Islamic Finance – Part Three


Mr. Omar states:

“Arbun is an amount paid by the purchaser pursuant to a binding and valid sale in terms of which the purchaser has the option to withdraw therefrom. If the purchaser elects to resile from the sale, the amount or deposit paid by him is forfeited in favour of the seller. If he confirms the sale, the amount or deposit so paid is offset against, and thereby reduces, the purchase price. The Arbun is recognized by the Hambali School. The great Hambali jurist Ibn Qudama states as follows: ‘Arbun in this context of sale means: the purchaser acquires a commodity, and pays an amount to the seller, on the basis that if he (the purchaser) takes the commodity, the amount sopaid by him will be offset against the price. If he does not take the commodity the amount will accrue to the seller.’ ” (Al-Mughni, Vol. 4 p 289)

Undoubtedly, the “Hambali jurist Ibn Qudama” is “great” just as Mr. Omar avers. But, has Ibn Qudama’s greatness eclipsed Imaam Maalik’s greatness – and Imaam Sahnoon’s greatness? Why has Mr. Omar silently and surreptitiously shied away from Sahnoon and the Maaliki Math-hab on the issue of ‘Arbun’? Why has he suddenly abandoned the Maaliki Sahnoon and clung to Ibn Qudamah? After all, Sahnoon is the pivot on which hinges Mr. Omar’s fallacy of the legal enforceability of promises. Insha’Allah, we shall resile to these questions after the demolition of Mr. Omar’s ‘Arbun’ device which is simply another haraam stratagem for circumventing Shar’i prohibitions to mellow the life of the riba banks of the capitalist system.


Bay-ul-Urboon (also known as Arboon, Arbaan, etc.) is a sale in which the client forfeits his deposit in the event he decides not to proceed with the transaction.

Mr. Omar contents himself with only the definition of Urboon given by the great Ibn Qudama in his Al-Mughni. It is an unadulterated act of chicanery to conveniently omit the great Ibn Qudama’s comments on the sale of Urboon, and to cite only the definition which he gives – a definition on which there is consensus of all Math-habs.

With clumsy portrayal of audacity, Mr. Omar says: “The Arbun is recognized by the Hambali School.” In his half-hearted, unsubstantiated averment, Mr. Omar has sought to peddle the misleading notion that the permissibility of ‘Arbun’ is an issue of consensus in the Hambali Math-hab. But this idea which he has attempted to slink in, is but one of the numerous fallacies which Mr. Omar subscribes to.

The great Ibn Qudaamah explicitly mentions on page 313, Vol. 4 of his Al-Mughni:

“Abul Khattaab adopted the view that, most certainly, it (Arboon) is not valid.”

Abul Khattaab is among the senior Hambali Fuqaha. Furthermore, the view of the great Ibn Qudaamah, himself, is in conflict with the view of Imaam Ahmad (rahmatullah alayh). The great Ibn Qudaamah on page 313 presents the valid arguments of the Three Mathhabs in rejection of Bay-ul-Urboon. Thus, even in terms of the Hambali Math-hab, Mr. Omar is skating on extremely thin ice.


And, what about the Hanafi, Maaliki and Shaafi Schools? Why the sudden eerie silence on the views of these three Math-habs, especially when the Maaliki Math-hab was conspicuously projected to the frontline on the promise issue? And, after all, Mr. Omar is not a Hambali. Let us now see what the great Ibn Qudaamah states in Al-Mughni about the views of the Three Math-habs – the views which Mr. Omar had hoped would not be unearthed if he restricts himself to the solitary definition of Urboon by the great Ibn Qudaamah.

To ascertain the Fatwa of these Three Math-habs, Mr. Omar need not delve too deeply into the Kutub. On the very page No. 313 of Al-Mughni from which he has extracted the only definition of Bay-ul-Urboon, the great Ibn Qudaamah says explicitly:

“Abul Khattaab has adopted the view that it (Urboon) is not valid. This is (also) the view of Maalik, Shaafi and As-haabur Raai” (a reference to the Ahnaaf).

The great Ibn Qudama states:

“Abul Khattaab (who is a very denote distinguished Hambali jurist) has adopted the view that it (Bay-ul-Urboon) is not valid. And, this is the view of Maalik, Shaafi and the As-haabur Raai’ (i.e. the Ahnaaf). This (invalidity of Urboon) is narrated from Ibn Abbaas (radhiyallahu anhu) and Hasan (Basri): ‘Verily, Nabi (sallallahu alayhi wasallam) forbade the sale of Urboon.’— Narrated by Ibn Maajah. And (it is invalid) because something (some money) is stipulated for the seller without anything in exchange, hence it is not valid….This is the demand of Qiyaas.

If a dirham (for example) is given to the seller prior to the transaction, and he (the buyer) says: ‘Do not sell this commodity to anyone else. If I do not purchase it, then the dirham is for you. Thereafter he purchases the commodity from the seller in a new transaction, and he deducts the dirham from the price, it is valid because the transaction is without the corrupt condition. It is probable that the purchase which was made for Hadhrat Umar (radhiyallahu anhu) was executed in this manner. Thus, it (the Hadith on which Imaam Ahmad bases his view) shall be given this interpretation to reconcile Hadhrat Umar’s action with the Hadith (which prohibits Urboon), and to conform with Qiyaas and with the Aimmah (Jurists) who hold the view of the fasaad (corruption) of Urboon.

If the client does not purchase the commodity, then in this case, the seller is not entitled to the dirham because he will be taking it without giving anything in exchange. The client has the right of taking it (the dirham). It is also not valid to aver that the dirham is in exchange for the seller’s waiting and for the postponement of the transaction. If indeed it (the dirham) was in lieu of this (waiting), then it would not have been permissible to deduct it from the price in the event of purchasing the commodity. Furthermore, giving something in exchange for the waiting period of the sale is not permissible. If it was permissible, it would have been Waajib to fix a time as it is in Ijaarah (leasing).” (Al-Mughni, Vol. 4, page 313)

These are the comments of the great Ibn Qudamah. But Mr. Omar deemed it prudent to conceal or ignore what the great Ibn Qudamah said, in the endeavour to cadge just any straw to proffer as ‘evidence’ for the haraam transaction known as Bayul- Urboon which Rasulullah (sallallahu alayhi wasallam) categorically prohibited. Hence, all the Muhadditheen as well as the Fuqaha of the Hanafi, Maaliki and Shaafi Math-habs upholding the prohibition of Urboon, said:

“Verily, Nabi (sallallahu alayhi wasallam) prohibited Bay-ul-Urboon.”

It is accepted that Ibn Qudaamah reports Imaam Ahmad’s view of the permissibility of Bay-ul-Urboon in his Al-Mughni. But, the surreptitious manner in which Mr. Omar approached the great Ibn Qudaamah’s multi-facetted comments on the issue, merely citing the definition of Urboon presented by Ibn Qudaamah without quoting the actual tafseer of the great Ibn Qudaamah, provides us with a vivid illustration of the unholy intentions of an incompetent man, lacking in the Islamic academic qualifications requisite for scholarly dilation and discourse on a subject well beyond his intellectual, educational and spiritual range of comprehension.

Mr. Omar’s intentional mutilation of the great Ibn Qudaamah’s tafseer in the desperate attempt to provide some vestige of ‘proof’ for the haraam Urboon practices of the so-called Islamic banks, is the effect of his scrabbling exercises and random searches through the books of the Math-habs. The shameless concealment of the great Ibn Qudaamah’s comments on Urboon compels us to advise Mr. Omar to scram off from the stage of Islamic Jurisprudence. He will present himself with a lasting mundane favour by restricting his secular abilities to the field of secular law in which he qualifies to operate.

The way in which this gentleman conducts himself in matters of Shar’i import bogs him down in a mess of incongruities in consequence of the mass of gaffes he makes when he is overwhelmed by an inordinate desire to pose as a ‘faqeeh’ (Islamic jurist) of the calibre of the Aimmah-e-Mujtahideen.

Did a state of temporary blindness overcome Mr. Omar which did not permit him to see the following statement of the great Ibn Qudaamah appearing on the very same page from which he extracted Ibn Qudaamah’s definition of Urboon? “Abul Khattaab adopted the view that it (Urboon) is not valid, and this is also the view of Maalik, Shaafi and the Ashaabur Raai’ (the Hanafi Fuqaha).”

The view of Abul Khattaab as well as the interpretation favoured by the great Ibn Qudaamah himself, and which appears on the same page from which Mr. Omar acquired the definition, is an attenuation of the lack of consensus on permissibility in the Hambali Math-hab. Even those Hambali Fuqaha who have accepted the permissibility view, present it in feeble tones. Hence, even Imaam Ahmad (rahmatullah alayh) said about Urboon: “I don’t see anything wrong with it.”

Ibn Seereen, echoing the tone of Imaam Ahmad, also said: “I don’t see anything wrong with it.” The thrust of the great Ibn Qudaamah’s elaboration in Al-Mughni on Bay-ul-Urboon is that this transaction is not permissible.

Even if it is conceded that the Hambali Math-hab allows Bayul- Urboon, Mr. Omar possesses absolutely no right whatsoever to offer a transaction prohibited by Rasulullah (sallallahu alayhi wasallam) and the three Math-habs, in vindication of the haraam riba practice of the Muslim capitalist banks which have painted themselves deceptively with Islamic hues.

Furthermore, Mr. Omar, as far as it is known, is still a muqallid layman of the Hanafi Math-hab. He does not occupy any pedestal in the firmament of Islamic Uloom. And the greatest Mufti alive today too lacks the authority to embark on the task which Mr. Omar, in his egotistical stupor, has set for himself.

Let us now ascertain what the Maaliki Math-hab has to say about Bay-ul-Urboon. Firstly, we should draw attention to another miserable tactic of Mr. Omar. In view of his contemptible penchant of nafsaani random selection from the Math-habs, Mr. Omar had proudly cited the Maaliki jurist, Sahnoon as his proof for the legal enforceability of promises. He boisterously presented the Maaliki view on that issue.

However, on the Urboon question he is eerily silent about Sahnoon and the Maaliki Math-hab. Since he was apprised of the vehement stand of the Maaliki Math-hab against Bay-ul- Urboon, he had no option other than casting a veil of concealment on the Maaliki view and seeking refuge in an impregnable fortress of silence on the Urboon question as it relates to the Maaliki stand, which we shall now, Insha’Allah, present:

“Imaam Maalik narrating from a narrator who according to him is authentic, who narrated from Amr Bin Shuaib who narrated from his father who narrated from his grandfather, said: “Verily Nabi (sallallahu alayhi wasallam) prohibited Bay-ul-Urboon.”

The Fuqaha of the cities of Hijaaz and Iraq, among them are Imaam Shaafi, Thauri, Imaam Abu Hanifah, Imaam Auzaa’, Laith Bin Sa’d and Abdul Azeez Bin Ubay Salmah, are in agreement with the view (of prohibition of Urboon) of Imaam Maalik because it (Urboon) is a transaction of deception, gambling, and devouring money without giving anything in exchange. And all this is baatil (unlawful).

According to them (these Fuqaha) Bay-ul-Urboon is Mansookh (abrogated). The commodity shall be returned (to the seller) if it is intact. If it has been disposed of (used up, destroyed, lost, etc.), then the value on the day of possession has to be returned. In every case, whatever has been appropriated by Urboon transaction will be returned, whether it was by purchase or lease. Bay-ul-Urboon is not permissible according to us (Maalikis).” (Al-Istithkaar lil Qurtubi, Vol. 6)

Shaikhul Islam Sughdi of the fourth Islamic century enumerates thirty kinds of Faasid (corrupt and invalid) sale transactions in his kitaab, An-Nutf Fil Fataawa. One of these faasid transactions mentioned in his list is Bay-ul-Urboon. (Page 290)

The great Ibn Qudaamah also confirms in his Al-Mughni, Vol. 4, page 313, the prohibition of Urboon according to Imaam Maalik (rahmatullah alayh). But Mr. Omar has shied away from even mentioning Imaam Maalik’s categoric rejection of Bay-ul-Urboon, and the Maaliki Math-hab’s Fatwa of prohibition. The following appears in Al-Fiqhul Islaamiyyu Wa Adillatuhu:

“The Ulama differ on it (Urboon). The Jamhoor (the vast majority of Ulama) say that it is a prohibited sale which is not valid. It is Faasid according to the Hanafis, Baatil according to the other Fuqaha besides them (the Hanafis), because, verily, Nabi (sallallahu alayhi wasallam) prohibited Bay-ul-Urboon. And, because it is of the ways of deception, gambling and devouring wealth without exchange. And, because it comprises of two faasid (corrupt) conditions. The first: The condition of hibah (gift). The second: The condition of something to be given to the seller without receiving anything in exchange. Hence, it is not valid.” (Page 449, Vol. 4)

Al-Qurtubi states in Vol. 5, page 150:

“Among the ways of devouring wealth in a baatil manner is Bay-ul-Urboon…This is not valid or permissible….because it is a sale involving gambling, deception and devouring wealth in a baatil way without (receiving anything) in exchange and hibah (gift). This is unanimously baatil. And, Bay-ul-Urboon is abrogated if it is transacted in this manner (as explained in the definition) whether before or after possession. The commodity shall be returned if it is intact. If it is no longer intact, its value on the day of possession shall be returned.”

The Shaafi kitaab, Kitaabul Majmoo’, states:

“Khattaabi said: “Maalik and Shaafi ruled it (Urboon) to be baatil on the basis of the Hadith. The As-haabur Raai’ also state that it is baatil. (It is baatil) because in it is a faasid condition, deception, devouring wealth in a baatil way…………Ahmad Bin Hambal inclined to it (to permissibility).” (Vol. 9, page 407)

All the kutub of Fiqh of all Math-habs, while mentioning Imaam Ahmad’s view and its basis, state with great clarity the rulings of the Hanafi, Maaliki and Shaafi Math-habs. Despite this clarity, Mr. Omar deemed it expedient in the interests of peddling his fallacy to conceal the Fatwa of the Jamhoor of all Three Math-habs, as well as the Fatwa of those Hambali Fuqaha who reject the permissibility of Bay-ul-Urboon.


There is no zulm (injustice) of any kind in the Islamic system. Forfeiture of a deposit paid is an act of brazen and cruel injustice. The Qur’aan Majeed prohibits with great emphasis such baatil, and says:

“Do not (mutually) devour your wealth in baatil ways.”

Bay-ul-Urboon is among the baatil transactions which come within the purview of this Qur’aanic prohibition. It has also been explicitly prohibited in the Hadith as mentioned earlier. However, in the endeavour to find justification for such forfeiture conditions of the riba banks, Mr. Omar resorted to clutching straws. His contention of Urboon is devoid of valid Shar’i substance.

In his ‘Arbun’ debacle Mr. Omar, for total lack of Shar’i evidence for his lost cause, degenerates into the ludicrous spectacle of citing some ‘articles’ of some dubious ‘Shariah standard’ of the equally dubious ‘Shariah board of AAQIF’. The riba standards of the ‘shariah’ boards of the modernist Muslim capitalist institutions which Mr. Omar cites, have no validity on an issue pertaining to the Shariah. The Qur’aan, Sunnah and the Rulings of the Aimmah-e-Mujtahideen and the Fuqaha of the Salf-e-Saaliheen era are of decisive importance.

Citing the articles and clauses of such modernist institutions serves to further confirm the bankruptcy of the so-called ‘Islamic banking and finance’ theories of Mr. Omar.


Defining Hamish Jiddiyah, Mr. Omar writes:

“Hamish Jiddiyah is an amount or deposit which is paid by the client to bank at the inception of dealings (at the time of promise) in anticipation of concluding a Shariah compliant transaction, such as Murabahah or Ijarah…….If the client breaches his promise to purchase or lease the commodity….then the bank is entitled to appropriate the anticipation deposit in settlement of the actual direct damages suffered…”

This is another specimen of Riba and Zulm which the modernist capitalist Muslim bankers and their liberalist ‘scholars’ have fabricated or more correctly, sucked from their thumbs.

In the presentation of his process of fallacious ‘dalaa-il’ (proofs) for his equally fallacious contentions, Mr. Omar slid incrementally into degeneration. In his brochure on so-called ‘Islamic banking and finance’, he initiated the process of his argumentation by the presentation of snippets from some books of the Shariah. He began with the Maaliki view of the legal enforcement of certain types of promises. He shakily ventured to cite a Maaliki kitaab, Furuq.

Mr. Omar then attempted to resuscitate the corpse of Bay-ul- Wafa’ which some later Maliki Ulama had legalized on the basis of ‘need’.

Then, on the issue of Urboon, he flitted from the Maaliki Mathhab and jumped onto the Hambali wagon, feebly citing the great Ibn Qudaamah and his kitaab, Al-Mughni, albeit in mutilated form.

Regarding Hamish Jiddiyah, he is astonishingly silent in the matter of daleel presentation. He fails to cite even one Shar’i basis to bolster this fictitious concept. He fails to name even a single book of Islamic jurisprudence to substantiate the bunkum he has gorged up after licking it from the platters of some liberalist scholars. In the matter of presenting daleel for the ludicrous alien riba practice of deposit forfeiture (Hamish Jiddiyah), Mr. Omar has demonstrated his absolute bankruptcy. Nevertheless, he has attempted to surreptitiously introduce this haraam practice into the Shariah under cover of Arbun which he has abortively laboured to present as a lawful transaction in the Shariah.

Before his flimsy portrayal of Arbun, he tendered the definition of the totally un-Islamic, alien concept of Hamish Jiddiyah. Thereafter Mr. Omar presents the Arbun device although the latter was a baatil sale contract which had already existed during the time of Rasulullah (sallallahu alayhi wasallam). It is inappropriate, therefore, to discuss the alien, non-existing concept of Hamish Hiddiyah prior to settling the score with Arbun. The agenda underlying this inversion of presentation is quite palpable. Mr. Omar’s scrounging around for a basis, has managed to unearth Imaam Hambal’s view to bolster the Arbun claim.

But, for the illegitimate anachronism of Hamish Jiddiyah there exists not a vestige, not a strand or a floating straw to present as daleel. Mr. Omar thus made an astute calculation in the hope that the total denudation of daleel from the alien concept will go by undetected if it is coated with the Arbun veneer for which Imaam Ahmad’s view has been cited.

The rash attempt to pass off this Hamish Jiddiyah as an Islamic concept upheld in the Shariah is truly astounding. A man who embarks on a topic of scholastic substance should cite the rational, logical and textual basis and references for his theories and claims, especially when he has assumed the unenviable and onerous task of marketing a product which is sure to attract strident criticism for its close affinity with the riba practices of a system which stands at the opposite side of Islam.

Yet, Mr. Omar has hoped that Muslims will offer some sort of absurd taqleed’ to him by accepting his Hamish Jiddiyah product for which he has miserably failed to produce even one straw of proof from the Shariah.


Bay-ul-Urboon or Arboon is a haraam transaction which Rasulullah (sallallahu alayhi wasallam), himself, had prohibited. The Hanafi, Maaliki and Shaafi Math-habs are in agreement on the prohibition of this transaction in which the client forfeits the deposit he has paid. While some Hambali Fuqaha have inclined to permissibility, there is no consensus of the Hambali Fuqaha on the permissibility of Urboon.

Hamid Jiddiyah is a phantom fabricated by the liberalists and protagonists of Riba practices under a variety of religious sounding titles coined to mislead the ignorant and unwary masses and to induce them to invest in the capitalist so-called ‘Islamic’ banks. It is a totally alien practice bereft of the slightest iota of Shar’i proof.


While there is some difference of opinion on this question, the Hanafi Math-hab unequivocally prohibits the sale of debt to anyone besides the debtor himself. Mr. Omar has acquitted himself ambiguously on this question. The random manner in which he has superficially dealt with this issue displays his lack of having understood the Fiqhi elaboration given in the kutub.

The conspicuous confusion in his essay on this subject is probably due to a lack of relevant information. Mufti Taqi Sahib’s Introduction to Islamic Finance does not deal with this question, and the elucidation of the Fuqaha has defied his (Mr. Omar’s) comprehension. He, therefore, blusters the following absurdity:

Utter Confusion

“On the other hand, in case of the sale of the debt, the buyer of the debt (being the third party) steps into the shoes of the seller (the original debtor) and thereby acquires all the rights and obligations of the seller, with the result that he (the original debtor) is released. It follows that the creditor has no right of recourse against the original debtor, if the third party purchaser goes insolvent or disputes the debt.”

Mr. Omar has fabricated this nonsense in the context of the sale of the debt to a third party other than the debtor. Firstly, such a sale of debt is haraam in terms of the Hanafi Math-hab.

While the Maaliki Math-hab allows the sale of a debt by the creditor to a person other than the debtor, there are eight compulsory conditions for the validity and permissibility of such a sale. The stringent conditions eliminate every vestige of riba and gharar (uncertainty, ambiguity and deception). Inspite of this achievement of the Maaliki Math-hab – the achievement to eliminate riba and gharar – by the straitjacket of eight stringent conditions, the Hanafi Math-hab disallows this type of sale.

The Hambali Math-hab too prohibits the sale of debts to anyone other than the debtor himself.

With regards to the Shaafi Math-hab, Mr. Omar incorrectly states:

The Shafi’i view is more complex. The majority of Shafi’i jurists prohibit the sale of a debt to a third party (other than the debtor).”

 In the dozen lines which Mr. Omar has written on the Shaafi viewpoint, we find only ambiguous rambling and error. The alleged ‘complexity’ should not have restrained Mr. Omar from presenting an accurate explanation of the Shaafi position since he had ventured into that domain – for what purpose? He has rendered the Shaafi Math-hab a disservice by his injudicious intrusion and incorrect acquittal.

He has erroneously concluded from his defective ‘research’ of whatever book/s he has scanned through, that the ‘majority’ of the Shaafi Fuqaha prohibit the sale of debts to persons other than the debtors. This is not so.

Firstly, the Shaafi Math-hab categorizes Dain (Debt) into two classes: Mustaqarr and Ghair Mustaqarr (Established and Not Established). The Majority and most authoritative Shaafi Ruling on this question is stated in the authoritative Shaafi kitaab, Al-Muhath-thab as follows:

“Regarding Duyoon (Debts), if the ownership over the debts is mustaqarr (established), its sale to the debtor is permissible even prior to qabdh (possession) because, verily, his (the creditor’s) ownership is established over it (the debt)…..

However, (the question is): Is its sale to another party (other than the debtor) permissible? There are two views in this regard. One view is that it is permissible…..The second view is that it is not permissible. The first view (of permissibility to sell to a third party) is the most authoritative………” (Al-Muhath-thab, Vol. 1, pages 262/263)

This elaboration appears in the other Kutub as well.

Regarding the Ghair Mustaqarr (insecure – not established) debts, there is no consensus in the Shaafi Math-hab on it. There are also two views in this regard. While one view is that such insecure debts may not be sold to a third party, the other view is that it is permissible.

We believe that these ramifying differences, plurality of views, division and subdivision of the debts in both the Mustaqarr and Ghair Mustaqarr categories, as well as a coalition of other factors which produce an oblique mental vision culminating in a defective ‘research’, contributed to Mr. Omar’s inability to unravel the ‘complexity’ which he had discerned in the Shaafi viewpoint. The summary of the Shaafi Math-hab on the mas’alah of selling debts to a person other than the debtor is:

? Debts are of two kinds as explained above.

? The majority and most authoritative Shaafi view pertaining to Mustaqarr Duyoon, is the permissibility of selling to a third party.

? Regarding the Ghair Mustaqarr Duyoon, one view is that it is permissible to sell this too to a third party.

Let us now revert to his statement of Utter Confusion which we have reproduced above, in the beginning of this question. Firstly, Mr. Omar says:

“the buyer of the debt (being the third party) steps into the shoes of the seller (original debtor).”

In this absurd hypothesis, Mr. Omar has transformed the debtor into the seller of the debt (i.e. the debt he owes another person). The debtor sells his debt to a third party who is not the creditor. In the first instance, how is it possible, legal and permissible for a debtor to sell the debt he owes Zaid (the creditor), to Bakr (a third party)?

Mr. Omar has clarified that this is not a Hawaalah (Transference of the debt to a third party and absolution of the original debtor with the agreement of the creditor), hence he says:

The sale of a debt to a third party (other than the debtor) must be distinguished from Hawala.”

Now when this ‘sale’ which Mr. Omar has absurdly concocted is not Hawaalah, how is it possible for the debtor to simply shrug off the debt he owes to Zaid, his creditor, by unilaterally ‘selling’ the debt to a third party? And, which moron is afflicted with adequate mental derangement to pay money for saddling himself with the liability of another’s debt? It is not a case of a man buying book debts from the creditor for a price substantially less than the value of the debts. He pays the creditor R10,000, for example, for the purchase of book debts valued at perhaps R100,000 which he (the new creditor) will collect, making a huge riba profit. This is a sale valid in the capitalist system.

But, what Mr. Omar has proposed is not this capitalist sale with its lucrative yield. He has proposed something absurd and downright stupid. His prevaricated model envisages the following scenario: A debtor sells the debt he owes a creditor to a third party. The stupid third party pays this debtor (the original debtor) a sum of money to transfer the debt onto his head.

By this ‘sale’ Mr. Omar claims that the “original debtor”: is released from his obligation to pay his creditor. This is a perfect example of bunkum. The original debtor will not be released from his obligation as long as he does not pay his creditor or as long as his creditor does not release him of the debt.

By what stretch of imagination did Mr. Omar ever manage to conclude:

“It follows that the creditor has no right of recourse against the original debtor, if the third party purchaser goes insolvent or disputes the debt.”

The mind is truly boggled by this latest stratagem of circumventing payment of debt. If the capitalist lobby can only succeed in getting the government to enact this stratagem into the statute books, it will provide wonderful relief and absolution from debt for all debtors.

In terms of this hypothesis, a debtor in order to be released from his debt, only needs to arrange with a friend (a penniless one with no assets to his name) to overtly ‘purchase’ his debt. As soon as he has documentary proof that he has sold his debt to a third party, he (the debtor) is released. Now when Zaid the creditor comes along demanding payment, Amr (the debtor) coolly claims that he has sold the debt to Bakr (the third party). Zaid hastens to Bakr to claim his debt which he (Bakr) had purchased from the original debtor. But, Bakr is either insolvent or disputes the debt. Zaid has to return empty-handed without “any right of recourse against the original debtor (Amr).”

Neither is the original debtor released from his obligation nor is the right of the creditor cancelled by this stupid stratagem.

Hadhrat Junaid Baghdaadi (rahmatullah alayh) offers Mr. Omar the following naseehat:

“He who searches for honour with baatil, Allah will afflict on him humiliation with the Haqq.”

We think we have adequately commented on the absurdity of the nonsense which Mr. Omar has peddled in his model of the debtor selling his debt to a third party thereby cancelling the right of the creditor to claim his due from his debtor.


Mr. Omar states:

“….the contemporary practice of cheques is not permissible. In essence, it amounts to the sale of money for money.”

This understanding of cheques is incorrect. A cheque is not the sale of money for money. A cheque is an instruction to the bank to pay the holder of the cheque from the drawer’s own money which the bank is holding.

Zaid purchases goods from a dealer, and he pays with a cheque. By tendering the cheque, Zaid in actual fact – in reality – asks the dealer to collect the money from his treasurer, the bank. Thus, when the dealer presents the cheque to the bank, he merely requests the treasurer (bank) of Zaid to pay the amount which the client (Zaid) owes him.

In essence, when payment is made with a cheque, the dealer is selling his goods on credit. The rules of Dain (debt incurred by the purchase of goods on credit) apply.

The claim that payment by cheque is a sale of money for money is absurd. The client who purchases from a dealer is the debtor and the dealer is the creditor when payment is made by cheque because a cheque is not money. It is plainly an instruction to the bank. When the bank honours the cheque, it merely pays the client’s debt from the client’s own money as instructed by the latter. The claim of the sale of money for money is therefore palpably erroneous.

If a cheque is tendered in lieu of a loan, then too, the question of the sale of money for money does not arise. The cheque is not money. Zaid acquires a loan from Bakr to whom he gives a post-dated cheque. The cheque merely informs Bakr that Zaid will repay the loan on the due date of the cheque. Furthermore, the debtor (Zaid) by giving the cheque, requests his creditor, Bakr to collect the money owed to him from his treasurer, theer bank, on due date. Therefore, if interest is not paid, discounting cheques will be permissible.

In the case of a loan, the rules of Qardh will apply. Among these rules, is the creditor’s right to demand payment even before due date.


Regarding bonds, Mr. Omar states:

These money bonds are issued by government or private companies to fund projects. These bonds are essentially interest-bearing instruments. The negotiation of these bonds are only permissible at their face value……”

Since these bonds are “interest-bearing instruments”, dealing in them is haraam. Before speaking of negotiability of these bonds at “their face value”, the hurdle of interest has to be addressed. Acquisition of bonds is haraam from the very onset. The issuing agency (the government or the company) pays interest for the loans. Bonds do not come without interest. According to all Math-habs, bonds are haraam.


Mr. Omar presents two ‘permissible’ transactions for negotiating cheques and bills of exchange.

First transaction

Explaining the first transaction, he says:

“The holder of the cheque or other negotiable instrument authorises the bank as his agent to collect the amount of the cheque upon the due date of maturity. As consideration for this service, the holder undertakes to pay the bank an agreed fee…..”

As explained earlier, the cheque is an instruction by the drawer to the bank to pay the holder (the drawee) from his (the drawer’s) own funds which the bank holds. The scenario here is as follows:

(a) The bank of the drawer and the drawee is the same. As such, the holder of the cheque is not authorising the bank “as his agent” to collect the cheque amount on his behalf. On the basis of the cheque, the holder merely demands payment which the drawer has instructed the bank to make.

In effecting payment to the holder, the bank is the wakeel (agent) of the drawer of the cheque, not the agent of the holder of the cheque. The same person cannot be an agent for two people in the very same transaction. The bank as the agent of the drawer of the cheque, pays the holder on the instruction of its principal (the drawer).

Since the bank is the agent of the drawer, it can charge him a service fee. It cannot levy a fee on the holder of the cheque whom it was instructed to pay. Its service is to its principal, the drawer of the cheque. If an employer sends his worker to deliver some goods, the worker cannot seek remuneration from the client of his employer. The same applies to the drawer’s wakeel , the bank. The ‘service’ fee which the bank in this case charges the holder of the cheque is Riba.

(b) The banks are not the same. Both the drawer and the drawee operate accounts in different banks. In this case, the banks are the agents of their respective account-holders. Each bank may charge a fee for its service. In this case, the holder authorises his own worker to collect the payment due to him.

Second transaction

Explaining his second transaction, Mr. Omar states:

“The bank lends the client as holder of the cheque an interest-free loan equal to the face value, but less the agreed agency fee, which loan is payable on the date of maturity. The bank on the due date of maturity collects the amount of the cheque from the drawer/debtor. The bank deducts the agency fee, and offsets the balance against the interest-free loan advanced to the client.”

 If the bank which advances the ‘loan’ on the basis of the postdated cheques is the bank where the drawer operates his account, then this will not be a loan. It will be a payment by the wakeel on the instruction of his muakkil (principal). The bank merely advances to the holder the money which belongs to the drawer. In this case the bank is not the lender nor is the holder of the cheque the debtor of the bank. The transaction is between the drawer and the drawee, not between the bank and the holder (drawee). The bank is merely the agent/worker of the drawer.

The ‘agency fee’ which the holder has to pay is Riba in this instance. The bank may levy its service fees on the drawer who instructed it to effect payment. If it happens to be another bank which discounts the cheques, and if it is assumed that the bank will not charge interest, it will in this instance be a loan. The bank may now claim a fee for having to execute a service on behalf of its principal who requests it to collect the debt from the bank of the drawer. If the holder effects payment on due date or prior to due date directly to the bank which had loaned him the money, obviating the need for the bank to collect the money from the drawer’s bank, then any fee charged will be interest.


Bay bit-Ta’aati is a sale in which the two fundamentals of the sale, Ijaab (the offer) and Qubool (the acceptance) exist without being verbally stated. These fundamentals are implied by the actions of the buyer and the seller. In regard to this type of tacit sale, Mr. Omar cited an Arabic text of Ibn Qudaamah, supposedly from Al-Mughni. Mr. Omar translates the quoted Arabic text as follows:

“[O]ffer and acceptance indicate contractual consent. If such consent is evidenced by conduct, then such conduct takes the place of offer and acceptance.”

This translation is incorrect. The correct translation is:

“…..because offer and acceptance are implied by virtue of (the conduct of the transactors) indicating consent. Thus, when there exists an act of bargaining and giving and taking indicating consent, then it (the indication is in substitution of both (i.e. Ijaab and Qubool—offer and acceptance).”

Mr. Omar’s translation, viz., “offer and acceptance indicate contractual consent”, is grossly inaccurate. He has fitted his translation within the folds of inverted commas to give the idea that he has presented the translation of the Arabic text whereas the statement is an inaccurate meaning which he has assigned to Arabic text.

The Arabic statement of Ibn Qudaamah does not say “offer and acceptance indicate contractual consent.” Offer and Acceptance are the two fundamental requisites of a valid sale contract. Ibn Qudaamah, in the text cited by Mr. Omar, is not informing what the two requisite fundamentals are for the validity of the sale. In other words, he is not telling us that ‘ a sale for its validity requires offer and acceptance’. Rather, he explains in this statement a particular kind of Ijaab and Qubool.

He conveys in the text that offer and acceptance can take place tacitly. The bargaining, handing over the price and taking possession of the commodity without explicit verbal statements, or the mere tendering of the price and appropriating the commodity without any verbal utterances are acts which indicate consent, hence the requisites of offer and acceptance are found.

Ibn Qudaamah does not say “[O]ffer and acceptance indicate contractual consent” as Mr. Omar alleges. He says: conduct in which there is no verbal expression implies consent which in turn is tantamount to offer and acceptance.

Offer and acceptance are in fact contractual consent. They are not indications of contractual consent. Contractual consent comprises of offer and acceptance. In Bay-ut-Ta’aati the offer and acceptance are effected tacitly by conduct.

Regarding Bay-ut-Ta’aati in relation to a Muraabahah sale, Mr. Omar states:

[I]t follows that, if such offer and acceptance (i.e. tacit) were to be permitted tacitly, almost immediately after the client has taken possession of the commodity, on behalf of the bank, then the abovementioned distinction between a Murabahah sale and an interest-bearing loan would become blurred.”

Describing the Muraabahah sale of the banks, Mr. Omar explains:

“In practice, the client normally takes possession of the commodity on behalf of the bank in his capacity as an agent of the bank. Thereafter, the client in his capacity as purchaser acquires the commodity from the bank in terms of a separate sale concluded by offer and acceptance.”

Although in practice, the so-called ‘Islamic’ banks do not follow the simple method mentioned by Mr. Omar, for they bind the client with the faasid condition which Mr. Omar has painfully laboured to sanction with his endeavour of resuscitation of the corpse of Bay-ul-Wafa’, we shall briefly assume for the purpose of this discussion, that this is indeed the factual position.

If the client has truly terminated his wikaalat (agency) duty after having taken possession of the commodity on behalf of the bank, and if he thereafter enters into a proper sale agreement with the bank to purchase the commodity, then Mr. Omar’s assertion of the impermissibility of tacit offer and acceptance is devoid of substance. The act of Ta-aati (tacit Ijaab and Qubool) is an adequate substitute for explicit or verbal Ijaab and Qubool. As long as the fundamental requisites of Ijaab and Qubool are fulfilled in a valid manner, the sale is valid regardless of the category of offer and acceptance.

The ‘blurring’ of the line between a Murabahah sale and an interest-bearing loan exists in the imagination of Mr. Omar. He should explain with precision the way in which this ‘blurring’ occurs to enable us to assist him to eliminate the obliquity which taunts his comprehension of Fiqhi (juridical) issues of the Shariah.

Inspite of his own explicit averment of a “separate sale concluded” after termination of the agency contract, he claims that if the sale of the commodity is effected in terms of Bayut- Ta-aati, it would not be permissible, as well as akin to interest. He needs to explain and illustrate with specific examples to extricate himself and others who read his brochure from confusion and misunderstanding.

If Ijaab and Qubool (offer and acceptance) are effected in a valid substratum – after the termination of wikaalat (agency) in this case – the transaction is valid irrespective of the Ijaab and Qubool being explicit/verbal or tacit. As long as there are no faasid (corrupt) stipulations, e.g. a promise, payment of interest, etc., encumbering the agreement, the sale is valid whether the Ijaab and Qubool are explicit or tacit. The quality of the offer and acceptance are not the issues of determination. As long as these requirements are validly discharged in a lawful substratum, the sale is valid.

Mr. Omar’s ‘fatwa’ of impermissibility in relation to tacit offer and acceptance is conditioned with his fantasy of “almost immediately”. He thus says:

“It follows that, if such offer and acceptance were to be permitted tacitly, almost immediately after the client has taken possession of the commodity, on behalf of the bank, then the above mentioned distinction between a Murabahah sale and an interest-bearing loan would become blurred.”

There is nothing here that ‘follows’ either in terms of the Shariah, rationally or logically. There is a glaring contradiction between Mr. Omar’s two averments, namely, (1) the separate sale after termination of the client’s agency, and (2) the occurrence of the sale ‘almost immediately after’ possession of the commodity by the client.

His statement: “the purchaser acquires the commodity from the bank in terms of a separate sale concluded by offer and acceptance”, presupposes the absolute termination of the earlier wikaalat of the client. This confirms the birth of the Murabahah transaction as a totally separate entity – an effect subsequent to the ending of the wikaalat. The supposition that the transaction takes place “almost immediately after possession of the commodity” does not adversely influence the validity and permissibility of the sale if the latter is executed in accordance with the Shariah. Mr. Omar has to explain the Shar’i basis of his ‘almost immediately’ concept.

He has to define the meaning of ‘almost immediately’. Then he has to explain and substantiate on Shar’i grounds why one transaction will not be permissible if contracted ‘almost immediately after’ another transaction regardless of whether the intervening time factor is just a minute. It is grossly inadequate to merely say that the line of distinction is blurred. He has to explain how it became ‘blurred’ by one transaction rapidly following another. Then he has to provide his Shar’i basis for the validity of his ‘blurring’ claim. In short, he has to substantiate every claim and ‘fatwa’ with the evidence of the Shariah. His personal ideas and theories have no significance in the Shariah.

Will 5, 10 or 15 minutes or let’s say 2 minutes come within the scope of ‘almost immediately’? If yes, what is the Shar’i daleel? If no, what is the Shar’i daleel? He has to precisely define and demarcate the parameters of his ‘almost immediately’ concept.

He further claims:

“The transaction would be analogous to an interest-bearing loan, with the bank effectively assuming no risk.”

Again he talks nonsense. Yes, the bank will assume no risk if Mr. Omar’s baatil theory of legal enforceability of a promise is incorporated in the agreement. Why would the bank not be assuming a risk if the sale is conducted and concluded in compliance with the Shariah? The commodity is present. Ijaab and Qubool takes place in a valid substratum. The bank sells what it owns after it has taken possession of the asset. Now why would this sale be analogous with an interest-bearing loan?

We hold no brief for the banks. In fact we believe that they all, i.e. all the so-called Muslim banks, are Riba institutions. Our discussion here pertaining to the validity of the Murabahah sale subsequent to the termination of the wikaalat which existed between the bank and the client, is in relation to an assumed valid sale which takes place ‘almost immediately’ after the valid termination of the agency contract.

Mr. Omar has no valid Shar’i basis for his analogy. He has absolutely no grounds for his fictitious ‘fatwa’ that “it is not permissible to conclude such contracts tacitly”.

If the commodity is present, and in the bank’s possession, Bayut Ta-aati will be permissible. The entire proceedings of the transaction have to take place at a time when the client is not the agent of the bank even if it is one minute after termination of the wikaalat. 

Next: Islamic Finance – Part Four

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