Regarding fees charged by banks, Mr. Omar says:
“The administration fee must be commensurate with actual costs incurred in rendering the relevant service.”
There is no Shar’i basis for this claim. What is the meaning of “commensurate with actual costs”? Who will compute this “commensurateness”? And, even if some expert secularist works out a formula for the personal figment of commensurateness, what is the Shar’i basis for it? There is no incumbency in the Shariah for wages, fees or remuneration to be commensurate with “actual costs”. The “commensurateness” theory of Mr. Omar is another one of his fallacies.
An institution is free to charge any fee for its services without consideration of the actual cost for the relevant service in the same way as traders are allowed to charge any sum as a profit on their wares just as they please.
Exploitation – exorbitance – taking gross advantage of a situation to fleece people as the riba banks do – relates to the moral domain. If the situation is out of hand, as it is with the riba banks, an Islamic government has the right of intervention to regulate the fees. But, the commensurateness fantasized by Mr. Omar is baseless. There is no such principle in the Shariah.
Mr. Omar further says in this regard:
“This may be calculated by having regard to a fair and equitable formula which is pro rated to the amount of each transaction financed by the bank.”
Mr. Omar purports to expound “Islamic Finance”. But he presents ideas which he sucks from his thumb. Since he has courageously embarked on his exercise of ‘Islamic Finance’, he is under obligation to furnish Islamic/Shar’i grounds for every idea, every theory, and every figment of the imagination he expounds.
He should divest himself of the notion that his secular qualification entitles him to present just any fallacy of his imagination as a rule, principle and ‘fatwa’ of the Shariah. What gives him the idea that his ‘pro rated’ formula is ‘fair and equitable’ in terms of the Shariah? What is the Shar’i basis for this formula? He does not tender the great and distinguished Ibn Qudaamah to bolster his claims. Nor does he cite the Maaliki jurist, Sahnoon, to provide a semblance of support for his theory and formula of equitability.
In an endeavour to appear professional and qualified in the Shariah, Mr. Omar degenerates childishly by presenting a laughable ‘mathematical’ formula for his theory of equitability. The formula he offers is:
Fee = A/B x P
His ‘A’ is the “amount of the relevant transaction”, and his ‘B’ “is the total aggregate value of transactions….”, and his ‘P’ is “the ratio in which the total costs incurred to date bears to the aggregate value….”
What Mr. Omar has palpably failed to mention, is his ‘Islamic’ basis for this laughable formula. Which Math-hab bolsters him on this issue? If perhaps the great and distinguished Ibn Qudaamah does, then it devolves on Mr. Omar to produce the relevant evidence for our diagnosis and prescription.
The only textual presentation he makes in his brief exposition of bank fees, consists of :
(1) Ibn Qudaamah’s ruling that the fee an agent charges may be a fixed portion of an amount, e.g. R10 for every R1000 of the price or a percentage of the price.
(2) Ibn Aabideen’s ruling that despite Ibn Qudaamah’s view being haraam some Hanafi Fuqaha have legalized it on the basis of the need of the people.
None of these two rulings supports Mr. Omar’s theory of equitability. The fee, in terms of Ibn Qudaamah’s view, is determined by the agent himself, not by the imposition of some stupid theory and laughable ‘mathematical’ formula of a secularist seeking to peddle the figments of his nafs as Shar’i principles pertaining to Islamic Finance. Ibn Qudaamah’s view is simple. The determination of the amount of the fee is left to the individual agent.
Although Ibn Qudaamah’s view is untenable and haraam according to the Hanafi Math-hab, some Hanafi Fuqaha have given credence to it due to what they perceived is a true need of the people.
As was mentioned earlier in our exposition of Bay-ul-Wafa’, a haraam act cannot be legalized on the basis of the permissibility of eating pork in a given situation of starvation. If the consumption of pork was permissible for Zaid at one time, it will be a conspicuous demonstration of jahaalat to aver that since the great and distinguished Ibn Qudaamah had ruled the permissibility of consuming pork due to the dire need of Zaid, relishing on pork has, therefore, become lawful for all time and for all people.
Haraam can be temporarily legalized on the basis of certain Shar’i principles. When a situation of dire need develops, recourse has to be made to the Usool (Principles). The relevant principle has to be invoked, and the contingency should be measured on its (the principle’s) standard to ascertain the legality of its applicability to the situation of need. But, Mr. Omar acquits himself in the style of ignorant laymen who has seen in a kitaab that pork is halaal for a starving man. On this basis the ignoramus proclaims the permissibility of eating swine flesh for all people at all times. This is the analogy of Mr. Omar’s ‘fiqhi’ (juridical) deductions. He makes a complete hash when he brews his potions.
THE BANK AS MUDHARIB
In his discussion on this issue, Mr. Omar says:
“The depositors as the contributors of capital are regarded as whole as the rabb-ul-mal, whereas the bank, as a separate legal entity, is regarded as the mudharib.”
While this is the position in the theory of the modernists and the liberal molvis, it is not the position of the Shariah. Firstly, the concept of legal entity is a fiction of the kaafir capitalist system. It has absolutely no place in Islam. It is a system of the humbug capitalist devourers of riba who, in Qur’aanic parlance, stand “like one who has been driven to insanity by the touch of shaitaan.”
Islam has no truck with the haraam legal entity concept fabricated to defraud creditors. We have explained the fallacy and prohibition of this imaginary ‘legal entity’ in our book, The Concept of Limited Liability – Untenable in The Shariah. Anyone who wishes to have a copy may write to us.
The first fundamental flaw in Mr. Omar’s aforementioned postulate is the Shariah does not recognize the capitalist concept of the imaginary phantom of ‘a separate legal entity’.
In the Shariah, both the Rabbul Maal (the investor or contributor of the capital) and the Mudhaarib (the worker – the one who employs the capital to gain profit for the joint venture) are Insaan (living human beings). All acts, contracts and institutions of Islam are regulated by Arkaan (Fundamental requisites) and Sharaa-it (Imperative Conditions). In the absence of any of these essential requisites, the act, contract or institution is null and void.
Among the essential requisites for the validity of the institution of Mudhaarabah is the shart (condition) of Ahliyatut-Taukeel. In other words, both the Rabbul Maal and the Mudhaarib must necessarily be qualified persons capable of assuming the institution of Wikaalat (Agency). This, according to the Shariah, is possible only if both transactors are baaligh (adults) and aaqil (sane). Therefore, a minor and an insane person cannot become either of the transactors in a Mudhaarabah venture.
These fardh and imperative conditions do not exist in the ghost they define as ‘separate legal entity’. An agreement with a fictitious being, i.e. the capitalist riba ‘legal entity’, is neither valid nor intelligent nor acceptable in the Shariah. Thus, since this vital fundamental condition is lacking in the current ‘mudhaarabah’ agreements of the so-called Muslim capitalist banks, a Shariah compliant Mudhaarabah simply does not exist. All these ‘mudhaarabah’ schemes of the banks are baatil – baseless and haraam.
The Rukn (the very fundamental basis) of a valid Shar’i Mudhaarabah is Ijaab and Qubool (verbal expressions) by the sane adult participants of the enterprise. A phantom ‘legal entity’ is incapable of fulfilling the Shariah’s demand for this Rukn. This too renders the current ‘mudhaarabah’ schemes of the banks totally baatil.
In a valid Mudhaarabah enterprise, the Mudhaaribeen will be the bank’s directors – those who are in charge of the money and who direct the money into profitable ventures. The conglomerate of directors is in actual fact the Mudhaarib. They do not represent the Mudhaarib. They collectively are the Mudhaarib.
The Mudhaarib in the Shariah acts like the boss. He has unrestricted use of the money, and he may employ it profitability according to the terms of reference of the Mudhaarabah venture. The bank’s directors pose as bosses, not as hired workers. They can therefore best act in the role of the Mudhaarib in a valid Mudhaarabah business venture.
Bringing the present baatil ‘mudhaarabah’ schemes of the socalled Muslim capitalist banks fully within the confines and compliance of the Shariah poses no formidable task. But, the corruptive transformation which the brains and hearts of the Muslim capitalists have suffered in consequence of the western capitalist Riba systems to which they are anchored, constrains them to defy with reckless intransigence the dire Divine castigations sounded in the Qur’aan and Ahaadith for those who refuse to desist from Riba and Riba tainted dealings.
Consider the specific case of Mudhaarabah in relation to the banks. Inspite of the simplicity and permissibility of the bank’s conglomerate of directors acting the role of the Mudhaarib, thereby satisfying all the vital requisites imposed by the Shariah for the validity of the venture, they mulishly insist and persist to buckle themselves with the yoke of the system of capitalism. Thus, they rather adopt the kuffaar baatil concept of ‘a separate legal entity’, then they perform an unholy – null and void – marriage between the contributors of the capital and the non-existing ‘legal person’.
Riba produces an unquenchable thirst for money. It engenders spiritual blindness which completely effaces the conscience which develops from the bedrock of Imaan. It is for this reason that the liberal molvis and pseudo-molvis perpetually and incorrigibly incline to hybrid models which are incongruous in relation to both the Islamic and the capitalist systems. Eager to effect a fusion of the two mutually repelling systems, they fabricate financial products of Riba with an outer-coating of an extremely diluted Islamic hue which does not really serve the objective of concealing the corruption of the schemes.
Mr. Omar says:
“The bank is entitled to its share of the profit in consideration for its labour. The bank itself as a separate juristic entity is the Mudharib”.
The bank being a ‘separate juristic entity’ in the imagination of the capitalists, is supposedly entitled to a share of the profit in its imagined capacity as the ‘mudharib’. Since the bank is a fictitious ‘person’ without real existence, who is destined to gobble up the ‘mudharib’s’ share of the profit? The depositors/contributors of the capital are the Rabbul Maal. Acquisition of profit by the human Rabbul Maal is understandable. But into whose coffers will go the profit share of the imaginary ghost – the ‘legal entity’?
If there are human faces behind this sham of a ‘legal person’ of no existence, whose pockets the ‘mudharib’s’ share of profits will grease, then they will be the Mudhaarib, not the fiction spawned by brains demented by the ‘touch of shaitaan’.
THE EXPENSES OF THE MUDHAARABAH
In this regard, Mr. Omar claims:
“…[A]ll indirect expenses incurred by the bank in conducting its operations must be borne by the bank, and not the Mudhaarabah partnership. These indirect expenses include salaries, rental, water, electricity, maintenance of equipment and ancillary expenses. Direct expenses, on the other hand, are those which are connected directly with the Mudhaarabah partnership…. These expenses must be borne by the Mudhaarabah partnership itself.”
Mr. Omar ominously refrains from citing the great and distinguished Hambali jurist, Ibn Qudaamah in substantiation of the myth he has propounded here. He baselessly categorises the expenses into direct and indirect. The owners/directors of the bank are the Mudhaarib. The expenses may not be loaded on the Mudhaarib. Whether direct or indirect, all expenses will be for the Mudhaarabah partnership. The imposition of any part of the expenses on the Mudhaarib alone, is a faasid condition which the Mudhaarabah contract is not allowed to bear.
Mr. Omar gives examples of ‘indirect’ expenses, e.g. salaries, rental, etc., etc. But he refrains from citing even one example of ‘direct’ expenses. Just what are these ‘direct’ expenses related to the Mudhaarabah venture? Why are salaries, rental, electricity and the like excluded from the liability of the Mudhaarabah partnership? A partnership business employing its capital for the acquisition of profit is saddled with this kind of expense.
No one should become fuddled and fooled by the false talk of banks engaging in Mudhaarabah business ventures. Imaam Ghazaali (rahmatullah alayh) says in his Ihya-ul-Uloom that assuming there would be trade and commerce in Jahannum (in Hell-Fire), the only trade which will subsist in that horrendous substratum would be the banks – the illicit trade of the moneyexchangers and money-lenders.
These institutions of parasitism, imperceptibly gnawing and eroding the economic foundations of the nation with their satanic ventures of Riba, never engage in lawful trade. They gamble on the haraam stock exchange. Their only profession is the transference of money from one account to another. They only sell money for money. Their mudhaarabah deals are huge ploys and gimmicks. They succeed in duping the ignorant masses. The Ulama have truly observed: “The masses are like dumb animals”.
The banks do not roll up their sleeves and work for profit. Their eyes see only Riba. They dream Riba. They devour Riba. The ‘profit’ they distribute is Riba. They live and die for Riba. Their investments in a variety of trading companies are all Riba dealings which they adorn with Islamic sounding paraphernalia.
The banks’ hired scholars of this age relentlessly seek to justify the Riba of the capitalist so-called Islamic banks with the over-used metaphors of mudharabah, mushaarakah, muraabahah and a litany of other Islamically flavoured terms. Their mismanipulation of Shar’i terminology is a deceptive exercise consisting of huge hyperbole developed solely for camouflaging the riba transactions of the banks in the hope that the ignorant Muslim masses will swallow it hook, line and sinker, as well as to intimidate Ulama of superficial textual knowledge, of shallow understanding and bereft of the depth of Ilm which emanates from a heart imbued with divine efflorescence of the Knowledge of Wahi.
Hired scholars paid huge ‘salaries’ from riba funds by riba banks cannot hope to partake in this efflorescence of Noor-e- Ilm. It is for this reason that they have enslaved their minds to serving the dictates and demands of capitalism.
THE ‘LEGAL PERSON’ RED HERRING
Utterly bereft of any Shar’i base, Mr. Omar licks the very dregs of the barrel of Baatil in claiming:
“It must be noted that the contemporary Shariah experts have recognized a company or other body corporate as a separate legal person, with rights and obligations (on the same basis as a natural person). On this basis the bank is regarded as a separate legal person, which is the mudharib itself, and which acts through its authorised Board of Directors, officers and employees. This was recognised by the supreme Shariah Board of Albarakah….”
“Contemporary Shariah experts” are not the representatives of the Shariah of Islam. They are not among the Warathatul Ambiya. These imagined ‘experts’ of the Shariah are the hired scholars and representatives of the riba banks which they serve. Their function is to churn out financial models portrayed as ‘shariah-compliant’ for the Muslim masses.
“The supreme Shariah Board of Albarakah”? This is indeed ludicrous and laughable. The hopeless, miserable board of hired ‘scholars’ of a capitalist bank wallowing in riba has suddenly become a ‘supreme shariah board’. It may be such a supreme board for modernists juhhaal who happen to be self-appointed ‘mujtahids’ of this age – such ‘mujtahids’ who, when their defective and superficial research of the kutub, and the shallowness of their intellectual grasp fail to exhume any facts for their baatil theories, seek refuge in stupid blind following of ‘shariah boards’ of hired scholars.
To give credibility to such laughable taqleed, the need has arisen in the ranks of the juhhaal to appoint some phantom of a ‘supreme shariah board’, which in reality is the handmaid of the capitalist banks, and just as fictitious as the ghost which the juhhaal term ‘legal person’.
In our book, The Concept of Limited Liability – Untenable in the Shariah, we have, Alhamdulillah, explained in detail the fiction and invalidity of the ‘separate legal person’ or the figment termed ‘company’. Anyone interested to acquire this book, may write to us for a copy.
When the ‘supreme shariah board’ of the capitalist banks has recognized the validity and permissibility of riba as an imperative requisite for the smooth functioning of the figment of ‘Islamic’ finance, albeit portrayed with Islamic hues, it should not be surprising when they issue their corrupt ‘fatwa’ of the validity of the phantom they term ‘separate legal person’. Even a Muslim businessman of mediocre Deeni knowledge of just the basics of the Shariah necessary for moral and spiritual survival, knows and understands that the company and limited liability concepts are forgeries of the kuffaar capitalist experts of economics.
The hired scholars sitting on the shariah boards of the capitalist banks were constrained to fabricate a basis for the legalization of the haraam effects created by the company concept. When all their tedious exercises and futile labour perpetrated in the kutub of the Shariah produced no basis for their bank masters, they had no alternative other than to throw all Imaani caution and conscience overboard to proclaim Islamically lawful the haraam figment of the phantom legal person dubbed ‘the company’ with its appendage of fraud, viz., its limited liability attribute.
In the commission of this monstrous legalization of baatil, they have placed themselves in the full glare of the Qur’aanic castigation:
“O People of Imaan! Verily, numerous of the Ahbaar and Ruhbaan, most certainly are devouring the wealth of the people by means of baatil (falsehood and haraam), and (in so doing) they prevent (people) from the Path of Allah (i.e. from following the Shariah of Allah).” (Aayat 34, Surah Taubah)
The ‘supreme shariah boards’ of the ulama and mashaaikh of the Yahood and Nasaara – all hired scholars of the wealthy capitalists of their age – had set the stage for selling the laws of Allah Ta’ala for miserable worldly remuneration. This is precisely the profession of the ‘supreme shariah boards’ of the Muslim capitalists banks of today.
The function of these ‘supreme shariah boards’ is nothing other than to search in the books of Fiqah for the flimsiest textual straws and stratagems to weave a fabric which could very deceptively posit as a basis for the theories of capitalism thereby according Shar’i acceptability and legality to the corrupt concepts and practices of an economic system which has absolutely no affinity with the system of trade and commerce enunciated by the Divine Shariah of Islam.
‘TA ADDI AND TAQSIR’
Citing from the baatil resolutions of Albaraka bank’s so-called supreme shariah board, Mr. Omar presents:
“Any changes in the shareholding or directors of the bank does not affect the relationship between the depositors as rabbul- maal and the bank as mudharib; because the depositors are protected in the event of negligence or misconduct on the part of the bank (despite changes in shareholding) in accordance with the ordinary rules of TA ADDI and TAQSIR governing partnerships such as Mudaarabah.”
The hybrid nature of this proposition adequately displays the split mentality and oblique vision of the members of the ‘supreme shariah board’. In the aforementioned fallacious theory they have laboured to legalize an invalid position by an act of bamboozlement – using two Arabic terms which have no technical significance in the terminology of the Fuqaha. The two words, ta-addi and taqseer simply mean ‘transgression’ and ‘deficiency’ respectively. These terms cover negligence, fraud, theft, mismanagement and the like. They are words of literal meanings applicable to all spheres of life.
These two words are unlike the technical terms of mudhaarabah, muraabahah, etc., which are not words of literal meaning, but are concepts and specific practices encumbered by a myriad of rules and regulations.
It is not difficult to see through the thin veneer for the employment of the Arabic words of literal meaning in the context of the corrupt resolution of the so-called ‘supreme shariah board’ of the capitalist bank. Since the entire resolution is devoid of Shar’i substance, its western capitalist colour is too conspicuous for comfort, hence the need to inject an ‘Islamic’ flavour by the silly use of Arabic terms which just have no juristic significance.
The resolution mentioned above is invalid in terms of the Shariah. The Mudhaarabah contract is between two parties – Rabbul Maal and Mudhaarib. If anyone of the parties opts out of the deal, the contract terminates. If a new partner (Mudhaarib in this case) enters the show, a fresh contract has to be arranged between the parties. The contract with the first Mudhaarib ends with his withdrawal from the agreement.
The Mudhaarib cannot sell his share of the business unilaterally to a third party and impose the mudhaarabah partnership on the Rabbul Maal (the one who advances the capital). Thus, in the event where a valid Shar’i Mudhaarabah contract exists, a change of directors will terminate the existing contract, necessitating the formulation of a new agreement between the Rabbul Maal and the new directors who intend to continue with the Mudhaarabah contract. The aim of the baseless resolution is simply to perpetuate the functioning of the capitalist banking structure along the lines which the capitalist concept has cast in stone for its systems.
Having understood the conflict with the Shariah of the aforementioned resolution, Mr. Omar cites the following resolution of the ‘supreme shariah board’ of the capitalist bank, in an abortive attempt to minimise the conflict:
“The aforegoing is subject to the following: a depositor may explicitly stipulate that his or her investment as rabb-ul-maal is subject to the condition that there be no change in shareholdings or directors and managers or one or more of them. A breach of this stipulation would entitle the relevant depositor to withdraw his or her investment in the Mudaarabah which by virtue of the said stipulation is regarded as a limited Mudaarabah”.
This is a typical utopian supposition. The poor depositor is an infinitesimal screw in the gigantic banking structure of the capitalist world. Leave alone having any say in the affairs of the bank, he totally lacks awareness of the banking system, of the functioning of the bank, of the methods employed by the bank and of even the meaning of the ‘mudhaarabah’ agreement. As far as the average depositor is concerned, he simply deposits money in the bank which he is told will pay him a share of the ‘profit’. He knows absolutely nothing beyond this rudimentary awareness.
This resolution is indeed a gimmick to befool people who have little understanding of the mechanics of the Shariah pertaining to invalidity of trade agreements. The Mudhaarib holds in trust the capital entrusted to him by the Rabbul Maal. If he desires to opt out of the contract by any of the stratagems recognized by the capitalist system, he may not do so. Thus, he cannot sell his percentage share of the profit and appoint the buyer to his share as the new mudharib. The newcomer will have to enter into a Mudhaarabah agreement with the Rabbul Maal. There is no automatic transfer of the Mudhaarbah to someone unilaterally selected by the Mudhaarib who opts out in consideration of payment by the prospective new ‘mudharib’.
Insulation against ta’addi and taqseer does not validate automatic transference of the Mudhaarabah agreement to one with whom the Rabbul Maal had not transacted. Ta’addi and Taqseer are separate issues with no bearing on the contract of Mudhaarabah. Negligence and deliberate mismanagement of any kind exercise their effect on the issue of Amaanat (Trust). The capital in the possession of the Mudhaarib is an amaanat, hence the rules of Amaanat are applicable. If the capital is lost while in the possession of the Mudhaarib, he is not liable. The Rabbul Maal sustains the loss. However, if the Mudhaarib is guilty of gross negligence, he will be held liable.
This is the limit of the operation of ta’addi and taqseer. But, the votaries of capitalism have abortively attempted to elevate these terms to the status of a principle or a specific concept, and to blindly apply it in a bid to sustain the Mudhaarabah agreement despite its invalidity when the Mudhaarib changes by way of a haraam deal – namely, the sale of his share in the Mudhaarabah contract
The explicit stipulation enunciated in the ‘supreme shariah board’s’ resolution is baatil. There is absolutely no need for such a stipulation. The question of the Rabbul Maal’s entitlement to withdraw from the Mudhaarabah contract being subject to the ‘explicit stipulation’ fabricated by the deviant ‘supreme shariah board’ of the capitalist bank, is a fallacy. The Rabbul Maal is not bound to perpetuate the Mudhaarabah. He may terminate the agreement at any time at will. The issue of ta’addi and taqseer is irrelevant. Absence of transgression and mismanagement cannot restrain the Rabbul Maal from cancelling the Mudhaarabah agreement. Hence, what the resolution states is pure drivel.
The irrefutability of this Shar’i fact is so well-grounded and conspicuous that Mr. Omar is compelled to concede:
“The classical Muslim jurists express the view that any party to a Mudaarabah contract may terminate the contract at any time.”
PREMATURE WITHDRAWAL OF DEPOSITOR
Under this caption, Mr. Omar attempts to supersede the right to terminate the Mudhaarabah contract which the Shariah grants both parties. Inspite of him conceding that according to the “classical Muslim jurists”, any of the parties has the right to terminate the contract at any time, he seeks to override the Shariah as propounded by the Fuqaha (the classical jurists) among the Sahaabah, Taabieen and Tab-e-Taabieen, by citing as his ‘daleel’ the unsubstantiated opinion of Mufti Taqi Usmani Sahib.
Even Mufti Taqi Sahib in his book, An Introduction to Islamic Finance, has no alternative other than to concede with clarity the right of the parties to terminate the Mudhaarabah contract at will.
Since Mr. Omar has miserably failed to present even a semblance of evidence from any of the Four Math-habs for his untenable view on what he terms ‘premature withdrawal of depositor’, his only succour is in seeking aid from Mufti Taqi’s book which is basically an exercise presenting much of the personal ideas of the author. Mufti Taqi’s opinions which conflict with the rulings of the Fuqaha of Islam are unacceptable and baseless.
In his brochure, Mr. Omar refers readers to pages 52 and 53 of Mufti Taqi’s book. They are supposedly to obtain the proof for the proposal to fetter the unrestricted right of termination, on pages 52 and 53 of Mufti Taqi’s book.
But on page 51, Mufti Taqi Sahib states unequivocally:
“The contract of mudarabah can be terminated at any time by either of the two parties. The only condition is to give notice to the other party.”
Mufti Taqi Sahib here states the Shar’i position. There exists ample evidence in the Books of Fiqh for the position stated by the Fuqaha. Notwithstanding this clear-cut ruling of the Shariah which he acknowledges without ambiguity, Hadhrat Mufti Taqi Sahib, very peculiarity states on page 52 of his book:
“This unlimited power of the parties to terminate the mudarabah at their pleasure may create some difficulties in the context of the present circumstances, because most of the commercial enterprises today need time to bring fruits. They also demand constant and complex efforts. Therefore, it may be disastrous to the project, if the rabb-ul-maal terminates the mudarabah right in the beginning of the enterprise. Specially, it may bring a severe set-back to the mudharib who will earn nothing despite his efforts. Therefore, if the parties agree, when entering into the mudarabah, that no party shall terminate it during a specified period, except in specified circumstances, it does not seem to violate any principle of the Shariah….”
It most certainly does violate the Shariah in that the Shariah has granted both parties the unfettered right (or unlimited power according to Mufti Sahib) to cancel the contract at will. While the Fuqaha have their solid Qur’aanic and Sunnah dalaail for their rulings, Mufti Taqi Sahib has presented absolutely no proof for his view which he presents in negation of the 14 century ruling of the Shariah.
In this opinion, Mufti Taqi Sahib implies that the Shariah has erred in its bestowal of ‘unlimited power’ to the parties to terminate the contract, because this bestowal, according to Mufti Taqi, culminates in the creation of such difficulties which may be ‘disastrous to the project’. In other words, Mufti Taqi Sahib expects Muslims to believe that the Shariah based on the immutable principles of the Qur’aan and Sunnah, did not foresee the degree of complexity of later projects. This leads to the conclusion of the inadequacy of the Shariah – Nauthubillaah!
This is the theme of the modernists who monotonously and fallaciously labour to ‘prove’ that the Shariah of Islam is the product of the minds of the illustrious Aimmah-e-Mujtahideen, and not that of the Qur’aan and Sunnah.
Furthermore, Mufti Taqi’s argument (as mentioned above) is baseless. The ‘difficulties in the context of the present circumstances’ are imaginary. The other claim, namely, “the mudharib will earn nothing despite all his efforts’, is also baseless, having no reality. The system of the Shariah is orderly and divinely designed for the maximum benefit of all concerned. It is most unbecoming of a learned Mufti of the Shariah to envisage disaster as an effect of observance of the limits prescribed by the Shariah. The Qur’aan-e-Kareem expressly states:
“These are the limits of Allah. Whoever commits ta’addi (transgression) against the limits of Allah, verily he has committed injustice against his own nafs.”
Hadhrat Mufti Sahib has to incumbently retract his statement:
“Therefore, it may be disastrous to the project, if the rabb-ulmaal terminates the mudarabah right in the beginning of the enterprise.”
When the Shariah has bestowed this right of termination to the Rabbul Maal, it does not then behove any Mu’min to read disaster into the bestowals and Ahkaam of the Shariah. The principles evolved by the illustrious Aimmah-e-Mujtahideen on the basis of the Qur’aan and Sunnah are ample for all contingencies and developments until the Day of Qiyaamah.
The rationale of Mufti Taqi Sahib to justify tampering with the explicit rulings of the illustrious Fuqaha is untenable and unacceptable. Hadhrat Mufti Taqi Sahib should not excise from his mind the fact that he is a Muqallid of the Hanafi Math-hab. He has therefore to incumbently operate within the confines of the Math-hab and abstain from the destructive exercise of bending and battering the rules to accommodate the concepts and theories of western capitalism for the sake of the monetary designs and pursuits of the neo-capitalists in Muslim society.
TERMINATION AT WILL
If the Rabbul Maal terminates the contract in the early stage of the enterprise, he does not harm the Mudhaarib. He simply recalls his capital. The Rabbul Maal will undoubtedly have valid reason for his desire to terminate the contract. Either he is in desperate need of his cash for another project or he has lost confidence in the integrity of the Mudhaarib or he has some other good reason for his desire to terminate the contract.
To satisfy his needs with his own wealth, he has every right to recall his capital. Upholding this right, the Shariah allows him unfettered freedom to cancel the contract. In so doing he does not usurp the rights of the Mudhaarib.
The argument that the Mudhaarib “will earn nothing despite all his efforts” is palpably false. According to the Shariah, when the Rabbul Maal notifies his partner of termination, the position will be as follows:
(1) The capital has not yet been employed by the Mudhaarib. In other words, the Mudhaarib sits with the hard cash. If this is the position, the Mudhaarib is not entitled to receive any remuneration/profit. He will suffer no “severe set-back” by simply returning the Amaanat of the Rabbul Maal.
(2) The capital has already been employed in the enterprise. It has already been converted into merchandise. In this situation notification of termination will not culminate in an abrupt halt and discontinuation of the enterprise. The notice to terminate while restraining the Mudhaarib from further employment of the cash, allows him to continue trading with the merchandise, selling off whatever stock he has, thereby bringing about an orderly cessation of the enterprise.
In this situation, the Mudhaarib is not deprived from his share of the profit. He will acquire his right. It is therefore injudicious and improper to aver that the Mudhaarib “will earn nothing despite all his efforts”.
Since the Shariah gives both parties the right to terminate the Mudhaarabah at any time, the claim of ‘premature withdrawal’ is baseless. The Shariah does not accept this postulate.
In his brief essay on premature withdrawal, Mr. Omar has conspicuously refrained from sighting the “eminent Hambali jurist Ibn Qudamah” or the Maaliki jurist, Sahnoon or any other jurist of any other Math-hab. Pure personal conjecture has been employed to justify an untenable position.
THE OPTION TO REPOSSESS IN THE EVENT OF INSOLVENCY
If the seller did not secure his right over the asset by means of a Rahn contract, he is on par with all the creditors in the event of the debtor’s insolvency. This is the unanimous ruling of the Hanafi Fuqaha. In the absence of a Rahn (Pawning) contract, the seller has no preferential rights to the exclusion of other creditors.
After unequivocally acknowledging this Hanafi position, Mr. Omar whom we still believe to be a layman Muqallid of the Hanafi Math-hab, advocates the ruling of the other Math-habs which allow the seller a preferential right – the right to take possession of the asset if it still exists in the buyer’s possession in its original form.
He has absolutely no right whatsoever to peddle views and opinions which soothes his nafs, and which he calculates will be in the interests of the riba banks of the Muslim neocapitalists. Mr. Omar is bereft of the qualifications which allow a Faqeeh to prefer certain views among the conflicting opinions of the Fuqaha of even his own Math-hab. Great Ulama of the calibre of Imaam Raazi, Saahib-e-Hidaayah and the like, possessed this ability and right, not total non-entities deficient in the knowledge of even the masaail of Tahaarat and Salaat.
It is beyond all limits of jahaalat for a layman in this age to propel himself onto the pedestal of the Aimmah Mujtahideen thereby arrogating for himself the right to set aside the unanimous ruling of his Math-hab to advocate just any view of another Math-hab which appeases his whimsical agenda.
Mr. Omar is guilty of intellectual abortion of the worst kind for discarding the authoritative and unanimous Ruling of the Hanafi Math-hab, and transgressing beyond its confines to advocate the view propounded by Ibn Qudaamah of the Hambali Math-hab. Fools rush in where angels dread to tread.
Furthermore, in his presentation of the view of the other Mathhabs, Mr. Omar states:
“The majority of the jurists including the Shafi’i, Maaliki and Hambali schools are of the view that the seller has an option upon the buyer’s insolvency: the seller may retake possession of his goods, or such of them as are found in the buyers possession.”
The Ruling of the other Math-habs is the right to repossess if the exact asset is found intact in the possession of the debtor. The claim of “such of them as are found”, is incorrect. The goods must be exactly the same, not part of them, part having been sold.
Continuing his presentation, Mr. Omar states:
“The view of the majority of the jurists may be effectively implemented by incorporating an appropriate clause in the underlying sale agreement to the effect that the seller will be entitled upon the buyer’s insolvency to retake possession of the goods, which remain unsold, and are with the buyer at the time of insolvency. The seller will, by the inclusion of such a contractual term, be able to bring a claim against the insolvent estate for the return of the goods (or their value, if they are sold in the ordinary course by the trustees) in preference to other creditors.”
Mr. Omar is either blissfully ignorant of the full mas’alah on this issue according to the Hambali Math-hab or he has conveniently cast a blind eye in order to peddle his fabrication to protect the interests of the riba banks. The Hambali position is that there are five conditions for the validity of the buyer’s right to reclaim the goods he had sold.
Among these five stipulations, the condition which is most germane to the ‘right’ which Mr. Omar seeks to abortively confer to the banks is:
“The second condition is that the seller did not receive any payment on the price of the asset. If he has accepted part of the price (i.e. the debtor had made payments), his (the seller’s) right of reclamation falls away.”
This condition nullifies the incorporation of “an appropriate clause” as proposed by Mr. Omar. It is indeed rare and highly unlikely that the debtor did not make any payments on his vehicle to the bank. As such, the right to repossess the asset is extinguished.
Thus, while according to the other Math-habs the seller may reclaim his asset, in practice this is not possible on account of the conditions which nullify the seller’s right to reclaim. And, above all, Mr. Omar has no right whatsoever to overrule and override the authoritative Ruling of the Hanafi Math-hab. In the stratagem proposed by Mr. Omar, there is no security for the bank. The only measure available to the bank to protect its interests, is the contract of Rahn.
A man in financial straits is in need of some cash. He requests a moneylender for a loan. The hard-hearted creature refuses, but offers the availability of a stratagem by which the struggling man can acquire some cash. The moneylender offers to sell him some goods for perhaps substantially more than the market value on credit. Since the hard-pressed man has no option, he purchases on credit from the blood-sucking parasite R1000 worth of goods for R1500, for example. He then sells the goods to others for substantially less, even below the R1000 market value in order to gain the cash to satisfy his need.
This irregular and unnatural dealing is with the full knowledge of the moneylender whose only interest is his R1500 to be paid on due date. While this type of sale, termed Tawarruq, is technically/legally valid and permissible, it is morally inhuman and obscene.
Technically there is no riba here. But morally it is ‘riba’ and cruel. It is a reflection of the worst form of human greed which makes the moneylender totally forgetful of his purpose in this world. This type of transaction totally banishes Allah from the human mind.
In view of the fulfilment of the requisite conditions for a valid sale, the abnormal Tawarruq stratagem is considered legal although prohibited by many Jurists. Mr. Omar is ominously silent about the view of the great Ibn Qudaamah for whose views he has a penchant, that is, whenever these coincide with his whimsical theories. Nevertheless, in all fairness to Mr. Omar, he does mention that according to Ibn Taimiyyah and Ibn Qayyim, Tawarruq is prohibited since they regard it as riba. In fact, morally it is riba.
Tawarruq is a stratagem to alleviate a man in distress. It is invoked in isolated cases of need. It is not a practice which the Shariah encourages nor should it be adopted as a normal trade practise. Although Mr. Omar advocates this stratagem to be incorporated as a normal trade practice and offers some silly advice to banks in this regard, we are sure that even the capitalist banks will frown and have no inclination for this type of dealing.
Mr. Omar has indulged in a futile discussion by introducing the stratagem of Tawarruq in his brief brochure. The only discernable reason for broaching this redundant and unhealthy practice is perhaps to flaunt his smattering ‘knowledge’ on Fiqhi issues.
PRIZES BY THE BANKS
Mr. Omar says:
“Investment accounts of depositors in Islamic banks do not represent loans.”
Therefore, if banks award prizes to investors, such prizes are permissible “[P]rovided that they are paid for from the bank’s own funds (and not that of the depositors).”
The pertinent question is: Does the stupid ‘legal person’ devoid of body and soul ‘own’ funds? How does the phantom earn and own funds? In terms of the capitalist concept of which Mr. Omar is an ardent devotee and expounder, the directors are not the owners; the depositors are not the owners; the managers are not the owners. Who in heaven’s name will inherit the funds of the ghostly and ghastly being they term ‘legal entity’?
Brains are not required to understand that the Shariah does not accept that a stupid figment existing in the minds of riba capitalists is an intelligent human being who can own funds. Since no human being is the owner of the bank according to Mr. Omar and his ilk of thinkers, from whence did the imaginary ‘person’ siphon off the funds which is ludicrously claimed to be the funds of the bank?
Undoubtedly, the funds which the directors set aside as the ‘property’ of the ghost – the legal entity – are siphoned off from the gains, whether ill-gotten or otherwise – of the depositors and so-called investors. The bank, i.e. its managers and directors, are in the capacity of the Mudhaarib or Shareek (partner). The investors are collectively the Rabbul Maal. It is clearer than daylight that the directors do not pay prize money from their pockets. The Mudhaarib pays the Rabbul Maal the prize acquired from money which is ‘legally’ stolen from the Rabbul Maal – the partners and investors – and/or from the gains which the monies of the other depositors yield. The bank’s funds are the product of legal trickery, thievery and riba which are siphoned off from the monies of depositors and investors under cover of baseless interpretation spawned by the concepts of the capitalist system of economics.
Under the sun and on the surface of the earth, there exist no greater humbugs than the banks, hence Imaam Ghazaali (rahmatullah alayh) averred that if ever there would be trade in Jahannum, it would be the banking trade.
Prizes given by banks, be these the so-called ‘Islamic’ banks – there is nothing Islamic in these banks – are Waajibut Tasadduq. It is incumbent to give such prizes to the poor as Sadqah. The sophistry employed in the arguments to legalize such prizes are merely a thin or even a transparent veneer which lack the ability to conceal the crookedness and false agenda underlying the prizes which banks dole out.
Mr. Omar, with temerity describes bank prizes as ‘tabarru’ – favour, gift or donation. No one should entertain the misconceived notion of the banks being philanthropic institutions with altruistic motives. There is absolutely no relationship between banks and Tabarru’. To predicate Tabarru’ for the capitalist banks is tantamount to the affirmation of Sajdah for Iblees. That banks render favours and present donations based on altruism are furthest from the imagination of every person who has had dealings with the devourers of riba who are driven to insanity by the touch of shaitaan. – Qur’aan
THE HARAAM RIBA PENALTY TERMED ‘CHARITY’
The worst misdemeanour perpetrated by the liberal molvis and their modernist unqualified cronies of Mr. Omar’s ilk is the dastardly attempt to legalize Sareeh Riba (categoric riba) which the Qur’aan and Sunnah unequivocally prohibit and castigate as the worst of sins for which Allah Ta’ala and His Rasool have proclaimed the ultimatum of war.
In this pernicious attempt, baseless, false and devious arguments have been employed. The endeavour is to convey the impression that the Maaliki Math-hab condones the interest on late payment of instalments. There is nothing further from the truth. The Maaliki Math-hab like all the other Math-habs prohibit this riba penalty which the mudhilleen describe as a ‘self-imposed charity contribution’. Perhaps they may succeed in hoodwinking themselves with their self-deceptive arguments which are devoid of the slightest vestige of Shar’i substance.
In his very unprofessional brochure, Mr. Omar states:
“The distinguished jurist Mufti Taqi Usmani has expressed the view that the clause is permissible in Shariah, based on the Maaliki school of jurisprudence.’
Mr. Omar further adds:
“The great Maaliki jurist Allama Hattaab (RA) has dealt with the enforceability of obligations in his incisive and authoritative work: Tahreerul Kalaam Fi Masaailul Iltizaam.”
Then in an unabashed claim which is pure falsehood, Mr. Omar states:
“The Maaliki jurists state that a debtor may permissibly stipulate to pay an amount to a third party, as a deterrence for his own breach of contract, if he (the debtor) were to default in payment on the stipulated future date of payment.”
In brief, we shall at this juncture content ourselves with an unequivocal rejection of the falsehood which Mr. Omar has brazenly and ignorantly attributed to the Maaliki Math-hab, and which Mufti Taqi Sahib has cautiously implied in his book on Islamic Finance. We have written two booklets in refutation of Mufti Taqi’s highly erroneous opinion in which he had presented misleading arguments to justify the haraam riba which banks charge on late payments. We shall, therefore not repeat here our discussion in negation of Mufti Taqi’s most weird and preposterous claim of the permissibility of riba on late payments. Those who are interested in the refutation of Mufti Taqi’s baseless opinion on the permissibility of riba on late payments, may write to us for the following two booklets:
(1) PENALTY OF DEFAULT
(2) PENALTY ON LATE PAYMENT IS INTEREST
Pure chicanery has been employed to obtain the quotient of permissibility of interest on late payment, in terms of the Maaliki Math-hab. It is far, very far from the truth to claim or even to imply that the Maaliki Math-hab permits interest on late payments under the deception of self-imposed obligation.
THE ATTEMPT TO JUSTIFY THE RIBA
In an extremely feeble attempt to justify the interest levied in the name of ‘charity on late payments’, Mr. Omar says:
“The first answer is that the amount is paid by the debtor to charity, and not to the creditor, pursuant to a unilateral undertaking, in the form of a vow, taken by the debtor. The bank as the creditor derives no direct or indirect benefit from the payment, which is made to charity.”
In this argument, three blatant lies are perpetrated.
(1) The lie that the debtor pays the interest to charity.
(2) The lie that the debtor does not pay the interest to the creditor.
(3) The lie that the debtor pays the interest pursuant to a unilateral undertaking in the form of a vow.
The First Lie
It is palpably false to claim that the debtor pays the demanded penalty (the riba) to charity. He does not do so. The agreement which the bank has imposed on the debtor against his wishes stipulates that the debtor must pay the penalty to the bank (i.e. the creditor). The bank will decide to which charity the haraam riba penalty should be given.
Charity is Sadqah. Sadqah is given voluntary with a happy heart and to whomever one wishes, whenever one wishes without the application of the pressure of the riba-sucking parasites of the capitalist banks whose men stand only like those driven to insanity by the touch of shaitaan.
Inspite of the bank dubbing the haraam riba ‘charity’, it denies the debtor the right of paying his own ‘charity’ to whomever he wishes and whenever he wishes. Only the inane minds of insane men are capable of conjuring such a warped concept of Sadqah as is professed by the capitalist banks. It is totally false and misleading to say that “the amount”, more appropriately the riba amount, is paid by the debtor to charity.
The Second Lie
It is likewise a glaring falsehood to aver that the debtor does not pay the penalty of interest to the creditor. The agreement clearly stipulates that the debtor has to compulsorily pay the socalled ‘charity’ to the bank in the event of default. The bank’s act of contributing the interest penalty amount to some charity of its choice does not negate the fact that the debtor pays the amount to the creditor. The bank’s disposal of the interest to charity is irrelevant and does not negate the interest nature of the money extracted under duress from the debtor in the name of ‘charity’.
Haraam money, be it the proceeds of robbery, gambling, prostitution or interest, does not transform these crimes into virtuous deeds if contributed to charity. Since the debtor has no option other than to hand the penalty directly to the creditor, it is a blatant lie to claim that the debtor does not pay the interest to the creditor. This reality is not negated by the bank’s act of contribution of the interest to charity.
The Third Lie
The claim that the penalty extracted from the debtor is by way of a unilateral undertaking made by him, is also a brazen falsehood. The payment of the penalty on late payments is a bilateral agreement between the bank and the client who has no alternative but to accept the bank’s imposition.
The debtor does not unilaterally agree to pay the penalty. The condition of payment is compelled on him and so is the confounded vow which is null and void in the Shariah. A vow to commit haraam is in itself a crime. If the bank does not insist on the penalty payment, no debtor whose sanity is intact will encumber himself with the burden of paying a penalty on late instalments.
Mr. Omar has made extremely misleading claims in his abortive attempt to vindicate the indefensible crime of riba. Pursuing his drivel, Mr. Omar says:
“The second answer is that Riba is contractually agreed amount between creditor and debtor, in respect of and against which no consideration (recognized by Shariah) passes, such contractually agreed amount (Riba) accruing exclusively to the creditor. In this case, the creditor receives no compensation on the monetary amount of the debt in any form whatsoever, with the result there is no Riba.”
Perhaps Mr. Omar has succeeded in fooling himself with this blithering argument. For the validity of riba, the contractual stipulation of a specified amount is not an imperative requisite. Whether the amount is contractually stipulated or not, it will be riba if the loan attracts its payment or if the debt demands this excess in the form of a penalty or any other guise and by whatever ruse. Thus, if a creditor taking advantage of the loan he gave, extracts any kind of monetary benefit from the debtor, it will be riba even if it was not contractually agreed to by the parties. Rasulullah (sallallahu alayhi wasallam) said:
“Every loan which draws a benefit is a riba (loan).”
Furthermore, with regard to the interest penalty falsely described ‘charity’, this is contractually agreed by the parties. From the very inception of the contract in making, there is a bilateral agreement that the debtor is obliged to pay the penalty on late payment. Therefore, the claim that this riba penalty is not by way of contractual agreement is not only stupid, but Islamically obscene.
Contrary to Mr. Omar’s claim, the penalty does in fact accrue exclusively to the creditor (the capitalist bank). The debtor has absolutely no right in terms of the haraam agreement to divert the so-called charity to any avenue other than the bank. Hence, it accrues exclusively to the bank. As far as the debtor is concerned, he hands over the penalty exclusively to the bank. What the bank does with the haraam interest is entirely a different act. The incontrovertible fact remains that the debtor incumbently has to pay the penalty to only the bank. The bank will then dictate the avenue of charity of its own sweet choice.
Mr. Omar’s assertion that “in this case, the creditor receives no compensation on the monetary amount of the debt” is erroneous and misleading. The diversion of the haraam penalty to charity does not negate the bank’s receipt of compensation. The sophistry employed in the agreement does not negate reality. A well-known principle of the Shariah is: “Consideration is for the meanings, not for the words.”
The legal trickery employed in the phraseology adornment of the penalty to create the idea of it being ‘charity’ does not negate the fact that the penalty payment is a compensation which the debtor has to compulsorily pay in consequence of his late payment. Then, he is obliged by the contractual obligation to pay the compensation to only his creditor, the bank. Thus, the penalty compensation accrues to the creditor exclusively. What the creditor does with the penalty amount does not detract from the riba reality of the penalty payment. The bank’s act of contributing the penalty amount to a charity of its own choice is a red herring created to divert attention from the riba nature of the penalty.
“Riba is every excess acquired in consequence of a transaction.” (Badaaius Sanaa’) That is, every such excess which has no tangible commodity as its equivalent. This is the precise nature of the penalty on late payment.
The Unilateral Obligation
In another baseless argument which Mr. Omar tenders in justification of the haraam riba penalty, he says:
“This unilateral obligation which the debtor assumes against himself, pursuant to a vow, to pay an amount to charity is therefore a tabarru….”
We have already pointed out earlier that the obligation to pay the penalty is not a unilateral undertaking by the debtor. It is a bilateral agreement with the pressure loaded against the debtor. In other words, the debtor is compelled by financial straits to submit to the stipulation imposed by the bank. He understands well that if he refuses to submit to the coercion of the bank, his need will not be fulfilled by the bank. He therefore reluctantly agrees to the bank’s imposition of the penalty clause. Anyone with brains understands this position.
The ‘unilateral obligation’ claim is therefore fallacious. While Tabarru’ cannot be compulsorily imposed on the donor, the bank stipulates the penalty as an incumbent payment. The avenue of expenditure set out for the penalty payment is of no significance and has no relevance in the determination of the nature of the payment. The way the money is eliminated does not affect the status of its method of acquisition. If the money is acquired by gambling, the act of acquisition remains haraam regardless of the funds being utilized for charity. If money is acquired by prostitution, the means of acquisition remain haraam notwithstanding the use of such money for charitable purposes. In exactly the same way, the penalty amount remains haraam riba regardless of the chicanery of the ‘vow’ and ‘charity’.
The penalty demanded by the bank is not Tabarru’ because: (1) Both the penalty and the vow are imposed on the debtor by the creditor. (2) The penalty comes into effect in consequence of the debtor’s inability to meet his financial commitment on due date. (3) The penalty is an excess amount which is created by a bilateral binding agreement on a monetary transaction between the creditor and the debtor.
These are the attributes of Riba, not of Tabarru’. It is indeed lamentable when even men of learning are unable to distinguish between the attributes of Tabarru’ and Riba’. The so-called ‘vow’ which produces the haraam effect of the haraam interest penalty in the theory of Mufti Taqi Sahib, is not one which the debtor volitionally imposes on himself. It is the consequence of the pressure of the creditor and the subject of a bilateral agreement in which the bank sees nothing but its monetary interests.
The difference between Tabarru’ which is a voluntary gift or Sadqah purely for the Pleasure of Allah Ta’ala, and the baselessly claimed ‘self-imposed’ penalty, is glaringly conspicuous. It is painful to offer this lengthy explanation for bringing to the fore the riba nature of the haraam penalty which is extracted from the debtor in the event of late payment of an instalment.
Stating another fallacy, Mr. Omar claims:
“The Muslim jurists are unanimous that a person may assume a tabarru obligation and thereby become bound or obliged to perform it.”
In the context of the riba penalty this is false and misleading. It has already been pointed out that the penalty amount is not Tabarru’. It is a pure riba payment. It is a cut and dry issue which the Maaliki Math-hab too has unequivocally declared haraam. We have already furnished the Maaliki Math-hab’s unequivocal proclamation of the hurmat of the interest penalty on late payment. This Ruling will be repeated at the end of this discussion to clinch the argument.
Mr. Omar’s ‘short answer’
In a monotonous reiteration of what he has claimed in his presentation of argument, Mr. Omar says:
“The payment to charity amounts to a penalty for non-performance by the debtor on due date (i.e. this is the objection). The short answer to this is that the ‘penalty’ so called is not imposed by the bank as the creditor. It is a ‘penalty’ which is imposed by the debtor upon himself, for the purpose of serving as a deterrent for his own possible non-performance or breach of contract.”
This is a regurgitation of the same lies which we have exposed and nullified above. The claim that the haraam penalty is not imposed by the bank but is a self-imposed fine/levy/riba by the debtor, is a crude and a naked attempt to mislead those who are unaccustomed to operate their brains.
If the penalty is not incumbently imposed by the bank, NEVER would the debtor even think of introducing this issue in the agreement, leave alone voluntarily step forward to pay the penalty on a late payment. Mr. Omar talks plain bunkum here. If the penalty is voluntarily self-imposed and the debtor regards it as a Sadqah for which he will gain thawaab in the Aakhirah, why will every debtor be rabidly averse to making such penalty payment?
A man in possession of the capacity to think will have no doubt in concluding that the payment which the debtor is required to make on late instalments is riba which is extracted from him against his will. No amount of legal trickery will alter this fact and understanding.
Clutching at another flimsy straw in the bid to justify the riba penalty, Mr. Omar says:
“The amount of the ‘penalty’ socalled, is not fixed to the amount of the profit or loss, in proportion to the period of the delay, but may be determined in any other manner…”
The determination of the penalty amount “in any other manner” does not extricate this charge from the domain of Riba. Calculation of the amount of the penalty by the method mentioned by Mr. Omar above, is not a requisite for the validity of Riba. From whence did Mr. Omar acquire the notion that if the amount is not determined by the method he has mentioned, it will not be Riba? He is indeed scraping the very bottom of the barrel in his quest for proof for his utterly untenable riba penalty.
Regardless of the method of determination and calculation adopted by the bank, the penalty which the bank obtains from the debtor by the exertion of haraam pressure, is irrefutably Riba. Every Muslim is capable of understanding this fact except those whose agenda is the upliftment of the capitalist system.
THE UNEQUIVOCAL RULING OF HURMAT OF THE MAALIKI MATH-HAB ON THE RIBA PENALTY
It will be most appropriate to clinch this argument with the Ruling of the Maaliki Math-hab itself:
“However, when the debtor imposes on himself that if he does not fulfil (pay) the due of the creditor in the stipulated time, then upon him (the debtor) is a certain amount (to pay for the default in payment), then there is no difference of opinion regarding its butlaan (invalidity and being haraam), because this is categoric riba (Sareehur Riba). It is the same (ruling of butlaan and prohibition) whether the (self) imposed thing (amount) is of the same kind as the debt or other than it. And, it is the same (i.e. baatil) whether the (self-imposed amount) is a tangible item or a benefit.” (Fathul Alil Maalik, page 263, Vol. 1)
In the face of this categoric Ruling of the Maaliki Math-hab declaring baatil and haraam the self-imposed payment of a sum on late payment of instalment, the attempts to mislead the Ummah by attributing permissibility of this type of Sareeh Riba to the Maaliki Math-hab, is callous and most despicable. It is only lack of fear for Allah Ta’ala and total ghaflat regarding the accountability in Qiyaamah that can constrain men of learning to descend to the low ebb of writing articles with corrupt ‘daleels’ to legalize the worst of sins – Riba.
It is abundantly clear from the aforementioned Maaliki Ruling that the ‘self-imposed vow’ pertaining to riba payment is not valid. Those who have attempted to attribute the permissibility of the riba payment on the basis of a self-imposed vow to the Maaliki Math-hab, have rendered a grave injustice to the Ummah in general, and to the Maaliki Fuqaha in particular.
The validity of self-imposed vows according to all Math-habs does not legalize criminal acts May Allah Ta’ala save us all from the evil lurking in our nafs and from the deceptions and traps of shaitaan which have been the downfall of many learned men.