Islamic Finance – Part One

THE DECEPTIVE ALTERNATIVE

In his booklet, Mr. M. S. Omar states:

“For example, a contract cannot be concluded between the client and the bank in the following form: “Client hereby sells his property (as defined) to the bank, for a specified price, subject to the condition that the bank agrees to lease the property back to the client upon stipulated conditions.” The valid alternative is that the contingent contract should be separate, and should be expressed in the form of an enforceable unilateral promise which should not be a term of the contract itself. In such a case, the sale transaction is separate and independent of the unilateral promise. In the hypothetical situation referred to above, the client sells the property to the bank. The bank in turn separately and apart from the sale, promises to lease the property back to the client upon mutually agreed terms. If the breach of the promise causes the client actual loss, the client is entitled to recover such loss from the bank.”

At the outset it is best to clarify the author’s peculiar penchant for selective extrication of views from the different Math-habs. The deficiency of the basis on which the author constructs his whimsical opinions stems from his random selective extrication of views from the Math-habs. Whatever suits his palate in his endeavour to legalize the baatil, faasid and riba practices of the capitalist world, he digs out from the kutub of the Fuqaha, therewith fabricating a patchwork of fallacious ‘fatwas’.

The author has presented his postulate of permissibility despite having acknowledged: “one distinct contract cannot be made conditional upon another distinct contract.” In his bid to overcome this Shar’i prohibition, he tendered a hypothesis which he terms “the valid alternative”.

A scrutinization of his ‘valid alternative’ will establish the deception and invalidity of the alternative which he has presented. The postulate of the writer, Mr. Omar, suffers from two major flaws:

(1) The figment of “an enforceable unilateral promise”

(2) The tacit condition (shart) of the ‘unilateral Promise’

According to the Shariah, a promise belongs to the moral domain. The rules applicable to a promise are:

? It is unlawful to apply pressure on a person to extract a promise from him. Such a promise is invalid.

? It is incumbent to fulfil a promise made voluntarily provided it does not give rise to any violation of the Shariah.

? It is permissible to absolve oneself from fulfilment for valid reasons. In this case the one who is unable to honour the promise is not guilty of any sin.

? Even if the promise is violated without valid reason, it is not legally enforceable. The violation is a moral issue beyond the jurisdiction of the legal courts of the Shariah.

A promise cannot be enforced legally. The promissory contract which the author has suggested is therefore baatil. It has absolutely no validity. Besides invalidity, it is a corrupt encumbrance which renders the sale contract Faasid (Invalid). The ‘client’ is not entitled to recover any loss sustained in consequence of ‘breach of promise’ committed by the bank as has been explained.

In his attempt to present a basis for his view of the enforcement of a promise, the author states:

“The Islamic Fiqh Academy of Jiddah has resolved in accordance with the Maaliki school that a unilateral promise (made by one party) is binding and enforceable.”

This corrupt resolution of the Jiddah academy is devoid of Shar’i substance. It is in conflict with the Shariah. If the academy in Jiddah has managed to dig up some remote view from the Maaliki Math-hab, it should be known that such a view is in total conflict with the categorical rulings of the Math-habs, including the Maaliki Math-hab. The author presents the ‘view of enforcement’ in a misleading manner to create the impression that the official position of the Maaliki Math-hab is the legal enforcement of promises. But this impression is grossly erroneous and the attempt of the author is contemptible. Regarding vows and promises, the position of the Maaliki Math-hab is:

“The Mash-hoor view of the Math-hab is that there shall be no courtruling (to enforce) it regardless of whether the institution (the beneficiary) is stipulated or not. Thus, it appears in Kitaabul Hibaat of Al-Mudawwanah that if a man says: ‘My house is Sadqah for the Masaakeen or for a specific man (whom he names)’, thereafter he violates his vow, there shall be no court-ruling against him (to enforce the selfimposed vow/promise of Sadqah).” (Tahreerul Kalaam fi Masaa-ilil Iltizaam of Allaamah Al-Hattaab)

It is highly unprincipled to cite an obscure view of a small minority in an attempt to negate the Mash-hoor Ruling of the Maaliki Math-hab as well as the Ijmaa-ee (Unanimous) Ruling of the other Three Math-habs distinct contract in other words the Unanimous law of the Shariah. Legal enforcement of vows/promises is a very contentious issue in the Maaliki Math-hab.

“Muhammad Bin Abdul Hakam said: He who takes a vow to give as Sadqah a specified sum of money or an unspecified sum to a particular man or to the Masaakeen (in general), or in the Path of Allah, or he vowed to make his house waqf, or to contribute horses in the Path of Allah (Jihad) or camels or oxen or sheep, then he violated (his vow), whether he confesses to this (violation) or it is proven by witnesses, nothing will be legally enforced on him. We shall, however, instruct him (morally to fulfil and honour his vow). But if he does not, he will not be compelled to do so.” (Tahreerul Kalaam) “Imaam Maalik said: ‘A legal decree will not be made regarding every Sadqah which is made in the vow of the haalif (the one who vows)…………however, the donor will be advised and admonished. If he then happily fulfils it, it is best for him. However, if he acts miserly (i.e. refuses to fulfil the vow), no legal ruling, whatsoever will be given against him. Ibn Rushd said: ‘So is it stated in Kitaabul Hibaat of Al- Mudawwanah, i.e. whatever Sadqah is (undertaken) by way of a vow for the Masaakeen or for a specified person, the Sultan shall not compel him to pay it, And, this (view) is the Mash-hoor (most popular and authoritative) in the Math-hab (of Imaam Maalik).” (Tahreerul Kalaam)

The rationale for the Mash-hoor view of the Maaliki Mathhab, is:

“Verily, a legal decree will not be given against him (to pay) the Sadqah despite him being sinful in refraining from fulfilment, because there is no reward (thawaab) for him by issuing a legal decree against him whilst he is displeased (and not disposed to give the Sadqah). Thus, his wealth will be appropriated without any benefit. Similarly, a legal decree of fulfilment (of a vow) will not be given against a person who has made a vow. (Tahreerul Kalaam)

“Al-Baaji said: ‘Verily, Hibah (a gift) becomes incumbent with a verbal statement. When this has been established, (then know) that it is of two kinds: (1) A category regarding which there is no legal ruling. (2) A category for which there is a legal ruling. The category for which there is no legal decree applies to Sadqah or Hibah (gift) or Waqf made by way of Yameen (Vow) whether made for a specified person (or institution) or for an unspecified person. There is consensus of our As-haab (Maaliki Jurists), Ibn Qaasim, Ash-hab and others besides them, on the view that no legal decree shall be given against him in this regard. However, he shall be instructed with it.”

The writer of the deceptive and baatil alternative in which he postulates the ‘unilateral promise’ theory, has regurgitated the view of Hadhrat Mufti Taqi Uthmaani Sahib, which he (Mr. Omar) has extracted from the book, ‘An Introduction to Islamic Finance’, in which Hadhrat Mufti Taqi Sahib states:

“However, in order to assure the creditor of prompt payment, the debtor may undertake to give some amount in charity in case of default. This is, in fact, a sort of Yamin (vow) which is a self-imposed penalty to keep oneself away from default. Normally such vows create a moral or religious obligation and are not enforceable through courts. However some Maaliki jurists allow to make it justiceable, and there is nothing in the Holy Qur’aan or the Sunnah of the Holy Prophet (sallallahu alayhi wasallam) which forbids making this ‘vow’ enforceable through the courts of law.”

We have responded in some detail in our booklet, The Penalty of Default, to this liberal and baseless view propounded by Hadhrat Mufti Sahib. Mr. Omar has structured his deceptive alternative on this weird premise presented by Hadhrat Mufti Taqi Sahib. The salient features of this postulate, which needs examination are:

(a) The unilateral promise is a “sort of a Yamin (vow)” which “some” Maaliki Fuqaha hold is enforceable by the courts of law. While Hadhrat Mufti Taqi Sahib clearly attributes this view to “some Maaliki jurists”, Mr. Omar presents it as the official stand of the Maaliki Math-hab when in reality it is not so.

(b) We have above, cited references of the Maaliki Fuqaha and the Mash-hoor ruling of the Maaliki Math-hab pertaining to the claim of the enforcement of promises/vows. According to the Maaliki Math-hab such vows and promises are not enforceable by the legal courts.

Hadhrat Mufti Taqi Sahib has erred in his conclusion, and Mr. Omar has structured his legalization of issues of capitalism on the basis of the errors of Hadhrat Mufti Taqi Sahib. While there is a type of ‘self-imposed’ vow which is legally enforceable according to “some Maaliki jurists”, it does not bring within its purview a promise constrained by financial difficulties, demands of capitalism, attempts to legalize haraam interest and similar other transactions fabricated to circumvent the prohibitions of the Shariah.

In fact, “some Maaliki jurists” mentioned by Hadhrat Mufti Taqi Sahib, constitute such an insignificant minority, that the Maaliki Faqeeh, Al-Baaji, was constrained to claim ‘Ittifaaq’ (Consensus) on the impermissibility of legal enforcement of the effects of Yameen (Vow).

Furthermore, the legal enforcement view of the small minority of Maaliki Fuqaha pertains to promises of Sadqah and acts enacted to gain the Pleasure of Allah Ta’ala, not to acts which are in this era being fabricated to circumvent the Shariah and which are in diametric conflict with the Shariah’s spirit and ta’leem of altruism and brotherhood, and which are in all truth imposed on the debtor by the creditor as an incumbent stipulation in a financial agreement.

(c) Hadhrat Mufti Taqi Sahib has acknowledged:

“Normally, such vows create a moral or religious obligation and are not enforceable through courts”.

However, it should be added that the choice of the word, ‘Normally’, is incorrect. Vows/promises always create moral obligations, and are never enforceable by the legal courts, with rare exceptions. At best, the view of “some Maaliki jurists” has been presented, and that too for a certain category of vows. The consensus of the Math-habs on this issue is sufficient to dispel the impression created by the reasoning of Hadhrat Mufti Taqi Sahib.

Hadhrat Mufti Mahmudul Hasan Gangohi (rahmatullah alayh) clarifies the issue of legal enforcement of a promise very emphatically and explicitly in his Fataawa Mahmudiyyah. He states with regard to a promise made at the time of a certain business transaction (this will, Insha’Allah, be fully discussed soon):

“….In brief, legally there is no right over him (who had made the promise). However, morally it is best for him to fulfil this promise. However, if at the time of making the promise, if it was his intention to honour it, but later due to circumstances he does not fulfil it, then according to the Shariah there is no sin on him.” (Fataawa Mahmudiyyah, Vol.6, page 287)

The Ruling of the Hanafi Math-hab – and we are followers of Imaam A’zam Abu Hanifah (rahmatullah alayh) – is too well known to require elaboration. Fulfilment of a promise cannot be enforced by the courts. It is an issue which pertains to morality. The same applies to the Shaafi and Hambali Mathhabs, and this is also the view of the Jamhoor Fuqaha of the Maaliki Math-hab.

(d) An error of exceptional gravity is committed by Hadhrat Mufti Taqi Sahib by making the claim:

“…and there is nothing in the Holy Qur’aan or the Sunnah of the Holy Prophet (sallallahu alayhi wasallam) which forbids making this ‘vow’ enforceable through the courts of law.”

In making this sweeping claim, Hadhrat Mufti Sahib has tacitly stated that 100% of the Hanafi Fuqaha from Imaam Abu Hanifah (rahmatullah alayh) downwards, and all the thousands of Fuqaha of all ages, and of all Math-habs, have raised the Ruling of the impermissibility of legal enforcement of promises on the figments of their imagination for which they have no Qur’aanic or Sunnah basis. It is this type of unwarranted, baseless liberal opinion tendered to justify the practices of capitalist bankers, which we are constrained to brand as weird.

For the Muqallideen it suffices that the Ruling of the Math-hab is on impermissibility of legal enforcement of promises. This Ruling in fact is the Qur’aanic and Sunnah basis which the Muqallideen have to incumbently accept. If this Ruling was bereft of Qur’aanic and Sunnah basis, it is inconceivable that there would have existed Ijma’ on this issue. It is precisely for this reason that Hadhrat Mufti Taqi Sahib found it necessary to say: “…..vows……are not enforceable through courts”.

The Qur’aan and the Sunnah undoubtedly substantiate the official Ruling of impermissibility of legal enforcement of promises. Hence, the unanimous Ruling of the Math-habs. The view of the insignificant minority has to be necessarily set aside. The liberalism of the Jiddah Fiqh Academy is the very first attitude to disqualify the opinions emanating from that source.

(e) The second major discrepancy in Mr. Omar’s postulate is the incumbent stipulation of the faasid (corrupt and haraam) condition in the deceptive alternative which he has offered in his endeavour to circumvent the Law of the Shariah. In the alternative which he presents, “the condition that the bank agrees to lease the property back to the client upon stipulated conditions should be expressed in the form of an enforceable unilateral promise” in a separate contract and not as a term of the sale agreement by which the client sells his property to the bank. If this stratagem is not an attempt to deliberately befuddle and mislead, then it is pure self-deception if the writer honestly believes that he has achieved the miracle of legalizing the haraam contract in which the condition is stipulated.

In the example he has postulated, the client sells his own property to the bank on the understanding that the bank will ‘lease the property back’ to him. The purpose of the sham contract is plainly to gain a cash loan from the bank. The bank is not in this type of market. If it does not have the assurance of the client ‘leasing’ the property, it will not venture into the deal. Conversely, if the client who owns the property does not gain the assurance from the bank that it will ‘lease’ the property to him, he will not ‘sell’ to the bank.

The deal is executed on the firm undertaking that the condition will be honoured. Regardless of the condition of the ‘unilateral promise’ not being part of the written contract, it is a verbal condition which has been tacitly agreed to by the parties. It is a bilateral agreement. In fact, it is the basis on which the whole contract pivots. There can be no gainsaying that irrespective of a ‘separate’ document prepared to record the baatil legally enforceable stipulation, it forms part of the sale contract by virtue of the prior agreement and the understanding.

In view of the tacit agreement on the condition, it is utterly baseless for the writer to aver:

“In such a case, the sale transaction is separate and independent of the unilateral promise.”

The writer, Mr. Omar has abortively attempted to justify his deceptive alternative by analogising it with what is known in the Shariah as Bay-ul-Wafa’. Insha’Allah, the fallacy of this analogy will soon be exposed. The writer is conveniently or ignorantly silent with regard to the timing of his ‘unilateral enforceable promise’. At what stage of the sale transaction is the ‘legally enforceable promise’ agreed to? Prior to the sale, simultaneous with the sale or after the sale?

Prior to the Sale:
If the condition is agreed to prior to the sale, it is tantamount to stipulating the condition at the time of the sale. This encumbrance renders the sale faasid –corrupt and haraam in the category of riba.

Simultaneously:
If the condition is stipulated at the time of the sale, it likewise renders the contract faasid.

After the Sale:
If the condition is agreed to after conclusion of the sale, it is totally superfluous in so far as the sale is concerned. It has absolutely no effect on the sale. It is then not a condition concomitant to the sale. It is an independent promise having only moral implications. It cannot be legally enforced. After finalisation of the sale, the prejudiced party will not be inclined to encumber himself unnecessarily with a provision of either legal or moral implications if he deems such a promise detrimental to his interests.

The party, (the creditor) who is keen for this stipulation will have no clout of imposition after conclusion of the sale. He will enjoy the right of imposition, albeit in a haraam manner, only if a prior agreement to the effect has been arranged. Why would the unwilling party assume an unnecessary obligation which cannot be imposed on him after the conclusion of the deal?

THE MUTUAL PROMISES

In his attempt to insulate his deceptive alternative, Mr. Omar says:

“The mutual promises do not themselves give rise to a contract of sale. The contract is only concluded on the future date when delivery and payment occurs by way of offer and acceptance at the relevant time.”

While the ‘mutual promises do not give rise to a contract of sale’, they most certainly invalidate a sale. The promise, as pointed out above, is a faasid (corrupt) condition which encumbers the transaction whether stipulated before or at the time of the contract of sale. The parties who wish to enter into this type of corrupt sale understand and know that the actual aim of the sale is the realization of the condition. Without the condition they will not enter into the sale. It is precisely for this reason that Mr. Omar postulated the priority of the condition. He at least understands that it would be futile to stipulate the condition after the conclusion of the sale due to its redundancy as well as the almost certain refusal of the party who is not favoured by the condition.

THE SELLER’S CLAIM

Using the convoluted Bay-ul-Wafa’ as the basis for his deceptive alternative, Mr. Omar says:

“Ownership passes immediately from the seller to the buyer. The buyer is in turn obliged to pay the agreed price.”

If the ‘buyer’ in this transaction truly gains ownership immediately on conclusion of the ‘sale’ as averred by Mr. Omar, the promise cannot compel him to ‘resell’ his own property to the former owner who has absolutely no rights over the property which has passed into the ownership of the buyer. The promise pertaining to the corrupt ‘buy back’ condition cannot be legally enforced to usurp the property of others.

In his quest for providing a basis for the riba banks, he has stumbled on the Bay-ul-Wafa’ ploy and has torn it out of its context to confer legality to the transactions which he proposes. The reason for the right of the so-called ‘seller’ to reclaim his property, if it has not been destroyed, or its value if destroyed, is not the promise, for a promise does not give rise to such consequences. The reason has been defined with clarity in the Kutub of the Ahnaaf. The plain and simple reason is that Bayul- Wafa’ is not a valid sale transaction. It is a Rahn (Pawn) contract. This will be shown, Insha’Allah, in the explanation on Bay-ul-Wafa’.

The so-called ‘seller’ is not a true seller. He is the debtor who has pawned his property to the so-called ‘buyer’ in lieu of the loan given to him. Since the ownership rights of the ‘seller’ (the pawner) are not extinguished by the Bay-ul-Wafa’ contract, he does not lose his property in the event of the insolvency of the ‘buyer’ (the pawnee) who had advanced the loan. In this arrangement, the promise is devoid of legal substance, and does not ensure for either party any special rights. The one who has made the promise subsequent to the ‘sale’ is morally obliged to honour it. But the condition which is either attached to the contract or made prior to it is faasid. Such a corrupt promise is not to be honoured, not even morally.

LEGAL CONSEQUENCES?

On the basis of a solitary corrupt contract condoned by a small minority of post 4th century Ulama, Mr. Omar proclaims in the tones of an ‘authority’:

“On the other hand, bilateral promises do not give rise to immediate legal consequences following upon a sale. If the promisor is unable to fulfil his promise for a valid reason, he is not liable to the promise for compensation or otherwise.”

This averment is another example of Mr. Omar’s unprincipled style of reasoning This unprincipled way of reasoning has constrained him to present a potion which is constituted of an admixture of moral and legal aspects. In the same breath while he speaks of legal consequences, he introduces the moral dimension of the ‘promisor not being liable if he has a valid reason’.

If the promise in the first instance had been a legal device, it would not have receded into the realm of moral oblivion which exonerates the ‘promisor’ of liability. The legal wheel in legal issues makes its full turn to squeeze from the defaulter everything he has to make good his liability.

Furthermore, Mr. Omar has sucked from his thumb this convoluted ‘ruling’ of his nafs. Even the Fataawa Khaaniyyah text which states the incumbency of honouring the promise does not tender the convolution which Mr. Omar has ventured. From whence did Mr. Omar acquire the ‘ruling’ that a promise of ‘legal consequences’ – a promise which he claims is legally enforceable – fizzles out in the moral domain in the event of inability to honour it ‘for a valid reason’?

In brief: Mr. Omar has postulated here pure drivel. A promise in the Shariah has no legal consequences.

‘ISLAMIC BANKING’

On the basis of the Bay-ul-Wafa’ fallacy, Mr. Omar states:

“In the context of Islamic banking, it becomes necessary to use ‘promises’ in relation to different financial instruments.”

Mr. Omar here commits a capital blunder and a capital sin while simultaneously demonstrating his lack of understanding of the methodology of the operation of the Principles of Fiqah.

It should be remembered that Bay-ul-Wafa’ is a faasid sale transaction. There exists consensus of the Fuqaha – both the Mutaqaddimeen and Muta-akh-khireen – on the fasaad (corruption) of this type of contract. Precisely for this reason is there considerable argument, controversy, incongruency, uncertainty, interpretation and explicit pronouncements of prohibition in the Kutub on this perplexing issue.

The aforementioned consensus includes the small minority of the Ulama of the later centuries. Even they who have ruled permissibility know that they are skating on thin ice. Even they do not challenge the Principles on which the prohibition is based. However, they have inclined towards permissibility on entirely a different basis, invoking the principle of ‘need’ which operates to produce the permissibility of pork.

In view of the extremely deficient ruling of the small minority, and in view of the conspicuous conflict of the permissibility with the Dalaa-il of the Shariah, and the flimsy claim of ‘need’, no one has ventured the stupidity which Mr. Omar has audaciously postulated as if he is an authority of the Shariah. Mr. Omar has committed the capital blunder and sin of extending the deficient, corrupt and shaky Bay-ul-Wafa’ ruling to a variety of ‘different financial instruments’ of the riba banks.

The permissibility of Bay-ul-Wafa’ is a ruling which is in conflict with the Analogical Reasoning Process (Qiyaas) of the Shariah. In terms of the conditions for the validity of Qiyaas it is invalid and not permissible to fix an irrational (Khilaaf-e- Qiyaas or in conflict with rational reasoning) mas’alah as the basis or first premise (Maqees Alayh) for the syllogism to effect transference of a Ruling (Hukm) to the new contingency, which in this case is the “different financial instruments”.

No authority of the Shariah has ventured to execute the stupidity which Mr. Omar has selected for himself in his ‘pioneering’ mission to give material effect to the Hadith of Rasulullah (sallallahu alayhi wasallam):

“They are astray and will lead others astray” – (with their jahaalat)

The materialization of this Hadith is among the Signs of the Approaching Hour of Qiyaamah.

For the process of formulation of rulings for the “different financial instruments” of the banks, it is imperative for a properly qualified Mufti or for Muftis to resort to the Dalaa-il of the Shariah. Every such ‘financial instrument’ has to be incumbently submitted to the scrutiny of the Shariah’s Dalaa-il and a principled approach be made on this sacred basis to extract a Shar’i Hukm which will carry the force of the Shariah. It will then be brought within the ambit of the Immutable Law of the Shariah, violation of which can be said to be sinful.

But the opinion spawned by Mr. Omar is a figment of his nafs having absolutely no basis in the Dalaa-il of the Shariah. He very amateurishly displays his inexpertise and inability to deal with issues which are in need of Shar’i rulings. An authoritative ruling of the Shariah cannot be acquired by rambling through the books of the different Math-habs, and randomly select in the process of stumbling on incongruencies, such individual mas’alahs which appeal to the palate of whim and fancy.

This type of rambler compounds his error when he believes that the expedient which he has extracted from a kitaab is a principle on which to base the variety of ‘different financial instruments’ of the banks in the capitalist riba world. No one among the authorities of the Shariah had adopted such an unprincipled approach which is the consequence of lack of knowledge and deficiency of understanding.

A BASELESS CALCULATION

An example of the “different financial instruments” presented by Mr. Omar is a Muraabahah transaction. Having satisfied himself by his convoluted and unprincipled style of reasoning that his Bay-ul-Wafa’ is a valid ‘principle of Islamic jurisprudence’, he deducted on its basis the legal enforceability of a promise which has only moral consequences in Islam. Then he extended this misrule and fallacy to a Muraabahah sale contract. In so doing he renders the Muraabahah deal faasid with the faasid promise condition.

One injustice and stupidity spawn other injustices and stupidities. He then concludes that a man who does not wish to enter into a Muraabahah sale with the bank after having intimated his desire to purchase, be penalized and forced to pay the bank “damages it would suffer”.

This ludicrous ‘ruling’ of Mr. Omar brings into existence several haraam and unjust consequences:

(a) A man is being forced to buy something he does not want.

(b) A man who refuses to purchase the property of the bank be robbed of his money. Such robbery is then interpreted as payment of damages for ‘breach of promise’.

Even if it is momentarily conceded that the particular promise attached to the sale contract has validity, then too it is haraam to extort money for breach of promise. But the reality is that the ‘promise’ is not valid since it appears in the form of a faasid condition which encumbers the sale in an unlawful manner.

Votaries of such baseless arguments contend that if the promise is not made legally enforceable, the bank stands to suffer considerable financial losses because the vehicles are bought specifically for the clients on their request. This argument is bereft of valid substance because:

(i) The very same argument rebounds on these votaries, for they have entrapped themselves by the self-contradiction:

“If the promisor is unable to fulfil his promise for a valid reason, he is not liable to the promisee for compensation or otherwise.”

Regardless of validity or invalidity of reason, the bank will suffer the same losses concomitant to breach of promise based on invalid grounds. In an irrational and corrupt ‘ruling’ based on a hybrid legal-moral concept, the bank simply has to accept the ‘loss’ – the imaginary loss – if the promisor has valid grounds for reneging. On the other hand, it can legally pursue the promisor if he lacks valid reasons. So, just as Mr. Omar has accepted that the bank simply has to suffer the loss in one dimension of the promise, it has also to be accepted that the bank has to necessarily suffer the ‘loss’ in the other dimension of the promise.

Just as the supposedly legally enforceable promise cannot be legally enforced according to Mr. Omar if the promisor has a valid reason for reneging, so too says the Shariah—that the promise cannot be legally enforced irrespective of validity or invalidity of reason for breach. Furthermore, the Shariah rules that the very promise encumbering the sale contract is a faasid shart. The question of legal enforceability, hence, does not arise.

(ii) In actuality, the bank suffers no loss. The vehicle is the property solely of the bank. If a prospective buyer refuses to purchase, the bank retains its property. If circumstances constrain the bank to sell the vehicle for less than its cost, such loss cannot be extracted from another person who is a stranger and an outsider in so far as the bank’s property is concerned. Any ‘damages’ the bank suffers on account of depreciation in the price of the vehicle is for the account of the bank, and cannot be unjustly loaded onto a man who had intimated a desire to purchase.

The Muraabahah or any other ‘financial instrument’ of the Shariah may not be utilized as stratagems and ploys to legalize riba and haraam. These are valid trade contracts which come with all their benefits and risks. When an entrepreneur ventures into this field, he understands or should understand the risks involved. But since the banks are pure Riba institutions which specialize in the ‘trade’ of money spawning money, i.e. lending money on interest, the risks attached to valid commercial sale transactions are incomprehensible and unacceptable to the banks. This is so because they stand like insane men driven to insanity by the touch of shaitaan. Confirming this, the Qur’aan Majeed declares:

“Those who devour riba do not stand except as one who has been driven to madness by the touch of shaitaan.”

 It is glaringly obvious that the deceptive alternative will have reality for the client and the bank only if the condition of the enforceable promise has been concluded either prior to the sale or simultaneously. This, however, effectively renders the sale transaction faasid. All the sophistry employed by Mr. Omar in the desperate ploy to weave the idea of a totally separate bilateral agreement apart from the actual sale contract is pure bunkum and humbug.

Acknowledging the prior stipulation of this haraam condition, the writer says:

“The contract is only concluded on the future date when delivery and payment occurs by way of offer and acceptance at the relevant time.” I

n the discussion on Bay-ul-Wafa’, in the ensuing pages, it will, Insha’Allah, be shown that the prior and simultaneous stipulation of repulsive condition renders the sale faasid. If this faasid encumbrance does not constitute an integral part of the sale transaction in the deceptive model offered by Mr. Omar, the deal will not be concluded. The very essence of the type of transaction which has been presented by the writer is the “buy back” condition. The ‘sale’ of the property is merely a stratagem of circumvention, albeit a baatil method.

AL-MA’ROOF KAL MASHROOT

Al-Ma’roof Kal Mashroot is a Fiqhi Principle of the Shariah which means that a well-known, customary practice is just like the one with the specified conditions. Thus, even if a condition is not verbally stated or written in a contract, but its existence is implied and tacitly accepted by the parties, it is tantamount to the expressly stated condition.

Even if a depositor of money in a bank does not enter into a riba agreement with the bank to pay him interest on his savings, the interest the bank credits on his savings is haraam riba. If it is a prevalent practice that the lender will only advance a loan if he receives an extra amount upon repayment, and in the absence of such extra payment he will not give a loan, then the extra sum given is haraam riba despite the fact that it was not a stipulated condition when the loan was given.

Similarly, if it is a known customary practice for the debtor to incumbently repay extra on a loan, then too the excess will be riba notwithstanding the absence of a verbal or written condition to the effect. Hence, there is consensus of all Ulama that bank interest on savings is haraam riba.

The separately recorded ‘unilateral enforceable promise’ is a necessary corollary of the deceptive alternative offered by Mr. Omar. As such it comes within the purview of Al-Ma’roof Kal Mash-root. It is tacitly agreed on and understood to be integral to the sale transaction. The alternative offered by Mr. Omar is deceptive since it offers nothing new. It is identical to the sale which is subjected to the stipulated haraam condition declared in the same contract.

PRECEDENTS

Proclaiming his fallacy, Mr. Omar states:

There are precedents in Islamic Law for the enforceability of bilateral promises in the case of commercial need.”

This claim is false. Firstly, we have shown that according to Islamic Law a promise is a subject for the Moral Code (Akhlaaq) of Islam, not for the legal law (Qadha). The question of ‘enforceability’ via the agency of the courts, moreover kuffaar courts, of which Mr. Omar happens to be an agent/officer, is therefore devoid of Shar’i substance. The fourteen century Mas’alah of the Impermissibility of legally enforcing a Promise may not be convoluted and abrogated for any reason whatsoever, especially when the motivation is the accommodation of aspects of the capitalist Riba system.

The legal enforceability of a certain category of vows, not all vows and promises, according to an insignificant minority of the Maaliki Jurists cannever be appropriated, especially by Muqallideen of the Hanafi Math-hab, leave alone miscreants and misguided self-appointed authorities, to constitute a valid premise for a Shar’i analogy with the aim of transferring the effect of that obscure ruling to constitute a permanent Fatwa of legality and permissibility for the corrupt business transactions of the agencies of capitalism, viz., the banks of this era, be they Muslim-owned. The factors which prevent and prohibit this baseless analogy and the transference of its effect are:

* The ramblings of a modernist layman in the domain of Islamic Law are of no consideration. An unqualified man in the Shariah, in its domain of Law, who ventures opinions on issues pertaining to the Sacred and Immutable Divine Shariah, comes fully within the scope of Rasulullah’s warning:

“Whoever speaks on (issues of) the Qur’aan (the Shariah) without Knowledge, should prepare his abode in the Fire.”

It is also mentioned in the Hadith that even if such a person stumbles on the correct opinion by coincidence or fluke, he has still grievously erred. He still deserves the Fire of Hell. He is in the category of a quack who tries to diagnose and prescribe to medical patients.

* The view of enforceability is in conflict with fourteen centuries of Ijma’ (Consensus) of the Ummah.

* There is absolutely no need, commercial or otherwise, for the incorporation of a haraam act within the scope of permissibility. Swine flesh will become lawful for consumption only in the case of Shar’i Dhuroorah (dire need which is life-threatening).

Some of the later Fuqaha have said that the mutual promises of the parties are incumbent because of ‘haajat linnaas’ (the need of people). Mr. Omar translated these terms as ‘commercial need’. This rendition is palpably erroneous. In the Shariah there is no concept of legalization of a haraam, faasid or baatil transaction on the grounds of ‘commercial’ need, whatever this may mean. If a dire need develops in relation to the masses, the exigency will be scrutinized in the light of the situation and the relevant principles of the Shariah, and the necessary ruling can then be issued by only qualified, experienced and expert Ulama.

In terms of the Shariah’s principle, prohibitions temporarily become lawful by way of concession due to ‘dire need’ (Dhuroorah/Haajat) which is a concept not left open to the interpretation of the vagaries of wildly vacillating commodity markets, commercial desires of the nafs and opinions of westernised Muslims acting as the clandestine agents of Riba capitalism.

* Mr. Omar has claimed that “there are precedents in Islamic Law for the enforceability of bilateral promises in the case of commercial need”. We have already mentioned that there is no such ‘commercial’ need which occasions the transformation of a prohibition into a permissibility. As for ‘precedents’, he has failed to cite any valid precedent other than tendering the Bayul- Wafa’ transaction which itself is a haraam and baatil sale contract. We shall discuss this deal soon, Insha’Allah.

There is no such precedent in even the Bay-ul-Wafa example which he has presented in his attempt to formulate a basis for the legalization of a haraam transaction, namely, his deceptive alternative.

* The text from Fataawa Khaaniyyah, which Mr. Omar cited as his ‘precedent’ for legal enforceability of a promise, makes no mention of such enforceability. The text is as follows:

[Arabic text ommitted]

Mr. Omar translated as follows:

“if the sale is concluded without reference to the “buy back” condition; thereafter the “buy back” condition is expressed separately in the form of bilateral promises, the sale is valid; and the promises are enforceable because of commercial need.”

This rendition is incorrect. The proper version is as follows:

“If the sale transaction is mentioned without (stipulation) of a condition, thereafter (i.e. after the finalisation of the sale), the condition is mentioned by way of mutual promise, then at times it (the mutual promise) will be incumbent. Hence, it (the promise) shall be made incumbent due to the need of the people.”

Mr. Omar is guilty of having interpolated:

? “the sale is valid”

? “the promises are enforceable”

? “commercial need.”

Although the validity of the sale is mentioned elsewhere, and even though the inference of validity could be inferred from this text, the writer stated it as part of the original text of Fataawa Khaaniyyah, while it is not so.

By ‘enforceable’ Mr. Omar clearly means ‘legally enforceable by the courts of law’. This is his whimsical injection into the translation. It is nowhere mentioned that the promise is ‘legally enforceable’, neither in the text produced by Mr. Omar, nor in any other text of Fataawah Khaaniyyah or any other Hanafi Book of Law.

The word, ‘laazimah’ appearing in the text means incumbent or binding, i.e. morally binding. This is in accord with the principle of the Shariah applicable to promises. In other words, the promise is binding and its fulfilment is binding (Waajib) simply on the basis of the Qur’aanic command: “Honour promises…” The incumbency of fulfilling promises is not contested. But there is a vast difference between morally honouring a promise and legal enforcement.

Furthermore, on the assumption that a promise in this regard is legally enforceable, which court does he envisage will be entrusted with this obligation? The Kuffaar courts of which Mr. Omar is an officer? Mr. Omar has fabricated his deceptive model for Muslim neo-capitalist banks which operate in either kuffaar countries or Muslim lands governed by fussaaq of the kuffaar ilk. In all these countries, there is no truly Islamic court available to execute the functions of Shar’i Qadha’. If Mr. Omar in a state of extreme naivety intended his model for an imaginary Islamic state, then it is necessary that he desists from redundant exercises dreaming of Utopia.

Thus, there is no support for Mr. Omar in the text of Fataawah Khaaniyyah which he has tendered as his evidence for the legal enforceability of promises. If it should be momentarily accepted for the purpose of this argument, that the text of Fataawah Khaaniyyah does mean ‘legal enforceability’, then we shall retort that there is absolutely no incumbency to adopt this view in the face of a thousand Rulings of the highest class of Fuqaha and Aimmah-e-Mujtahideen and the Consensus which all are in diametric opposition to the view of legal enforceability of a promise.

Since Mr. Omar has chosen to extract this reference from Fataawah Khaaniyyah selectively to bolster his convoluted opinion, it will be appropriate to cite the very same authority (Fataawah Khaaniyyah) on also an issue involving a promise. The following Ruling appears in Fataawah Khaaniyyah:

“A man rents his house to someone, then sells it to another person. The new owner now collects the rent. He, has however, promised the seller of the house (in a Bay-ul-Wafa) that when he (the seller of the house) returns the money (which he had paid for the house), he will return the house to him, and he will also deduct the amount of collected rents from the price (which he had paid). After some time the seller comes with the money and intends to deduct from the amount (i.e. the price he had received). The Ulama said in this regard: ‘The seller may not deduct the amount (which the buyer had promised to be deducted). The statement of the buyer, namely, the collected rentals will be deductible from the price at the time of the return of the house, is a promise, fulfilment of which is not legally binding. However, if he honours his promise, then it is commendable.”

The luzoom (binding nature/incumbency) of the promise mentioned in the mas’alah cited by Mr. Omar from Khaaniyyah should be viewed in the light of the clarity of the negation of legal enforcement stated in the aforementioned Ruling of Fataawa Khaaniyyah.

HAAJATUN NAAS

Furthermore, there does not exist a situation of dire need to justify acceptance of a view which clashes with the Asal Mathhab – the Original Ruling of Hurmat (being haraam) of the Hanafi Math-hab as well as of the other Math-habs.

Haajatun Naas (need of the people) which Mr. Omar translates as ‘commercial need’, besides being incorrect, does not exist in our time to the degree of a Shar’i Dhuroorat which is a genuine and a dire need causing great hardship, thus necessitating the operation of the principle: “Dhururaat (dire needs) legalize prohibitions”

‘Commercial need’ is the need to make money. Such a need is related to even billionaires who ply their trade until the day they enter the grave, motivated by the need to gratify the inordinate greed of the nafs. All their trade and commerce are dictated by their respective commercial needs. But these ‘needs’ are not within the ambit of the Shariah’s definition of ‘Need’ on the basis of which a prohibition falls away for the concession of permissibility.

There is absolutely no such need in our time for even contemplating legalization of a haraam and baatil sale based on the Bay-ul-Wafa stratagem, which itself cannot constitute a basis for the formulation of a Shar’i Hukm. 

Next: Islamic Finance – Part Two

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