Roshan din Roshan Vs. the State

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IN T H E FEDERAL S H A R IA T C O U R T

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FK 2S E N T

M R .J U S T IC E D R .T A N Z IL -U R -R A H M A N , C . J .

M R .J U S T IC E D R .F ID A MUHAMMAD KHAN .

M R .J U S T IC E M IR HAZAR KHAN KHOSO.

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SHARIAT PETITION NQ.10/1 OF 1992.

Roshan Din Roshan, resid en t o f T u llo k a r House opposite BungJow A dditional Sessions Ju d g e, D is tric t H a rip u r, H azra D ivisio n . . . . P e titio n e r.

V ersus

. v ■ • •y .• T h e S tate. Respondent.

For th e P e titio n e r. ... P e titio n e r in person assisted b y Qazi A b dud Daim, a religious Scholar.

For th e S ta te / H afiz S .A . Rahman. Advocate t F ed eratio n . M r .T a r iq A zh ar S h aikh , Section O ffic e r, M /o Finance.

Date o f In s titu tio n . . . . 10.2.1992.

Date o f h e a rin g . ... 1 3 .5 .1 9 9 2 .

Date o f decision.

nh. a L/< v >»*a JU« A '

JU DG M ENT A; .

P R ,F i fe* MUHAMMAD K H A N J . - B y th is Sh ariat P e titio n , file d b y M .R .R o s 'u m D in (h e re in a fte r called the > • v learned p e titio n e r )S e c tio n s 2 ,5 o f th e P ro v id e n t Fund A ct, 1925 (as amended u p to 1966 (a fte rw a rd s re fe rre d to as the Act) and its app licatio n to R egulations u n d e r Section 1 4 (5 ) and (6) nt the N .W .F .P S e rv an ts P ro v id e n t Fund R u le s ,1935 have been challenged on th e g ro u n d th a t th e y a re re p u g n a n t to the tniu nction s o f (slam . D u rin g th e course o f h e a rin g . Section 6 o f the A ct was also po itn ed o u t b y th e learn ed counsel for th e S tate to be in tine w ith th e im pugned sections as fa r as m entioning o f th e w ord in te re s t was co n cern ed . U n d e r the sun moto ju ris d ic tio n g ra n te d n y tth e C o n stitu tio n o f P akistan under A r tic le 2 0 3 -D ,th e re fo re ., th e said section o f th e A ct was also taken u p fo r co n sid eratio n .

2.T h e Impugned sections read as u n d e r:

"Section 2: In th is A c t,u n le s s th e re is a n y th in g repug nant In th e subject o f c o n te x t, -

(a ) "com pulsory deposit" means a sub scrip tio n to. o r deposit in ,a P ro v id e n t Fund w h ic h ,u n d e r th e ru le s o f th e F u n d ,is n o t,u n til th e happening o f some specified c o n tin g e n c y ,re p a y a b le on demand otherw ise th an fo r the purpose of the paym ent o f prem ia in respect of a policy o f life insurance [o r the paym ent o f su b scrip tions or prem ia in respect o f a fam ily pension fu n d ],a n d includes any co n trib u tio n . . . . and any in terest or increm ent which had occrued u n d er the rules o f the Fund on any such s u b scrip tio n ,d ep o sit o r c o n trib u tio n ,a n d also any such su b scrip tio n , deposit c o n trib u tio n ,in te re s t or increm ent renum ing to the c re d it o f the s u b scrib er o r u«rpcs..v. a fte r tiie happending o f any such contingency;

(b ) "c o n trib u tio n " means any amount c re d ite d in a P ro v id e n t F u n d , by (a n y a u th o rity adm inistering the F u n d }, by way o f ad d itio n t o ,( a subscrip tion to ,o r deposit o r balance a t the c re d it o f an in d ivid u al account in ,} th e F u n d ; and “c o n trib u to ry P ro v id e n t Fund'' means a P ro v id e n t Fund the rules o f w hich P rovide fo r th e c re d itin g o f c o n trib u tio n s;

(c ) "d ep en d an t” m n n s an y o f th e follow ing re latives of a deceased s u b s c rib e r to , o r a dep ositor in , a P ro v id e n t F u n d ,n a m e ly ,a w ife ,h u s b a n d ,p a re n t,c h ild , minor b ro th e r, unm arried s is te r and a decreased son's widow and c h ild ,a n d ,w h e re no p a re n t o f the s u b scrib er o r dep ositor is a liv e ,a p a ren tal g ra n d ­ p a re n t;

(d ) "G overnm ent P ro v id e n t Fund" means a P rovident F u n d ,o th e r than a Railway P ro v id e n t F u n d ,c o n ­ s titu te d by the a u th o rity of [th e S e c re ta ry o f S tate, the Federal G overnm ent, the C row n R epresentative o r any Provincial G overnm ent} fo r any class or classes o f [persons in th e s e rvice o f the State] or (o f persons em ployed in educational In s titu tio n s or employed b y bodies e x is tin g solely fo r educational p u rp o s e s }, (a n d references In th is A ct to the G overnm ent shall be co n stru ed a c c o rd in g ly ];

(e ) "P ro v id e n t F un d" means a fund in which su b s c rip ­ tions o r deposits o f any class o r classes o f employees a re received and held on th e ir in d ivid u al accounts and includes any co n trib u tio n s ......... and any In te re s t or increm ent a c c ru in g on such subs­ crip tio n s ,d e p o s its o r co n trib u tio n s u n d er the rules of the Fund;

(f)R aily ad m inistration" means -

({} an y com pary ad m in iste rin g a ra ilw a y o r tram way in (P a k is ta n i (u n d e r a Pakistan law] o r u n d e r co n tract w ith the (G overnm ent] or

(41)th e m anager o f any railw ay adm inistered b y the Fed eral G overnm ent o r the manager o f an y tram w ay adm inistered b y a Provincial G overnm ent; and

(g ) "R ailw ay P ro v id e n t F un d" means a P rovident Fund c o n stitu te d b y th e a u th o rity o f a railw ay adm inistration fo r any class o r classes o f its em ployees.

S-, (1 ) N o tw ith stan d in g a n y th in g contained in any law fo r the time being in f o r c e o r i n a n y d isp o sitio n , w hether testam entary o r o th e rw is e ,b y a s u b scrib er to ,o r depositor in ,a G overnm ent o r Railway P ro v id e n t Fund of the sum standing t o his c re d it in th e F u n d ,o r o f an y p a rt th e re o f, w here any nom in atio n ,d u ly made in accordance w ith the rules of the F u n d ,p u rp o rts to co n fer upon any person the rig h t t o r e c e i v e the whole o r an y p a rt o f such sum has become payable o r before the su m ,h avin g become p ayab le,h as been p a id ,th e said person s h a ll,o n the death as a f o r e s a i d o f the s u b s c rib e r o r d e p o sito r, become e n title d ,to the exclusion o f all o th e r p e rs o n s ,to receive such sum o r p a rt th e re o f,a s the case may be unless, - (a ) such nomination is a t any time v a rie d by another nomination made in lik e m anner or e x p re s s ly can­ celled b y notjf.r. g iven in th e m anner and to the a u to h rity p re s c rib e d b y those ru le s , or

10 I of 1992

(b ) such nomination a t any time becomes in valid b y reason o f the happening o f some c o n t i n g e n c y specified th e re in , -

and if the said person predeceases th e s u b s c rib e r or d ep o sito r, the nomination shall, so fa r as it relates to the rig h t co n fe rre d upon the said perso n , become void and of no e ffe c t :

P rovided th at '/h e re provision has been d uly made in the domination in accordance w ith the rules of the F u n d , c o n fe rrin g upon some o th e r person such rig h t in the stead o f the person deceased, such rig h t shall, upon the decease es aforesaid o f th e said person,pass to such o th e r p e rs o n ].

(2 ) N o tw ithstand ing a n y th in g contained in the {Succession C e rtific a te A ct 1925] or the Sind Regulation V I I I o f 1827, an y (p e rs o n ,w h o becomes e n title d as a fo re said,m ay be g ra n te d ] a c e rtific a te u n d e r th at A c t,o r that R egulation,as the case may b e ,e n titlin g him to receive payment o f such sum o r p a r t , a n d such c e rtific a te shall not be deemed to be invalid ate d o r superseded by any g ra n t to any o th e r person of p robate or letters o f adm inistration to the estate o f the deceased.

(3 ) T h e provision o f this section as amended by su b -se ctio n f 1} o f section 2 o f the P rovident Funds (Am endm ent) A c t, 15M*6,shall ap p ly also to all such nominations made before the date o f the commencement o f that A c t:

P rovided th a t the provisions o f this section as so amended shall not o p erate to a ffe c t an y case, in which before the said date any sum has been p a id ,o r has u n d er the rules o f the Fund become payable in pursu ance o f a n y nomination d u ly made in accordance w ith those r u le s .]

Section 6: *W h e n th e sun, standing to the c re d it o f any s u b scrib er o r dep ositor in an y G overnm ent o r Railway P rovident Fund w h l;n is a c o n trib u to ry P ro v id e n t Fund becomes p a y a b le ,th e -e may, i f the a u th o rity (sp ecified in this b e h a lf in th e rules o f the F u n d ] so d irects be deducted th erefro m and paid to (G overnm ent or the Railway A d m in istra tio n , as the case may b e , |- (a ) any amount due u n d er a lia b ility in c u rre d by the s u b s c rib e r o r depositor to (G o v e rn ­ ment or the Railway A d m in is tra tio n ], but not exceeding in any case the total amount of any co n trib u tio n s c re d ite d to the account o f the s u b scrib er o r depositor and o f any in te re s t or increm ent which has accrued on such c o n trib u tio n s ; or

(b ) w here the s u b scrib er o r dep ositor has been dismissed from (h is em ploym ent] fo r any reasons specified in this b e h a lf in the rules o f the Fund, or w here he has resigned such employment w ithin fiv e years o f the commencement th e re o f, the whole o r any p a rt of the amount o f any such c o n trib u tio n s , in te re s t and increm ent.

The impugned ru le reads as u n d e r:

1 9 (5 ): In te re s t shall not be c re d ite d to the account o f a Muhammadan s u b scrib er If he informs the Account. O ffic e r th at he does not wish to receive it ; o u t I f he subsequently asks for in te re s t, it shall be c re d ite d w ith e ffe c t from th e fir s t d ay o f the ye a r in which he asks fo r It .

( 6 ) : T h e In te re s t on amounts which u n d er sub- r u le (3 ) o f Rule 1 3 ,s u b -ru !e (5 ) o f Rule 16, s u b -ru le (3 ) o f Rule 1 9 ,s u b -ru le {3 ) of Rule 2 1 ,s u b -r u le (1 ) o f Rule 23. s u b - r u le ( l) or (2) o f Rule 2 9 , Rule 29 or Rule 30 are replaced a t the c re d it of the s u b scrib er in the Fund, shall be calculated as such raltes as may be successively p re sc rib ed u n d er s u b - r u le ( l) o f this ru le and so fa r as may be in the manner described in this ru le ."

3.The said p e titio n was adm itted and fix e d fo r re g u la r hearin g on 13.5.1992 when th e learn ed p e titio n e r and a d istin g u ish ed religious scholar Qazi A bdud Daim who had been produced by the te a m e d p e titio n e r to assist him w ere heard in d e ta il. M r.H a fiz S .A .R a h m a n , learn ed Advocate fo r the Federation accompanied b y M r. T a r iq A zh ar S h e ik h . Section O ffic e r, M in is try o f Finance was also h ea rd and the judgm ent was re s e rv e d . T h e same is being disposed o f now by this judgm ent.

9.It is p e rtin e n t to mention h e re th a t an o th e r Sh ariat P etition N O .J5/I o f 1990^on sim ilar p o in t,c h a lle n g in g a provision of P rovident Fund |,e.< R egulation No. 19 o f the Pakistan Insu ran ce Employees P ro v id e n t Fund Regulations 1959, was also considered by a Full Bench o f this C o u rt. The s a id S h ariat Petition was allowed on !4 th Nobem ber, 1990.

5.In th e In s ta n t p e titio n , th e learned p e titio n e r r e lie d on several verses o f th e Holy Q uran and numerous A h ad ith on the subject o f in te re s t and subm itted th a t th e provisions re la tin g to the paym ent o f in te re s t in the Act w ere re p u g n a n t to the I n ju n c tio n s o f Islam and as such needed to be s tru c k o f f. He sought p e rm is s io n o f the C o u rt to produce a religious scholar Qazi A bdud Daim.

Permission was g ra n te d and th e learned religious scholar was also heard In d e ta il. T h e learned scholar In te r^ v e ly read out v a r io u s quotations from a booklet title d " c *" - ”11 j *''1" '' 11 ** by Qazi Mohammad S a d ru d d in .

6.T h e learned counsel fo r Federation placed re lia n c e on a booklet named u 1 jl j- ■

by Maulana M ufti Mohammad S hafie.

7.We have considered th e argum ents o f both the sides in d e ta il. O u r conclusions a re summed u p in th e subsequent p a rag ra p h s.

8.So fa r as the p ro h ib itio n o f in te re s t is c o n c e rn e d , th ere could be no two opinions re g a rd in g its rep u g n an cy to the injunctions o f Islam and especially so in a Muslim com m unity. O u r detailed judgm ent on th e subject o f Riba w ritte n by H o n: M r.

Justice D r.T a n z il-u r-R a h m a n the learned C h ie f Ju stice, is v e r y com prehensive and contain all necessary re le v a n t m aterial on the subject which need not be repeated Qn f u ll) .( S e e PLJ 1992 , FSC i c. i ) .

9.T h e main question which we a re co n fro n ted h erew ith re la te to the in te re s t accrued b y th e G overnm ent on the com pulsory deduction as P ro v id e n t Fund o f the Governm ent em ployees. In sim plified f o r m the issue is ju s t confined to the fact w h eth er th e p a rt o f rem uneration which is com pulsariiy deducted a t source, w ith h eld by th e G overnm ent, invested a r b itr a r ily and handed o ve r to th e employees w ith some fixed add itio n in the name o f in te re s t comes u n d e r th e defin itio n o f Riba and is p ro h ib ite d or not.

10.To decide th e question we have to see the d efin itio n o f Riba and then ap p ra ise th e p rese n t point in its lig h t. For this p u r p o s e it would be most a p p ro p ria te to quote from the judgm ent on Riba r e fe r re d to above. The re le v a n t paras a re reprodu ced aS u n d e r:

”67: A ccording to the above Q uranic illu s tra tio n s , the lite ra l meaning o f rib a is ," in c re a s e " . In S h ariah it means "an a d d itio n ,h o w e v e r s lig h t, o ve r and above the p rin c ip a l" ,a n d thus includes both u s u ry and in te re s t (S ee:Lan es's Arabic English L e x ic o n ). T his find s su p p o rt from the best au th o ritie s on A rabic language like Imam Raghib ls fa h a n i( ^ 1 -*-**! 1 1 ,• l—»J ) and Zdbaydi ( j ) . R efer th e ir Encyclopaedic v.orks: M c fra d a t al Q u ran ( jjJ l _ l ) and Taj a l-A r u s ( CU. ) .

68: T h e word " in te re s t" , by and la rg e ,h a s now been accepted in d is understood as R ib a( ) (See Stiengass E n g lis h -A ra b ic D ictio n ary , Lahore, 1979,the w ord " in te r e s t" ).

69: Riba ( L - j ) U s u ry ,a s defined in "A D ictionary of Islam" b y Thomas P a tric k Hughes, Lahore, 1964,page 544 means "A term in Muslim law defined as "an excess according to a legal stan d ard of measurment or w eig h t, in one or two homogeneous articles opposed to each o th er in a co n tract o f exchange, and i n which such excess is stip u lated as an ob lig ato ry condition on one of the p a rtie s w ithout any r e t u r n ."

T h e w ord rib a appears to have th e same meaning as the Hebrew nushec, which included g a in ,w h e th e r from th e loan o f m oney,or goods, o r p ro p e rty of any k in d . In th e Mosaic law , conditions of gain for the loan o f money o r goods w ere rig o ro u s ly p ro h ib ite d See E xold . x x il 25; L e v .x x v .3 6 (U S U R l).

T h e re fo re ,R ib a includes both ‘ u s u ry ' and 'In te re s t' as known In English term inology. In legal sense it is th a t excess amount which a " C re d ito r" settles to re c e iv e /o r reco ver from his "D eb to r" in considers tion o f g iv in g time to the said d e b to r fo r re-paym ent o f his loan. Imam T a b ri (d .3 1 0 A . I I ) in T a fs e e rT a b ri ( V o l.H I,p a g e 6«) commenting on the Quranic verse ( U jJ I 3 c .,1 1 »J_M > 1 > w rites th a t:

JL —M wy j l j y Z-lL*jJl LwjJ\

th at is ,R ib a is thrit increase (fin a n c ia l) which an ow ner o f valuab le p ro p e rty (mat) receives from his d e b to r fo r g iv ir g him time to re p a y his d e b t.

Ib n a l- A t h ir ,ln His famous w ork 'K ita b a l-N ih a y a h - fi-C h a rib a l-H a d ith wa'I A th a r C a ir o ,1322 A . H . v o l.II,p a g e 66 says:

. ^ L , w a ic JL—H J - l

(T h e o rig in al meaning . o f rib a is excess and in the term inology o f th e S h a ri'a h , it means increase in the p rin c ip a l w ithout any co n tract o f sale having taken p la c e ).

Ibn A rab i in his noted w o rk .A h k a m al Q u ra n ,C a iro 19^7,v o l.I,p a g e 292 has d efin ed rib a to be the name of e v e ry increase in lieu of w hich th e re is no con­ sideratio n v iz p r o p e rty , (M a i).

i-tfl ^ j I j^ J I j y» &2-LII ^ L .jJ | " . Jyt l *■ .1-1 ,*J i^L -3

T his is the d e fim fio n which Allama B u rh an u d d in al-M a rg h in a n i (d .3 9 3 A . H . ) has also stated in his famous book, A i-H id a y a h (See A t-H id a y a ,Q u ra n M ahal, K arachi, K ita b -a 1 -B u u "( £ * - —111 —I— S ) S in g .B a i( ) (S ale) C h ap ter on Riba ( V o l.H i.p a g e 7 6 /, which reads ae u n d e r;

. UJ J ^ ^U JI

R ib a ,in la w ,s ig n ifie s an excess (in c re a s e ) in a (loan) c o n tract in which such excess is stip u la ted as an ob lig ato ry condition on one o f the p a rtie s ,w ith o u t any r e t u r n ,i . e . w ithout a n y p ro p e rty (M a i), i n exchange. (See Book X IV on S a le ,C h a p te r V I I I on Riba o r u s u ry . H id a y a h ,E n g lis h T ranslation by H a m ilto n .L a h o re, page 2 8 9 ), Imam F ak h ru d Din Al Razi (d .6 0 6 A .H ) in his w ell-know n Tafseer A l-K a b ir w rites that the meani ng o f the word Riba

is increase b u t it does not mean th at to r e c o v e r e v e ry kind o f increase is Riba and is unlaw ful ( fl ) . T h e forbiddance o f Riba relates to a speci al kind o f c o n t r a c t which was known ei.vingst th e A rabs as Riba a l-N a s iy a h ( t— J l L - j ) i . e . increase on d e b t. (T h e o th e r k in d o f Riba called Riba aJ-FadJ" f l—j ) is outside the scope o f th e presen t d iscu s sio n ).

74: Al-Jassas in Ahkam a l-Q u ra n (Istam bol 1335 A .H . v o l.l.p a g e 469 d efines the term 'rib a ' as follows:

lJJc J L . i s L / j j J + H l

(R ib a is the loan g iven fo r a specified period on condition th a t on the e x p ir y o f th e p e rio d .th e b o rro w er wUI rep ay it w ith some e x c e s s ).

75: Maulana Mawdoodl has stated the d e fin itio n o f Riba as follows:

-r* ^ ^ •**-*!-?

o--» »« ^ S w. j.4 a il j s> jnf j-' j

— J 4 *J>- »J ^ J-**— J i l

( tn • tin * jW • •>>- )

76: Even in common law parlance " in te re s t" has been held as " T h e excess o ve r th e o rig in a l advance is c e rta in ly the compensation which the c re d ito r gets for lending his money fo r th e p a rtic u la r p eriod. The fact th at it is not described in so many words as tn te re s t will not a lte r its c h a ra c te r" . (A IR 1944. Mad. 243 ).

77: H alsbury'sLaw s o f E n g la n d ,v o l.2 3 ,S . 253 defines in te re s t as follows:

" in te re s t when considered in relatio n to money denotes the r e tu rn o f c o n s i d e r a t i o n o r compensa­ tion fo r the use o f reten tio n by one p a rty of a sum o f money or o th e r p ro p e rty belonging to an o th e r.

73: It can thus be concluded th a t in te re s t is not an increase sim p lic iU r b u t in the S h ari'ah it is a special kind of increase, otherw ise in Bai( Sale ), th e re is an in c rc .s e which is term ed as p ro fit,w h e re • as Riba is the consideration or compensation for the period o f repaym ent o f loan. Sicne this "period" is not a valuable p ro p e rty (M a i), its r e tu rn has been declared as u n law fu l, w hether it be money or any o th er th in g . In o th er w ords, w h e re v e r th ere is money from the One P art and th e re is only grace period or deferm ent of the repaym ent of loan on the o th e r, and tor th at a 'r e tu r n ' is stip u lated it is R iba. On a c a refu l study o f several forms of commercial activ itie s and c re d it tra n s a c tio n s ,p re v e la n l among A rabs d u rin g the period of Holy Prophet a transaction w ith contains excess or addition over

N o . 10/1 o f 1992

and above th e p rin cip al amount o f loan, which is p re -d eterm ln e d ln relatio n to time o r period to be conditional on the paym ent o f th at p re -d e te rm in e d excess o r a d d itio n ,p a y a b le to the c re d ito r (such a transaction containing the said elem ents) co n sti­ tutes Riba and any sale ,tra n s a c tio n o r c re d it fa c ility , in money o r in k in d , has been considered to be a transaction o r R ib a, which is u n la w fu l,H a ra m ( y) in te r r ito r y o f Islam , (D a r al Islam ).

in Muslim society. T h e re is consensus (Ijm a , ) o f the Muslim ju ris ts on it. (F e d e ra l S h ariat Court Judgm ent on ln te re s t(R ib a )p a ra g ra p h s 67 to 78)"

11.Before dealing w ith the subject it ajcn seansappropriate to reproduce in th e ir own w ords the re le v a n t portions of argum ents p u t fo rw a rd In sup port o f both th e propositions by th e p a rtie s .

A d istin g u is h ed scholar o f th e s u b -c o n tin e n t, Maulana Mufti Muhammad Shafi who was o f th e opinion th a t the in te re s t accrued on the com pulsarily deducted portion o f P ro v id e n t Fund by the G overnm ent does not come u n d e r th e d e fin itio n o f R ib a, w rites in his booklet t it le d <1 * M jf ^ as under:

ifS L+Sjk* y tUii V i IJf ^

U ulSj ^ - L wL ^ ^ i r LxyJ -» >

y j- 4_ijt y J y ^ -Syl . W j -*y ^ ^ jjy >

- U.T y j y s jS ^

L i> L> l A^ 4I t-S I n>^> O Jo J

•S-i j A , I y l+> I LS o L , -t* f j iU i ' i .i j ‘j >1 *. ii.il—j I y £~ »* j j l ^A y i LS f 4w.) ty I XfJ 0-=*v-i' J y*5 _ r' * J L - L S .j.t *j ^ j? I it - t r jl l— j y

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L ijJ _ y £ + 1 J y ^yy ^ 9* * A . • I—S’ )

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12.C o n tro v e rtin g the aforem entioned point o f view , another religious scholar o f g re a t re p u te Maulana Qazi S adrud Din w rites in his booklet named " ft c J I" as follow ■ i* - _S j, u

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13.R egarding th e ow nership o f the Fund before its possession, the said learned s c h o lj* exp lains in re p ly to a question ^ Ji as u n d e r:

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He fu r th e r'e x p la in s :

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13.As fa r as the point o f ow nership before actual possession as raised b y f «■ ■ *■■ p-^1 * » i r f in re fe rre d to above is concerned th a t view in fa c t was advanced in re b u tta l to the point o f view o f Imam Shaft who considers th a t h ire becomes due immediately on concluding th e con tract whereas according to Hanfi point of view th a t becomes claimable only in v ir tu e o f an agreem ent o r in consequence o f th e end o f the c o n tract being o b tain ed . A ccording to la tte r v ie w . It can be claimed on one of the th re e grounds o n ly , e ith e r it is claimable in advance, in v irtu e o f a p revious agreem ent------o r in advance independent o f such agreem ent — o r In consequence o f th e h ir e r o b tain in g th e th in g con tracted fo r . T h is view o f th e m atter is based on the concept th a t a co n tract o f h ire is renew ed e v e ry in stan t according to the occurrence o f the u s u fru c t and thus the c o n tra c t in fact is a con tract of exchange which re q u ire s e q u a lity between the consideration and its r e t u r n . Since, th e re is a necessary delay in the u s u fru c t, th e re must alw ays be a d elay w ith respect to the r e tu rn fo r it i . e . th e h ir e . H ow ever, w here the u s u fru c t is obtained the rig h t of ow nership takes place w ith respect to the h ire , so that

S .P .N q . 10/1 o f 1992

the e q u a lity may be estab lish ed . And so also In case o f stipulation th a t the h ire shall be In advance o r is paid in advance by the h ir e r , as th e re in the h ir e r him self forgoes his r ig h t. (F o r details see t £ • IM j jjt 1«*V £...p .

*1T - • r f. j —jL t ll liiJ I j - —i j U V i < L to r-U \* 114-411 I* i* c le a r from th e above th a t th e issue o f ow nership before o r a fte r possession o f th e h ire is based on a h ig h ly technical g ro u n d , it tra n s p ire s from p eru sal o f the Act and re le v a n t Rules th e re o f th a t as fa r as p ra c tic a l aspect o f the m atter as ap p lied to the ow nership o f P ro v id e n t Fun d is concerned, it is considered to be the absolute p ro p e rty o f th e su b scrib er in a il re s p e c ts . It is c re d ite d in h is /h e r account b y nam e. H e /S h e is au th o rize d to make increase/d ecrease in th e m onthly instalm ent o n ly . H e /S h e is considered com petent to make nomination and co n fer th e rig h t to receive the amount That may stand to his c re d it in the Fund in the event o f his death b efo re the amount standing to his c re d it has become payable, or w here th e amount has become p ay ab le, before paym ent has been made. H e /S h e a'one a t the time o f join ing the F u n d , is re q u ire d to send a nomination in the form s e t-fo r th .in the F irs t Schedule in fa v o u r o f one o r more members o f his fam ily, if h e/sh e has a fam ily a n d , in case h e /s h e has no fam ily, shall sim ilarly nominate a person o r persons in the form set fo rth in th e • r second schedule. H e /S h e is eq u ally au th o rized to form ally cancel/rfepicut- * ■ik e - -

the previous nom ination. Likew ise h e /s h e may in th e nomination d is trib u te the amount th a t may stand to h is /h e r c re d it in the F un d am ongst1- the nominees a t h is /h e r own d is c re tio n . H e/sh e is a u t h o r iz e d also to be g ra n te d advance from th e amount stan d in g in his own c re d it in the F u n d , w ith c e rta in conditions im posed in his own in te re s t. H e /s h e has several options to exerc ise in con tinuing or d iscon tinuing su b scrib in g to the Fund a t an y tim e, as mentioned a t S .N o .6 , 7. 10 and 11 o f th e said R ules. T h e acc ru in g of in t e r e s t on th e Fund forms an in te g ra l p a rt o f the co n tract and being know n to th e s u b scrib er is well w ith in the meaning o f stip u la tio n as a thing known b y common usage is lik e a stip u la tio n which has been made ( ^ >.

IS . It is also in te re s tin g to note w ith g re a t care that in sp ite o f all these options and decisions, a "Muhammadan" i . e .

(Muslim ) su b scrib er has also been fu r th e r a u th o rize d to accept o r re je c t the in te re s t, as h e /s h e may lik e to do so. Rule 14(5) which is re le v a n t in this connection reads as u n d e r:

14(S) " In te re s t shall not be c re d ite d to the account o f a Muhammadan s u b scrib er if he in fo rm s th e Account O ffic e r th a t he does not w is h to receive it; b u t if he sub sequently asks fo r in te re s t, it shall be c r e d i t e d w ith e f f e c t from the fir s t day o f the year in which he asks f o r i t . " I t may be mentioned th a t in case, a s u b scrib er to the F u n d d ra w s advance fro m his account In th e F u n d , the same will be r e c o v e re d

/I of 1992

from him in the specified num ber o f instalm ents and a fte r the p rin cip al o f th e advance has been fu lly re p a id , in te re s t shall be paid thereon a t th e fix e d ra te m entioned in th e said R ules. How ever, the Muslim sub scrib ers whose deposits in th e Fund c a r r y no in te re s t shall not be re q u ire d to p ay in to th e Fund an y add itio nal instalm ents on account o f in te re s t on advances g ra n te d to them from th e F u n d . (R u le 1 5 (a ) ) .

16.A resume o f th e said Rules re la tin g to the subj ect u n d er exam ination summed u p above c le a rly shows th a t the s u b scrib er has a fu ll say in sub scrip tion to th e F u n d , its handling and its operation on Interest-free/jnterest beering basts. . T h e re fo re , it Is not a t all a r b itr a r ily m aintained and h e /s h e has e v e ry rig h t and resp o n sib ility in its m anipulation.

17.It appears th a t th e tr u e and fu ll factual position was not b ro u g h t to the k in d notice o f th e honourable scholars. The relevan t la w a n d r u l e s w e re not com pletely rep ro d u ced before them and instead o nly a portio n, th e re o f was form ulated in a questionaire form and thus the aforem entioned Fatwa was issued in favour o f the in te re s t accrued on the com pulsory portion o f th e F u n d , it may be noted th at the honourable g ra n d M u fti, may A llah bless his soul, did not app ro ve o f the re ceip t o f in te re s t accrued on the o p tio n a lly increased portion o f the F u n d . He w rites

Of 1992

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It shows th at w h erever th e s u b scrib er has the option o r say in the m a tte r, the n a tu re o f th e m atter changes and so it resu lts in a d iffe re n t positio n. We a re s u re th a t i f the whole law on the issue was presented before him , th e re p ly would have been c e rta in ly d iffe re n t from the one before us.

18.We may also mention th a t th e said Fatwa o f the

late g ran d M ufti o f Pakistan issued in fa v o u r o f the p erm issib ility of ti> said in te re s t was p rim a rily based on the view fa v o u ra b ly taken by ano ther d isting uished religious scholar o f the s u b -c o n tin e n t of a v e ry high s ta tu re namely Maulana A s h ra f Ali Thanew i in this connection. When asked about the in te re s t on P ro v id e n t F u n d , he ■i w ro te. ....................

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j j l >j—“*—* J > - •»>- LS ^ j l j* C ^1 -> J 3 l C ^- j* f j- L - L -J LS ^ j l jLi1 j ^ i—r** ^ ^ j U i * l ,>£«J - u*** r j L i ^ ^ J> - ^ * - *■* cr* -iil j ^ L iJ y> f\jt j j l I *—*- j-^-JI *“j*- — * ^ IL * L X ^ *_.U*i*l ^ - u * l « o * * ^ j j > » J>~ > *o -' u-*v- < rr L i rr u* : j^ -) _ t - u ^ _ u j I j jJ - iiL * I iA 19. The upshot o f th e above discussion is th at the

su b scrib er is a necessary p a rty to th e whole transaction who exercises h is /h e r option continously rig h t from m aking su b scrip tio n to the Fund in the fir s t instalm ent to his participation u p til la s t. T h e option to incruuse the said subscrip tion o r abstain from it is e x c lu s iv e ly h is /h e r own.

The conditions th e re o f a re made wefl known to h im /h e r and h e /s h e has e v e ry au th o rizatio n to change o r m odify his option in e v e ry resp e ct.

The stip u latio n o f in te re s t which forms a p a rt o f the co n tract is open to h im /h e r ftir acceptance o r re je c tio n . It seems th a t the view adopted in favo u r o f the p erm issib ility o f the in te re s t accrued on only the com pulsory portion o f the Fund was based on a h ig h ly technical reason.

H ow ever, i t is evid en t from th e correspondence th a t th e renowned scholar was exp lain in g a solution to individuab/persons who beiny G overnm ent employees w ere considered to be placed in situations out of i

f

x S . I ^ P ^ . I O / I of 1992

th e ir c o r tr o l. B ut it appears th at n e ith e r the whole law on th e subject alongw ith the detailed Rules th e re o f was placed b e fo re the honourable scholars nor to them it was a m atter o f e x a m in a tio n of <1 law enacted by o r enforced in an Islamic S ta te , the p rim a ry d u t y o f whose as mentioned in th e O bjective Resolutions, now a s u b s t a n t iv e p a rt o f the C o n stitution o f Pakistan b y v ir tu e o f A rtic le 2A . Is to enable the Muslims to o rd e r th e ir lives in th e In d iv id u a l and collective spheres in accordance w ith the teachings and r e q u ire m e n ts o f Islam as set o u t in th e Holy Q u ran and S u n n ah . T h e learned scholar Qazi S adrud Oin has r ig h tly o b served in this connection that i— t . . .j a * { j j 1-*-5 • ■*>-) ,J - '—* r --'

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20.To sum u p , we agree w ith th e contention that

the su b scrib er is the ow ner o f h is /h e r P ro v id e n t Fund in all r e s p e c ts .

It is a portion o f h is /h e r re m u n e ra tio n , d e fe rre d in h is /h e r ow n in te re st according to th e m utually accepted co n tractu al a g re e m e n t.

It is a sort o f loan to be p a id by the G overnm ent a nd h e /s h e has the option to accept or reject in te re s t th ereo n .

Q.10/1 i f 1992

21 . In th is view o f th e m a tte r/ we a re o f the considered opinion th a t th e in te re s t accru ed on th e Fund comes u n d e r the d e fin itio n o f Riba a s - mentioned a t pa r a IQ . ofjth ie -ju d g m e n t •i • '

jn q & g M - such th e im pugned provisions o f th e A ct namely Sections 2 ,5 and 6 and R egulation re la te d th e re to i . e . i < i ( S ) , (6) a/e -h e r e b y d ec lared re p u g n a n t to th e inju nction s o f Islam as o ;r ta in e d in the^H oly C u r a n a n d Sunnah and re s u ita n tly th e re is an u rg e n t need to amend th e same b y s u b s titu tin g it w ith an y system o f PLS e tc th a t is fn consonance w ith the teachings o f Islam . ^ .

' • ^ ^ 7; (C.

22 . C o n seq u en lty, we d ire c t th a t th e said provisions atongw ith th e said Rules be b ro u g h t In con form ity w ith the Inju nction s o f Islam in th e llg h t^ o u r observations made at /'id g e

(DR.TA NZIL-UR-RA H/AN ) (M IR HAZAR KHAN KHOSO)

C h ie f Justice Judge A t x n n CmC C»<v* .

Islam abad, >• ‘ A bdul Salam* A pproved fo r re p o rtin g .