P L D 2000 S C 225(Riba prohibition stayed)
[Shariat Appellate Jurisdiction]
Present: Justice Khalil-ur-Rehman Khan, Chairman, Justice Munir A. Sheikh, Justice Wajihuddin Ahmed and Justice Maulana Muhammad Taqi Usmani, Members
Civil Shariat Appeal No. l of 1992
Dr. M. ASLAM KHAKI---Appellant
versus
Syed MUHAMMAD HASHIM and 2 others---Respondents
Civil Shariat Appeal No.2 of 1992
THE AGRICULTURAL DEVELOPMENT BANK OFPAKISTAN,ISLAMABAD---Appellant
versus
FEDERAL GOVERNMENT OFPAKISTAN
through Secretary, Ministry of Finance,Islamabadand 53 others---Respondents
Civil Shariat Anneal No.3 of 1992
THE MANAGER, ALLIED.BANK LIMITED, B/O BAGHBANPURA,LAHOREand 2 others---Appellants
versus
Malik MUNIR AHMED and 2 others---Respondents
Civil Shariat Appeal No.4 of 1992
ALLIED BANK OF PAKISTAN LIMITED---Appellant
versus
NAVEED ASIF and another---Respondents
Civil Shariat Appeal No.5 of 1992
ALLIED BANK OF PAKISTAN LIMITED---Appellant
versus
NAVEED ASIF and another---Respondents
Civil Shariat Appeal No.6 of 1992 ‘
ALLIED BANK OF PAKISTAN LIMITED---Appellant
versus
NAVEED ASIF and another---Respondent
Civil Shariat Appeal No.7 of 1992
ALLIED BANK OF PAKISTAN LIMITED---Appellant
versus
NAVEED ASIF and another---Respondents
Civil Shariat Appeal No.8 of 1992
ALLIED BANK OF PAKISTAN LIMITED
through President, Head Office, Jubilee Insurance House,Karachi---Appellant
versus
NOOR AHMED and another---Respondents
Civil Shariat Appeal No.9 of 1992
ALLIED BANK OF PAKISTAN LIMITED
through President, Head Office, Jubilee Insurance House,Karachi---Appellant
versus
FEDERATION OFPAKISTANthrough Secretary, Ministry of Finance, Government ofPakistan,Islamabad---Respondent
Civil Shariat Appeal No. 10 of 1992
ALLIED BANK OF PAKISTAN LIMITED---Appellant
versus
GOVERNMENT OFPUNJAB
through Secretary, Finance Department, Government of Punjab,Lahoreand 4 others---Respondents
Civil Shariat Appeal No. l l of 1992
UNITED BANK LIMITED---Appellant
versus
Messrs FAROOQ BROTHERS
through Sole Proprietor Zafar Alam Chaudhry and 5 others---Respondents
Civil Shariat Appeal No. 12 of 1992
UNITED BANK LIMITED---Appellant
versus
Chaudhry SHARIF AHMED and another---Respondents
Civil Shariat Appeal No. 13 of 1992
UNITED BANK LIMITED---Appellant
versus
MUHAMMAD AMIN and another---Respondents
Civil Shariat Appeal No. 14 of 1992
UNITED BANK LIMITED---Appellant
versus
Messrs KAMRAN ICE FACTORY and 5 others----Respondents
Civil Shariat Appeal No. 15 of 1992
UNITED BANK LIMITED---Appellant
versus
MUHAMMAD IQBAL ZAHID and 3 others---Respondents
Civil Shariat Appeal No. 16 of 1992
UNITED BANK LIMITED---Appellant
versus
Messrs HAJISONS ANGOLO CINEMA
through Ch.Talib Hussain, Managing Partner and 8 others---Respondents
Civil Shariat Appeal No. 17 of 1992
UNITED BANK LIMITED---Appellant
versus
ABDUL QAYYUM QURESHI and another---Respondents
Civil Shariat Appeal No. 18 of 1992
UNITED BANK LIMITED---Appellant
versus
ABDUL RASHID and 2 others---Respondents
Civil Shariat Appeal No. 19 of 1992
UNITED BANK LIMITED---Appellant
versus
Shaikh MASOOD ELLAHI and another---Respondents
Civil Shariat Appeal No.20 of 1992
MUSLIM COMMERCIAL BANK---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 8 others---Respondents
Civil Shariat Appeal No.21 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 13 others---Respondents
Civil Shariat Anneal No.22 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 8 others---Respondents
Civil Shariat Appeal No.23 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD and 8 others---Respondents
Civil Shariat Appeal No.36 of 1992
Messrs HABIB BANK LIMITED---Appellant
versus
Syed MUSHARAF ALAM and 4 others---Respondents
Civil Shariat Appeal No.37 of 1992
Messrs HABIB BANK LIMITIED---Appellant
versus
FAIZ AHMAD and 11 others---Respondents
Civil Shariat Appeal No.38 of 1992
Messrs HABIB BANK LIMITED---Appellant
versus
Messrs KASHMIR FABRICS through Haji Sh.Karamat Ali, Managing Partner and 2 others---Respondents
Civil Shariat Appeal No.39 of 1992
Messrs HABIB BANK LIMITED---Appellant
versus
FAIZ AHMAD and 11 others---Respondents .
Civil Shariat Appeal No.40 of 1992
Messrs HABIB BANK LIMITED---Appellant
versus
FAIZ AHMAD and 11 others---Respondents
Civil Shariat Appeal No. 41 of 1992
Messrs HABIB BANK LIMITED---Appellant
versus
FAIZ AHMAD and 11 others---Respondents
Civil Shariat Appeal No.42 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs ALCOS (PAK),LAHOREand 2 others---Respondents
Civil Shariat Appeal No.43 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs ALCOS (PAK),LAHOREand 2 others---Respondents
Civil Shariat Appeal No.44 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs ALCOS (PAK),LAHOREand 2 others---Respondents
Civil Shariat Appeal No.45 of 1992 .
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs ALCOS (PAK),LAHOREand 2 others---Respondents
Civil Shariat Appeal No.46 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs M.A.QURESHI & SONS
through Proprietor Muhammad Ashraf and 2 others---Respondents
Civil Shariat Appeal No.47.of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs M.A.QURESHI & SONS through Proprietor Muhammad Ashraf and 2 others---Respondents
Civil Shariat Appeal No.48 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs M.A.QURESHI & SONS through Proprietor
Muhammad Ashraf and 2 others---Respondents
Civil Shariat Appeal No.49 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Messrs M.A.QURESHI & SONS through Proprietor Muhammad Ashraf and 2 others---Respondents
Civil Shariat Appeal No.50 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 11 others---Respondents
Civil Shariat Appeal No.51 of 1992
NATIONAL BANK OFPAKISTAN---Appellant.
Versus
MUHAMMAD HASHIM---Respondent
Civil Shariat Appeal No.52 of 1992 .
NATIONAL BANK OFPAKISTAN---Appellant ,
versus
MUHAMMAD HASH IM-Respondent
Civil Shariat Appeal No.53 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
Mian SALEEMUDDIN and 4 others---Respondents
Civil Shariat Appeal No.54 of 1992
Messrs ABN AMRO BANK through Authorised Officer and 19 others---Appellants
versus
The FEDERATION OF PAKISTAN through the Secretary, Ministry of Finance,Islamabadand 4 others---Respondents
Civil Shariat Appeal No.55 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 7 others---Respondents
Civil Shariat Appeal No.56 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 8 others---Respondents
Civil Shariat Appeal No.57 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 11 others---Respondents
Civil Shariat Appeal No.58 of 1992
NATIONAL BANK OFPAKISTAN---Appellant
versus
ALLIED PAPER INDUSTRIES LTD. and 11 others---Respondents
Civil Shariat Appeal No.73 of 1992
FEDERATION OFPAKISTAN---Appellant
versus
Dr. MAHMOOD-UR-REHMAN FAISAL---Respondent
Civil Shariat Appeal No.96 of 1992
PROVINCEOFPUNJAB
through Secretary Cooperative, Government of Punjab,Lahoreand another---Appellants
versus
Ch. SARWAR HAYAT and another---Respondents .
Civil Shariat Appeal No.97 of 1992
PROVINCEOFPUNJAB
through Secretary Cooperative Government of Punjab,Lahoreand 2 others---Appellants
versus
Mst. MUMTAZ BEGUM and another---Respondents
Civil Shariat Appeal No.98 of 1992
PROVINCEOFPUNJAB
through Secretary Cooperative, Government of Punjab,Lahoreand another---Appellants
versus
GULZAR AHMAD KHAN, SENATOR and another---Respondents
Civil Shariat Appeal No.99 of 1992
PROVINCEOFPUNJAB
through Secretary Cooperative, Government of Punjab,Lahoreand another---Appellants
versus
GULZAR AHMAD KHAN, SENATOR and another---Respondents
Civil Shariat Appeal No. 100 of 1992
PROVINCEOFPUNJAB
through Secretary Cooperative, Government of Punjab,Lahoreand another---Appellants
versus
GULZAR AHMAD KHAN, SENATOR and another---Respondents
Civil Shariat Appeal No. 101 of 1992
PROVINCEOFPUNJAB
through Secretary Cooperative, Government of Punjab,Lahoreand another---Appellants
versus
Ch. SARWAR HAYAT and another---Respondents
Civil Shariat Appeal No. 102 of 1992, ,
PROVINCEOFPUNJAB
through Secretary Cooperative, Government of Punjab,Lahoreand another---Appellants
versus
Ch. SARWAR HAYAT and another---Respondents
Civil Shariat Appeals Nos. l to 23. 36 to 58,73 and 91 of 1992
(On appeal from the judgment of Federal Shariat Court dated 14-11-1991 passed in Shariat Petitions Nos. 42-1 + 45-I/91, 14-I/90, 42-L/91, 67-L/91, 74-L/91, 69-L/91, 68-L/91, 28-L/91, Suo Motu Case No.3-I/91, Shariat Petitions Nos.4-I/91, 30-L/91, 31-L/91, 32-L/91, 17L/91, 18-L/91, 49-L/91, 73-I/91, 76-L/91, 89-L/91, 30-1/90, 17-A/I/91, 16C/I/91, 16-A/I/91, 21-L/90, 29-L/91, 26-L/91, 31-1/91, 32-t/91, 33-I/91, 70-L/91, 71-L/91, 72-L/91, 73-L/91, 27-L/90 (in four cases), 16-1/91, 421/91, 45-1/91, 73-1/90, 72-L/91, 17-1/91, 16-B/I/91, 17-B/I/91, 17-C/I/91, 30-1/90 and 16-I/90 respectively).
Shariat Appeals Nos. 96 of 1992. 99 of 1992, 100 of 1992 and 101 of 1992
(On appeal from the judgment ofFederal Shariat Courtdated 22-61992 passed in Shariat Petitions Nos.84-1/91, 78-1/91, 79-1/91 and 83-I/91 respectively).
Civil Shariat Appeals Nos. 97 of 1992, 98 of 1992 and 102 of 1992
(On appeal from the judgment ofFederal Shariat Courtdated 30-61992 passed in Shariat Petitions Nos.l-I/92, 80-I/91 and 82-I/91 respectively).
(a) Islamic Jurisprudence-
----Riba---Kinds---Any amount, big or small, over the principal, in a contract of loan or debt is Riba prohibited by Holy Qur’an, regardless of whether the loan is taken for the purpose of consumption or for some production activity-“Riba-al-Sunnah” and “Riba-al-Qur’an” are types of transactions termed as “Ribs” in Islamic Fiqh based on the Holy Qur’an and Sunnah.
Any amount, big or small, over the principal, in a contract of loan or debt is “Riba” prohibited by the Holy Qur’an, regardless of whether the loan is taken for the purpose of consumption or for some production activity. The ‘Holy Prophet (p.b.u.h.) has also termed the following transactions as Riba:
(i) A transaction of money for money of the same denomination where the quality on both sides is not equal, either in a spot transaction or in a transaction based on deferred payment.
(ii) A barter transaction between two weighable or measurable commodities of the same kind, where the quantity on both sides is not equal, or where the delivery from any one side is deferred.
(iii) A barter transaction between two different weighable or measurable commodities where delivery from one side is deferred.
These three categories are termed in the Islamic Jurisprudence as Riba-al-Sunnah because their prohibition is established by the Sunnah of the Holy Prophet (p.b.u.h.). Alongwith the Riba-al-Qur’an, these are four types of transactions termed as `Riba’ in the literature of Islamic Fiqha based on the Holy Qur’an and Sunnah.
Out of these four transactions, the last two ones, mentioned above as (ii) and (iii) have not much relevance to the context of modern business, the barter business being a rare phenomenon in the modern trade. However, the Riba-al-Qur’an and transaction of money mentioned above as (i) are more relevant to modern business.
(b) Islamic Jurisprudence---
----Riba---Loan---No difference between types of loan, so far as the prohibition of Riba is concerned---All the prevailing forms of interest, either in the banking transactions or in private transactions do fall within the definition of Riba---Any interest stipulated in the Government borrowings, acquired from domestic or foreign sources, is Riba and prohibited by the Holy Qur’an---Present financial system, based on interest, being against the Injunctions of Islam as laid down by the Holy Qur’an and Sunnah, and in order to bring the system in conformity with Shariah, Shariat Appellate Bench of Supreme Court directed that the system had to be subjected to radical changes---Alternatives to the present system being available, the transactions of interest could not be allowed to continue for ever on the basis of necessity.
There is no difference between types of loan, so far as the prohibition of Riba is concerned. It also does not make any difference whether the additional amount stipulated over the principal loan or debt is small or large. Therefore, all the prevailing forms of interest, either in the banking transactions or in private transactions do fall within the definition of Riba. Similarly, any interest stipulated in the Government borrowings, acquired from domestic or foreign sources, is Riba and clearly prohibited by the Holy Qur’an.
The present financial system, based on interest, is against the Injunctions of Islam as laid down by the Holy Qur’an and Sunnah, and in order to bring it in conformity with Shariah, it has to be subjected to radical changes.
A variety of Islamic modes of financing has been developed by Islamic scholars, economists and bankers that may’ serve as a better alternative to interest. These modes are being practised by about 200 Islamic financial institutions in different parts of the world.
These alternatives being available, the transactions of interest cannot be allowed to continue for ever on the basis of necessity.
There is ample evidence to prove that quite a substantial ground work has been done to suggest strategy for the transformation of the existing financial system to the Islamic one, and the present interest based system need not be retained for an indefinite period on the basis of necessity. However, the transformation may take some time which can be allowed on that basis.
(c) Interest Act (XXXII of 1839)---
----Preamble---Constitution ofPakistan(1973), Art.203-F---Repugnancy to Injunctions of Islam---Undefined, naked and generalised power to allow interest on a debt, as provided in Interest Act, 1839, being repugnant Injunctions of Islam, Shariat Bench of Supreme Court directed the repeal of Interest Act, 1839 and declared that the Act shall cease to have effect from 31st March, 2000.
The Interest Act, 1839, confers power on the Court to allow interest to the creditor upon all debts or ascertained sum payable which the Court gets recovered. The Council of Islamic Ideology had recommended its repeal in its Session held on 11th November. 1981.
The question of allowing interest by the Court while granting decree has been exhaustively dealt with by the Negotiable Instruments Act, 1881 and the Civil Procedure Code, 1908 as amended from time to time and as such there is no need to retain the Interest Act. 1839 on the Statute Book, so the same, for this reason alone, needs to be repealed. Even otherwise an undefined, naked and generalized power to allow interest on a debt is repugnant to Injunctions of Islam, therefore. Interest Act, 1839 being repugnant to Injunctions of Islam was directed to he repealed.
(d) Government Savings Banks Act (V of 1873)---
----S. 10---Constitution of Pakistan (1973), Art.203-F---Repugnancy to Injunctions of Islam---Provision of S.10, Government Savings Banks Act, 1873 on account-of the use of the word “interest” which was payable along with the amount of deposit was repugnant to Injunctions of Islam---If the accrual was caused through permissible mode of investment, no objection could be taken, for the emphasis had to be on adoption of Islamic modes of finance and conduct of business following Islamic principles--Word “interest” appearing in S.10 of the Government Savings Banks Act, 1873 being repugnant to the Injunctions of Islam, Shariat Bench of Supreme Court directed that word “interest” be substituted with the words “Shariah compliant return” and declared that the provision shall cease to have effect from 30th June, 2001.
The Government Savings Banks Act, 1873 provides for nomination and payment of deposit on death of the depositor and such payment to be a full discharge. However, it provides for the savings of rights of executor and creditor etc.
Section 10, as challenged, reads as under:---
“Any deposit made by, or on behalf of, any minor may be paid to him personally if he made the deposit, or to his guardian for his use if the deposit was made by any person other than the minor, together with the interest accrued thereon.”
The provision, on account of the use of the word “interest” which is payable alongwith the amount of deposit was repugnant to Injunctions of Islam. If the accrual is caused through permissible mode of investment, obviously no objection can be taken. The emphasis should be on adoption of Islamic modes of Finance and conduct of business following Islamic principles. The word `interest’ appearing in section 10 of the Act being repugnant to the Injunctions of Islam was directed to be substituted with the words ‘Shariah compliant return’.