of the bait it offers in the opinion on page 161. It is imperative for Ulama to have their fingers on the pulse of the community to diagnose the ills and maladies which are ravaging this Ummah. The function of the Ulama is to create spiritual health in the bond which exists between Khaaliq and His Makhlooq.
The function of the Ulama is never to act as a bridge for the institutions of Riba—insurance companies being the flagship of this satanic institution—inviting Muslims to cross into these spiritual brothels to purchase their wares of Riba under a variety of deceptive guises such as mushaarakah, kafaalah, mudhaarabah, wakaalah, etc., etc. The incumbent obligation of the Ulama is to guard the Shariah, to proffer Naseehat to the community, and to call on Muslims night and day to make their preparations for Barzakh and Qiyaamah before the clarion call is sounded. At that juncture in life, all regret will be of no avail.
The Ulama have to wake up and understand who they are and what their function is. Some of us are in an unholy embrace with the institutions of Riba to design products for banks and insurance companies to perpetuate Riba portrayed as ‘trade’ while morally and technically even the layman can see through the smokescreen. These exercises are not designed to benefit or assist the man in the street. The beneficiaries of the juridical stratagems and tricks are the institutions of Riba.
It is truly lamentable—cause for shedding tears in profusion—to observe Ulama who are supposed to be the Representatives of the Ambiya, sitting in spiritually adulterous embraces with the men of Riba in deceptive forums falsely termed ‘shariah boards’ when in fact these boards are camouflaged appendages of the Riba institutions who have hired scholars to be their representatives and advertising agents to sell their Riba merchandise to the dumb and ignorant Muslim masses whose only concern in this era in close proximity to Qiyaamah is money, whether the means of acquisition are halaal or haraam. It is not their concern.
The Ulama have lost their direction, hence they sit with the Riba fussaaq and fujjaar in their unholy ‘board rooms’ and air-conditioned offices, jetting around in business class, interacting with the faajirahs and kasbiyahs in the planes, meeting such female receptionists in the luxury buildings of these Riba institutions and sitting around conference tables in kuffaar style talking their mushaarakah and mudhaarabah drivel and deception with their paymasters. They–the Ulama–have abandoned their posts– the Musjid platforms, their humble Madrasah rooms and their khaanqahs– in the contemptible endeavour to curry favour with the Riba institutions. The rationale for this ghastly and lamentable attitude is twofold—Hubbud Dunya (Love of the World) and Hubbul Maal (Love of rands, cents and dollars). There is no third motivation in this race in which some Ulama are falling over others, bending far backwards to appease the Riba institutions.
When Ulama whom the community believes are members of the orthodox brand, can nonchalantly present insurance companies as Islamically valid and viable institutions to deal with, then we must say that something is drastically wrong in the hearts. When insurance companies are presented in the guise of traders, kafeels, wakeels, etc., it is an invitation to Muslims to transact with these satanic institutions. It is akin to encouraging Muslims to buy bread from cafes and restaurants inside casinos and glorified brothels. While technically the worldly Molvi Sahib who lacks in Noor-e-Ilm and Noore- Fahm, can present technicalities and juridical arguments to claim permissibility for the transaction of buying bread from the café and restaurant which have been established to cater for the gamblers, the prostitutes and the clientele of the prostitutes in these shaitaani venues, he fails to discern the emphatic hurmat of issuing a fatwa of permissibility which would draw Muslims into the haunts of shaitaan.
So while the shallow minded Molvis and Sheiks, trapped in textual paraphernalia, blissfully ignorant of the rot in which the community is sinking down the abyss of moral destruction in its state of inebriated torpidity, can afford to bask in issuing their puerile fatwas of permissibility bereft of the depth of learning, we are constrained by the transcendental goals of this Deen of Islam to state with equanimity and unequivocally that dealing with insurance companies is haraam, and the opinion offered on page 161 of Camperdown’s book is a grave error and a disservice to the Ummah and to Islam. As for the technical or juridical (Fiqhi) rebuttal of the opinion on page 161, it shall be forthcoming at a later stage, if Allah so wills. Taufeeq for guarding the Haqq of His Shariah emanates from only Him, and we are incapable of achieving an accomplishment in any field whatsoever if He withholds the Taufeeq therefrom.
The Second Objection Our anonymous brother who proclaims himself as a member of a Movement For Upholding Pristine Shariah, albeit lacking in the knowledge and spiritual stamina which constitute two imperative qualification for those who defend and guard the Shariah, says:
“Riba has been legitimised through the exchange of two different currencies on credit at a higher mutually agreed rate.”
The anonymous brother has presented Madrasah In’aamiyyah’s fatwa in a corrupted form. He has not been honest in his presentation. Although his erroneous presentation may perhaps not be due to dishonesty, it is certainly due to ignorance. Since he does not appear to be a molvi, he has confused the issue of selling with loan. Camperdown’s fatwa speaks of ‘selling foreign currency’. It does not discuss lending of money as the anonymous brother alleges. There is Islamically nothing wrong with selling a gold coin worth R3,000, for example, in exchange for silver coins which have a value of R5,000, provided that the transaction is cash and possession of both commodities is taken immediately at the session of the transaction.
The rate which Mr. Bush and Mr. Blair fix has absolutely no significance in the determination of the Shar’i hukm pertaining to this type of sale which is not qardh (a loan) which our anonymous brother has wrongly inferred it to be. Thus, if Abdullah sells his 100 dollars in exchange for Zaid’s 90 sterling pounds, they are not under Shar’i obligation to ascertain the rate which Mr. Bush and Mr. Blair have fixed for their respective currencies or the rand rate of the dollar/pound. The fundamental error of the objector is that he has understood the ‘ruling rate’ as sacrosanct, and to be the basis of permissibility for the exchange of currencies whereas this is not a requisite of the Shariah. Hence, the loan/interest example he has given (which is not in the Camperdown book) has no relevance in the sale of monies involving different currencies.
On the negative side of Camperdown’s fatwa is the deficiency in the research in which the fundamental element of immediate possession has been dispensed of. After stating that the sale of currencies is categorized as Bay’ Sarf, Camperdown errs in its exposition of the ‘fundamental laws pertaining to such transactions’. It has omitted to include in these ‘fundamental laws’ the compulsory element of immediate possession by both parties in the session of the transaction. Instead, it very unprofessionally enumerates ‘permissibility of selling on credit’ as a fundamental law (Rukn) of Bay’ Sarf. The research of Camperdown on this question is defective on two grounds:
(1) It has confused something which it believes to be permissible with the fundamentals of the transaction of Sarf. The statement in the book, viz. “It is permissible to exchange two different currencies on credit at a higher rate with the condition that both parties are in agreement to the rate.”, and which is listed as the third fundamental of Bay’us Sarf, is not a fundamental of a sale involving currencies. This statement is nothing other than a fatwa issued by the Camperdown Madrasah. Whether the fatwa is correct or not, is another issue. But, it definitely is not a fundamental of Bay’us Sarf.
(2) The second defect in the fatwa is that it has no original Fiqhi basis for the view that inspite of sale of currencies being Bay’us Sarf, it is permissible to dispense with the vital requisite of Taqaabudh fil Majlis to render permissible the credit dimension. The only substantiation which Camperdown tenders for its view of permissibility is the claim made by Mufti Taqi Usmaani Sahib. But, it is highly unprofessional, to say the least, to rely on Mufti Taqi Sahib’s opinions on matters of trade and commerce due to the fact that he is a member of the ‘shariah boards’ of the world’s top Riba banks. He has a very disconcerting penchant for opening up avenues constructed on faasid ta’weel, to legalize riba models and merchandise of the banks.
Camperdown should understand that Taqaabudh fil Majlis (immediate possession by the transactors in the session of the sale) is one of the vital fundamental requisites of Bay’us Sarf. Minus this requisite, the transaction degenerates into a haraam riba deal. Therefore, solid Fiqhi argument and grounds have to be incumbently furnished for a fatwa of permissibility to dispense with such a vital requisite of such a delicate issue which culminates in pure Riba in the absence of its fundamentals. It is laughable for researchers and Ulama who sally forth into the battlefield of Ifta cluttered with thorns, obstacles, pitfalls and dangers of a variety of sorts, to present as daleel for abrogation of a fourteen century Mansoos Alahy Hukm of this sacred and immutable Shariah, the view of what Camperdown terms as ‘contemporary fuqaha’ , then citing the personal opinion of Mufti Taqi Sahib.
Undoubtedly, Camperdown has access to an impressive array of the original Works of the Fuqaha-e- Mutaqaddimeen and the Fuqaha-e- Mutakh-khireen. Setting aside the illustrious Aimmah of this Shariah, and settling for dubiosity, is not of the attributes of the Rijaal of Ifta. It is imperative that the young contemporary Muftis should understand the razor sharp path of Ifta. Our advice is that they should sit back and not venture into this field with deficient research.
While at this stage we do not categorically refute the permissibility fatwa of Camperdown, it is necessary to draw attention to the two flaws listed above. If an ignorant layman cites Mufti Taqi Saheb in justification of his practice, it is acceptable. But, for the Men of Ifta to regard as adequate an opinion of contemporary Ulama to constitute the basis for rescinding fundamental Arkaan and Sharaait of fourteen century old Shar’i institutions, is totally unacceptable and intolerable. Some sagacious and pertinent advice for our Mufti Saahibaan: “I never repose confidence in my own understanding until I have not seen the juziyaat of the Fuqaha.” (Hakimul Ummat)
“Fuqaha” here is not a reference to the ‘contemporary fuqaha’ of the ‘shariah boards’ of the Riba banks. The Fuqaha mentioned by Hadhrat Maulana Ashraf Ali Thaanvi (rahmatullah alayh) are the Fuqaha of the Salf-e-Saaliheen of Khairul Quroon. If there is a need, this question shall be further discussed in another forum, Insha’Allah.
Q. In response to my query regarding the permissibility of charging cash deposit fees, Albaraka Bank replied as follows: 1. Al Baraka Bank South Africa adheres to the Shariah Standards laid down by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). 2. The issue of cash deposit fees has been deliberated in great detail with the Bank’s Shariah Supervisory Board and the Shariah advisory panel of the Al Baraka Banking Group, the chairman of which is Sh. Abdus Sattar Abu Ghudda, a distinguished international jurist and a senior member of the AAOIFI Shariah Board as well as the International Fiqh Academy of Jeddah. 3. The resolution that has been passed by the international Shariah advisory panel of the Al Baraka Banking Group and ratif ied by the Bank’s own Shariah Board allows us to charge cash deposit fees on current, investment and f inance debtors accounts. 4. This is also in accordance with the prevalent banking practice (urf) in South Africa due to the high costs involved in handling cash.
A. In the four answers furnished by AlBaraka Bank, no proof of the Shariah is given. Some ambiguous ‘AAOIFI’ standard and the name of a sheikh are mentioned. The response of the bank does not provide any Shariah basis for its haraam deposit fees. If the kuffaar capitalist banks had not introduced cash deposit fees, never would AlBarakah have charged such haraam, riba, extortion fees. The deposit fees are gross exploitation which is imposed on the bank’s clients whose money the bank uses to earn haraam riba. We have explained the Shar’i prohibition of these fees in a detailed article. No one has to date responded with any Shar’i facts to counter our arguments.
The only thing they can come up with is the ‘AAOIFI’ creature which is definitely not the Shariah. No one’s standard can abrogate the Standard of the Shariah. The “high costs” of handling cash is an extremely deceptive, hallucinatory stratagem presented to fleece clients. Despite the so-called ‘high costs’, these banks coin millions annually. Hitherto, even without these haraam fees, they were making millions by exploitation. Since only the Qabr (grave) can satiate man’s greed, they have fabricated this new fee for ‘handling cash’. ‘High costs for handling cash’ is an obscene LIE. Banks have since time immemorial – since their inception — never charged such fees of exploitation. The natural consequence of devouring riba is the development of an inordinate craving for more haraam money. The greed is simply insatiable.
Shaikh Abu Ghudda is not the Shariah. He must present his Shar’i dalaa-il for his view. His personal opinion has no value and no effect if it is not the product of Shar’i daleel. These modernists of AlBaraka Bank are swift in making ‘taqleed’ of characters who present corrupt ‘fatwas’ to aid in the corrupt project of churning out more riba money. But, they have an aversion for true Taqleed of the Math-hab. In matters of the Shariah, we do not make taqleed of modernist sheikhs and incompetent Shariah boards which are on the payroll of the capitalist banks. The ‘prevalent banking practice’ is a confirmed capitalist riba system. Since the brains of Albarakah’s personnel are corrupted with the capitalist riba system, it is not surprising that the bank cited the prevalent capitalist, riba banking system as its ‘shariah’. `Fees charged for handling cash – cash which clients loan to the bank – are HARAAM. AAOIFI’s standards stand rejected in the Shariah.
Q. Please comment on the Diminishing Mushaarakah concept. By this agreement a person simultaneously leases and buys the same property from the financier (the bank). The bank purchases the property and leases and sells it to the client. From the monthly rental a sum is deducted as a payment on the property. So each month the client’s ownership increases a percentage while the ownership of the bank decreases by that percentage. At the end of the contract term, the client becomes the sole owner of the property. Is this deal permissible? According to Mufti Taqi Usmaani this deal is permissible.
A. There is no ‘diminishing mushaarakah’ concept in the Shariah. Shorn of technicalities and legal terminology, the transaction is simply as follows:
(1) Zaid approaches the bank to purchase a house for him.
(2) The bank agrees to buy the house for him on the basis of the following conditions: (a) That Zaid gives a written undertaking that he will buy the house from the bank. (b) That Zaid undertakes to lease the house from the bank, and simultaneously purchase it. Thus this is a double deal in a single contract regardless of the different documents drawn up. It is a deal consisting of a lease and a purchase at the same time. (c) Zaid will make monthly payments. Part of his payment will be rental and part will be deducted as payment on the purchase price of the house. This is what the fabricators of this contract call diminishing mushaarakah, but in the Shariah there is no such transaction which is a combination of two transactions in a single deal. (d) With each monthly payment Zaid makes, his ownership increases proportionately, until at the end of the period he becomes the owner of the house. In essence — in reality, Zaid enters into 60 new sale transactions if the repayment period is 60 months. Each month he ‘buys’ a percentage of the house in lieu of the amount deducted from his monthly payment. Thus, in this deal there is not only two transactions. There are 62 transactions. The first two are the initial purchase and lease agreement, and the 60 are the subsequent monthly acts of purchase. Contrary to the claim that the promise is not enforceable, it is indeed legally enforceable in terms of kuffaar law. The very purpose of the written undertaking is to oblige Zaid in the event he reneges from the promise.
(3) Since the very initial contract is baatil it is superfluous to delve into the other issues. The bottom line is that the property is ‘sold’ and ‘leased’ to Zaid in a single deal His ownership is incremental over the 60 months. Every month he ‘purchases’ a small percentage of the property, and all of this is incumbent in terms of the initial agreement.
(4) We observe that whenever the bankers are bereft of Shar’i argument, they resort to the taqleed of Mufti Taqi Usmani. Please be informed that we do not follow the venerable Mufti. We are in conflict with him on a range of issues.
(5) The contract may be made to conform to the Shariah by means of a simple agreement of sale. If the bank purchases the property for $50,000, for example, and if it wants to make a profit of $30,000 for example over a period of 5 years, the simple and straightforward way is to sell the property to Zaid for $80,000 payable over 60 months or whatever period is mutually agreed on. What is the need for the rigmarole and the laboriously worded contract which the banks usually fabricate, and which contains a number of Islamically corrupt conditions? We fail to understand why the Muslim banks are so intransigent in their insistence to follow the capitalist system. With a simple contract, as outlined above, the banks can make the same profit which they expect to make with the corrupt ‘diminishing mushaarakah’ contract. What then is the need to simultaneously enter into a sale-cum-lease agreement? Brothers, please give this issue further reflection to bring your dealings within the confines of the Shariah.
Q. Please advise regarding dissolving a business partnership.
A. In these times, the dissolution of partnership businesses almost always culminates in mutual hatred, malice and lasting disruption of family relationships which extends to the children of the former partners. Millions of rands are squandered in legal fees and in the end all parties are the losers because they or one of the parties refuse/s to abide by the Shariah. According to the Shariah, the dissolution of a partnership business is a simple procedure provided that the partners are honest and have some fear for Allah Ta’ala. A partnership is dissolved by agreement of the partners or by any one partner unilaterally terminating his partnership. Termination of partnership requires only a verbal declaration to this effect. Just as Talaaq comes into effect with a verbal statement, so too is the dissolution of a partnership valid with a verbal profession of termination. When the partners or any one of them desire/s to dissolve the partnership (Shirkat), it is preferable that they meet and discuss the details of winding up the business. This they should do prior to the actual act of dissolution to ensure that the winding up and distribution of the assets are executed in an amenable and equitable manner without acrimony and dishonesty. The rights of partners permeate every single item of the assets in the business, whether it be the cash, stock-in-trade, book-debts, equipment, fixtures, vehicles, etc. No one has a priority or preemptive right over any particular asset.
When it has been finally decided to end the partnership, then it is imperative to immediately and physically make an inventory of all the assets. If this requires discontinuing trading for a couple of days to effect a thorough stock-taking, then it will be Waajib to do so. Many huge business firms close for a day or two for stock-taking. Stocktaking for terminating a partnership is Waajib. If a partner announces his termination of partnership, it is not permissible for him to continue trading with the assets of the other partners without their consent. Their consent too is invalid prior to stock-taking. If it is decided to finally liquidate the business and cease trading, the decision will be valid and lawful only if all the partners are agreeable. If a partner rejects liquidation, it will be Waajib to assign to him his share of the assets. Consider the example of two partners each one having a 50-50 share. One partner has no right to liquidate the business. While he may cease trading thereby compelling the other partner also to cease trading operations with the stock, he cannot unilaterally liquidate the business. Each one has to physically take possession of his 50% share of all the assets. That means 50% of the cash, 50% of the stock, 50% of the fixtures and fittings, 50% of the vehicles and 50% of everything the business has. A partner cannot insist to be paid in cash for his share. He may sell his share of the assets to his partner at a mutually agreed price which will be paid according to a mutual agreement. If the other partner refuses to buy, he may sell his share of the assets to an outsider.
This does not mean selling his 50% shareholding in the partnership and becoming a partner in the profits and assets of the business. Such a sale is baatil (null and void). Furthermore, a partnership cannot be transferred. An outsider can become a partner only by agreement with the existing partner. The owner of the assets (the partner who withdraws from the partnership) will have to physically uplift and remove his assets if the other partner refuses to buy. If one of the two partners decides to quit, he does not have the right to demand for his share a price which is determined by the value of the business if sold as a going concern. For example, the assets in the partnership business have a real value of R1 million. However, if the business is sold as a going concern, it could be sold for R5 million. The withdrawing partner cannot demand that he be paid R2.5 million for his half million assets if the other partner refuses to pay this price. The price has to be fixed by mutual agreement. Not even the market value is the determinant.
Either the withdrawing partner uplifts his share of the assets or a mutual agreement is made for the other partner to purchase the assets at a mutually agreed price, whatever that price may be. If the kuffaar law is enlisted as is the case nowadays, the court will make a determination with regard to the value of the business as a going concern. It is haraam to make such claims. Such money awarded by a court is haraam. The partner guilty of such usurpation will carry the burden with him into the grave and from there into Jahannum. The partners when ending their partnership have to conduct themselves like intelligent Muslims. They should not lose sight of the Ultimate Reckoning in Allah’s Court on the Day of Qiyaamah. There will have to be a large measure of mutual understanding and some give and take. For example, while the rights of the two partners have equal status in a vehicle, the vehicle cannot be physically split into two. Either the one partner purchases the vehicle for a mutually agreed price or the vehicle is sold to an outsider. The cash will then be split 50-50 (i.e. in this example where there are two equal partners). They should proceed similarly with all such assets which are indivisible. In simple terms, at dissolution, the partnership carcass must be evenly split in two with each partner taking his half and doing with it as he pleases. Any measure in conflict with the Shariah adopted to divide the carcass will render it haraam carrion – just as haraam as the carrion chickens.