I have made an indepth study of Mufti Muhammad Taqi Uthmaani Sahib’s book, Islaam Aur Jadeed Ma’ eeshat Wa Tijaarat (Islam and Modern Life and Trade). I have concluded that Mufti Saheb has embarked on an unsuccessful attempt to establish the capitalist system with the aid of Islam and the Shariat. While Islam has refuted this system, Mufti Saheb has, on the contrary, endeavoured to make Islam subservient to this (capitalist) system. But, we (Muslims) and our social, political life and systems are all subservient to the Shariah. Mufti Saheb has furthermore, attempted by the addition of the word, jadeed (modern), to present the system of the capitalists in the hues of the Shariah. This endeavour envisages monetary gain for the capitalists who will be led to believe that their gain is halaal profit. They will thus make use of such profit without understanding a sin to be sinful. This is truly loss in this world and in the Aakhirah.
Prior to this attempt, Mufti Sahib had issued a fatwa to enable the government to claim Zakaat from the banks. However, the Authorities of Fatwa and Knowledge had rejected this fatwa, explaining that Zakaat is not discharged in this manner. May Allah Ta’ ala reward Mufti Abdus Salaam, Chief of Daarul Ifta Binnuri town munificently. He had elaborated with great detail on this issue in his Jawaahirul Fataawa, Vol. 3.
Similarly, on 24th Rajab 1415 (28-09-1994) at a conference of the Muftis of Pakistan convened at Daarul Uloom Karachi, Hadhrat Mufti Saheb had abortively attempted to legalize bank interest on the basis of six Faasid Ta’weelaat (Corrupt Interpretations). This writer too had participated in the gathering. The Muftis, hearing the rakeekah (flimsy) interpretations of Mufti Sahib were bewildered and aghast. We have to congratulate Mufti Abdus Sattaar, Chief of Daarul Ifta Khairul Madaaris of Multan who rejected these interpretations. In the evening this conference ended without legalizing interest.
You (O Reader!), are aware of the ultimate consequence of the fatwa which Mufti Sahib had handed to Shah Faisal Bank and to N.I.E.Unit Trust. Similarly, (some) Ulama had issued a fatwa of permissibility for Alliance, without thinking what they were in reality embarking on. Is this profit or not? Ask those who had lost their capital,about the trading in shares.
THE BOOK UNDER SCRUTINY
Presently our attention is focussed on the aforementioned book. I am presenting some comments on this book to readers to make the reality of this book conspicuous for those who have become involved in the trade of shares on the basis of Mufti Sahib’s fatwa so that they may understand the difference between Haqq and baatil, and dissociate themselves (from this unlawful trade).
The Kitaab of Allah Ta’ ala, The Qur’aan-e-Kareem is the Law until Qiyaamah. Its exposition in the form of the Sunnah is sufficient and clear until the Day of Qiyaamah. The Risaalat of Rasulullah (sallallahu alayhi wasallam) will endure until Qiyaamah. It devolves as an obligatory duty on us as Muslims to keep in view the principles of the Shariah in every department of life. It does not behove us tofirst innovate an act to satisfy our desire, then by adding the word,’modern’ seek to legalize it by taking support of erroneous interpretations.
This is precisely what has transpired in trading on the stock exchange and this is what is happening presently. Mufti Sahib has named it(stock exchange) Bazaar-e-Hisas (the market of shares). He has made the abortive attempt to legalize it by means of interpretations.In his book he has further offered capitalists the protection of immunity against debt. In the event of the company going bankrupt, the debts cannot be claimed from them (the capitalist shareholders in the company).
Mufti Sahib has also said that to make persons owners of capital their verbal statement of security suffices. Whoever becomes a buyer of shares only verbally (not by intention), in exchange for this verbal averment he will be given capital Mufti Saheb has said that even if one has no intention of being a buyer, then too he becomes a buyer of shares merely by a verbal statement. This is permissible, according to Mufti Sahib, as will be mentioned later. (We have not understood the purport of this contention—translator).
According to his own confession which will be mentioned later,these companies also deal in interest, but there is no control over them. Despite this, trading in company shares (on the stock exchange)is permissible according to Mufti Sahib. But the command of the Qur’aan-e-Kareem is:
“Take notice of war from Allah Ta’ ala and His Rasool”
What need do Muslims have for indulging in usurious transactions which are accursed? Allah Ta’ala declares:
“Allah destroys riba and causes Sadaqaat to flourish.”
There is destruction in interest. Many people in these times who have been destroyed in consequence of their participation in share-trading,and the country (Pakistan) has become a pauper. This is the consequence of diversion from the Command of Allah Ta’ ala.
The motive for all these (liberal) opinions is the desire to be known as ‘scholars’ and to be proclaimed experts in modern research. This is tantamount to saying: We have no affinity with orthodox Islam.There is an outstanding attribute of simplicity in the Tareeqah (Way) of Rasulullah (sallallahu alayhi wasallam). This simple system precludes the capitalists from augmenting their capital by means of sattah baazi, and snatching the little capital of the masses by making them ignoramuses.
THE FATWA OF MUFTI KIFAAYATULLAH SAAHIB
Mufti A’zam of Hind, Mufti Kifaayatullah Saahib states in his Fataawa that trading in shares is based on gambling (sattah baazi.). His Fatwa is reproduced hereunder:
“Question: In our age the tramways, railways and other factories sell what they term shares. A company is established for operating tramways, railways or for manufacturing and trading in other products such as steel, timber, etc. The capital is fixed and shares are sold. Salaried employees (officials and directors) are appointed to manage the affairs of the company. They issue periodical financial reports of the shareholders while a portion of the profits is retained(not distributed).
This capital is also invested in interest ventures.The interest is also included in the profit for distribution to theshareholders.The value of these shares rises and falls according to the performance of the company. According to these (market) values, shareholders sell their shares. The method of selling is as follows: the seller instructs an agent to sell his shares. The agent keeps the seller informed of the fluctuating prices. If the seller is satisfied with a price,he instructs the agent to sell. The buyer does not take possession of any tangible assets.
What happens is that the name of the seller is expunged and the name of the buyer is now listed as the owner of the shares.If the buyer wishes to acquire a share of the tangible assets of the company (in view of him being a shareholder), this is not possible.The company’s employees will not comply nor will they refund him the price (of his share of the asset). The only option he has is to sell the shares at the market value in the way he has purchased them. Is it permissible to trade in these shares according to the Shariah? If it is permissible, what type of transaction is this. Is Zakaat incumbent on the value of the shares or on the profit (i.e. the dividend)?
ANSWER: The aforementioned transaction is unlawful on the basis of several factors:
(1) This deal does not come within the scope of any transaction of commerce of the Shariah. It is neither a sale nor a partnership nor any other lawful Shar’i transaction.
(2) Riba dealings are haraam.
(3) Buying and selling of these ‘shares’ are not permissible because the item of sale is unknown. It is quite apparent that the certificate which the buyer receives is not the ‘mabee’ (the tangible asset of the transaction). The assets being sold are thus either the cash which the company holds or the stock of the company which belongs to all the shareholders. If the mabee is the cash,then is it obvious that inequality (between the price paid and the proportionate cash) is not permissible (since it is riba).
Furthermore,the shareholder cannot acquire his proportionate cash from the company. The seller is therefore unable to deliver the mabee to the buyer. At the time of the sale, the seller and the buyer are unaware of the amount of cash which belongs to the seller. If the mabee is a proportionate share of the company’s stock, then although the sale of a portion of the partnership asset is permissible,it being unknown renders the transaction unlawful………This transaction is not permissible. Buying and selling of shares is forbidden.” (Kifaayatul Mufti, Vol.8, page 12)
MUFTI TAQI SAHIB IN CONFLICT WITH THE PRINCIPLE OF THE FUQAHA
Although the words of buying and selling are used in the trade of shares, in reality it is only an exchange of papers. Besides this, it isnothing. Inspite of acknowledging this fact in his book, Mufti Taqi Sahib proclaims it permissible on the basis of the words employed. It appears that Mufti Taqi Sahib has not observed the accepted principle of the Fuqaha pertaining to buying and selling, namely: “The actual meanings are taken into consideration”. The words are not the determinant in this context. Explaining the permissibility,
Mufti Taqi Sahib avers that the amount of cash which the buyer tenders should be in excess of the cash which constitutes part of the seller’s proportionate share of the assets of the company. Thus the amount of the seller’s cash in his total proportionate share of the company’s as-sets is sold for an equal amount of the cash tendered by the buyer.The extra cash which the buyer gives is in exchange for the other assets(besides cash) which the seller owns in the company. By this interpretation riba is circumvented (according to Mufti Sahib).But the issue is that neither the seller nor the buyer is aware of the respective amounts of cash, stock and other tangible assets which constitute the share of the seller which he is supposedly selling. This comes within the scope of mushtabah (doubtful). Inspite of Rasulullah (sallallahu alayhi wasallam) having prohibited mushtabah, how has Mufti Sahib permitted it? It is mentioned in the Hadith:
“Nabi (sallallahu alayhi wasallam) prohibited najash.”
“Najash is a deal in which the words indicate a sale transaction while there is no intention of buying. How did Mufti Sahib permit trade in shares when the intention is not to acquire tangible assets?
The Mufti of the time should keep his sight on the way in which peopletrade. In fact, he himself concedes this. If the ways of trading are in compliance with the Shariah, they should be permitted. If in conflict with the Shariah, they should be prohibited.In the Islamic system of trade there are neither interest dealings nor any impediments to taking possession (of the commodity).
The basis of trade should be honesty and trust, and it should be crystal clear(there being no ambiguity in the transaction). In fact, Rasulullah (sallallahu alayhi wasallam) instructed that if part of the grain has been moistened by rainwater, it should be revealed for viewing (it should not be concealed). But in the matter of selling and buying shares, neither the seller nor the buyer is aware of the assets of the transaction. Furthermore it is impossible for the buyer to take possession of the commodity he purchases.Rasulullah (sallallahu alayhi wasallam) said:
“There is neither suffering harm nor causing harm in Islam.” (Muslim)
Another Hadith states:
“There is no deception in Islam.”
It is quite obvious that a transaction in which the elements of the sale are unknown and ambiguous, comprises of harm and deception.
MUFTI TAQI SAHIB’S IMPROPER DEFENCE OF THE CAPITALISTS
If the company goes insolvent, the capitalist shareholders have no liability. They are not responsible for the debts of the company.Mufti Sahib has fabricated this concept and has produced several analogies in substantiation. Alas! This concept does not have the slightest affinity with Islam. None of the analogies presented by Mufti Sahib has any relationship with this concept. Inspite of this, he has made an ardent effort to defend the capitalists by means of this(self-fabricated) concept. (Limited liability and absolution from debt are in fact concepts which Mufti Taqi Sahib has borrowed from the capitalist system solely to provide Shar’i justification and legality for these fallacious haraam concepts—Mujlisul Ulama)
Thus Mufti Sahib says: “Shirkat (Partnership) does not have its own independent existence. But the company has its own independent legal existence. It is termed a legal entity.” Page 80 Mufti Taqi Sahib’s motive underlying this statement is the defence of the capitalists. He has extracted the following conclusion from this concept:“
The liability of the directors too is limited. The liability of the company which is a legal person is also limited. In effect, there is no relief for the creditors to claim payment of debts in excess of the assets of the company. In the terminology of the Fuqaha, when there is no way for settling the debts of the creditors, it is called Kharaabus Zimmah.” Page 82. By these averments he has given immunity to the capitalist shareholders.If the company goes insolvent, the shareholders are absolved of all liability. The basis for this claim is nothing but a fabricated terminology.
In order to give protection to the shareholders he has presented his personal idea. In the process he has deemed that all the people are ignoramuses who will swallow this fabrication of the company being a legal person. This is never the terminology of theFuqaha.Furthermore, the analogies which he has presented have no relationship with this fabricated fiction of a legal person. There is the difference of heaven and earth between them. In fact, according to the principle of the Fuqaha stated in Sharh Uqood Rasmul Mufti, he has no right to present analogies.On page 80 of his book, Mufti Sahib has presented the intuition of Waqf as an analogy for the fictitious concept. It is incorrect to present an analogy with Waqf because a Waqf has no owner. The popular rule regarding Waqf is: “A Waqf is not owned (by anyone) norcan it be assigned to (anyone’s) ownership.”
But in the company concept,the shareholders are (supposedly) the owners. They obtain loans and assume responsibility. They consume the profit of the company whereas there is nothing of this sort in a Waqf. The profits of a Waqf are also Waqf while there is no one responsible for its loss.On page 80 he has also made the analogy with the Baitul Maal. This analogy is also erroneous because the assets in a Baitul Maal are alsoa type of Waqf.On page 81, Mufti Taqi Saheb has presented the analogy of Khaltatut Shu-yoo’.
On the same page he acknowledges that this concept is not in compliance with the Hanafi Math-hab. Since he is a Hanafi, he has no right of presenting this example. He further adds:”It should be remembered that between the system of the company and Khaltatut Shuyoo’ is the difference……”When there is a difference, then why present it in substantiation?On page 81 he concedes:”However, this terminology is certainly a new one. “Why did he invent such terminology to give protection to the capitalists?On page 81 he has also presented in substantiation the analogy with one who is described as Mustaghraq bid dain (one over-whelmed by debt, i.e. an insolvent person). This too is erroneous because here the insolvent debtor is deceased while the directors and shareholders of a company are alive. Thus all four analogies are fallacious.The rule is that when there is a difference between the mas’alah and the examples presented, then the analogies are baseless. Refer to Sharh Uqood Rasmul Mufti where it states:
“….Because, it is rare that for a contingent development there is no mention in the kutub of the Math-hab, either in exactitude or by the mention of a general principle which embraces it (the new development). A similar example is insufficient (for the formulation of a ruling) because it is quite probable that between the new development and the acquired example there is a subtle difference which is beyond his (the Aalim’s) comprehension. The Fuqaha have differentiated between numerous masaa-il and their similarities(i.e. similar occurrences). So much so, that they have compiled books of such differences.”