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Q: 14- "Is car insurance permissible? The photo-copy of an article published in "Arab News" is enclosed wherein it is held that car Insurance is perfectly permissible and it is not against the concept of Tawakkul" or "Taqdeer". Please explain whether or not this viewpoint is correct in Shari'ah." (Mansoor Qadri, Jeddah)

A:  I have gone through the enclosed article, and I am  sorry to say that the viewpoint mentioned therein does not reflect the correct position of insurance according to the principles of Shariah as recognized by the overwhelming majority of the contemporary jurists.

In fact, all forms of the commercial Insurance prevalent in the traditional Insurance companies are against the Islamic principles because they have either an element of riba or the element of qimar or gharar.

The basic cause of the impermissibility of the current methods of insurance is not that the insurance is against the concept of tawakkul or taqdeer. It is rightly mentioned in the article of "Arab News" that taking a precautionary measure against a possible loss or seeking a safe-guard against an accident does in no way contravene the concept of `Tawakkul" (placing one's trust in Allah) and of "Taqdeer" (Allah's will and destiny).

However, like any other act in this life, every measure of precaution must conform to the principles of Shari'ah and should not in any manner cross the limits prescribed by the Holy Qur'an and Sunnah.

It is a well settled principle of Sharibh that every transaction between two parties in which the payment by one party to the other is certain and mandatory while payment by the other party depends upon a contingency (which may or may not occur) is included in qimar and gharar and is, therefore, unlawful.

The insurance of cars or other goods with the traditional Insurance Companies is a commercial transaction in which the person who wants to insure his goods is bound to pay a premium to the company in accordance with the prescribed conditions. This payment is certain and mandatory without which an insurance is not possible. But on the other hand, the payment by the company is not certain. It is contingent upon an event or accident which may or may not occur. If the accident takes place, the company is bound to pay an amount far more higher than the amount of the premium paid by the insured, but if the accident does not take place, the company does not pay to him anything and the premium paid by him goes without any return. In other words, the insured is bound to pay in any case while the company may or may not pay. Such kind of transaction is termed as gharar and Qimar and is strictly prohibited in Shariah.

Moreover, if the accident takes place, the amount of insurance is paid to the Insured as a consideration of the amount of premium. It is again repugnant to the well-settled principle of Shariah that where money is exchanged for money, both the amounts should be equal in quantity. Any increase on either side is riba which is clearly prohibited by the Holy Qur'an and Sunnah.

It is for these reasons that all the prevalent forms of commercial insurance have been held by the majority of the contemporary Muslim jurists as prohibited. This subject has been thoroughly discussed in different international seminars and conferences. Lastly, the question was also put before the Second Annual Session of the Islamic Fiqh Academy (established by the OIC) in Jeddah where all the Muslim countries were represented through their eminent scholars. After a detailed discussion of the subject, the Academy has adopted the unanimous resolution that the prevailing forms of insurance are prohibited in Shariah. However, the Muslim countries can develop their own system of insurance through the concept of takaful, waqf etc.

However, it should be remembered that since third party insurance is a mandatory legal requirement for every car-owner, he can effect this kind of insurance, because it is not possible for him to avoid it.'

Contemporary fatawaa



Q: 13- "On page 5 of the October, 1993 issue of AL BALLAGH

I have read with interest the commentary on Verses 180 - 182 and particularly the Hadith narrated by Sayyidna ibn Abbas 4 and the conclusion given which purports to make it permissible for an inheritor to receive more than his/her share if all inheritors allow the enforcement of a will which names an inheritor to receive more than his/her share.

From previous issues several months back and from other material read, it Chas my understanding that only one third of the total net assets can be gifted as part of a will to non-inheritors and that no allowances in gifts can be made to normal inheritors where their share would exceed that which is ordained by ALLAH.

Please comment on this aspect of inheritance, laws and remove any confusion or misconception that has cropped up in my mind and possibly in other reader's minds too.

Your prompt attention to this request will be much appreciated. Thank you and Jazakallah." (Muhammad Hussain Chand Karachi)

A: Answer to your question is very simple. Islamic law of inheritance does not permit a person to make a will in favour of any one of his legal heir so as to increase his share in the property of the deceased to more than the share prescribed for him by the Shari'ah. But this limitation has been imposed only to protect the rights of other inheritors, because any increase in the share of one heir would violate the rights of the remaining heirs whose shares would be reduced. However, if all other inheritors are sane and major, they can waive their right in favour of some other inheritor. Therefore, if a deceased person has made a will in favour of one of his legal heirs, and all other inheritors, being sane and major, have consented to enforce it, there is no bar in Shari'ah against its enforcement, because the restriction was meant to safeguard the rights of all the legal heirs and if they themselves have waived their rights, there is no violation of any right in its enforcement. It will be like a gift made by them in favour of the legatee. It is this principle that has been enunciated in the hadith of Sayyidna Ibn Abbasi rdi. quoted in Ma'ariful Qur'an in the following words:

"There is no will for any inheritor unless all inheritors permit."

But it should be kept in mind that the permission of other inheritors will be effective if they have given such permission after the death of the testator. The permission given in his lifetime is not a valid permission unless it is confirmed after his death.

Similarly, the restriction that a person cannot bequeath more than one third of his property is also meant for the protection of the rights of the legal heirs. But if all of them, being sane and major, are agreeable, a will of more than one third of the property can also be enforced. For example, if a person has bequeathed one-half of his property to a mosque, and all the legal heirs are agreeable to enforce it, they can do so, but in this case the thawab of one third will go to the deceased and the thawab of the remaining one eighth will be deserved by his legal heirs who have foregone this part of their share for a mosque.

Contemporary fatawaa



Q: 9- (1) The bank would purchase the land or property from the vendor and sell it to the would be buyer on an instalment basis. Each instalment would act as an increasing participation by the tenant in the property until such time as all the instalments have been paid. At that time the tenant would contractually be given ownership of the property. The bank would profit from the sale of the land or property together with an arrangement fee part of which would be rebateable conditional on the buyer making the instalment of the purchase in accordance with the terms of the contract.

Family security (Aman al-Osra) would form an integral part of this product possibly on the basis of a group policy with collective participation. This facility may also be used for the construction of new houses.

We have submitted that the type of product we have described affords a strong social benefit to elements of society and at the same time is consistent with the provisions of Islam. How does it seem to you?

For the bank to be able to undertake such a scheme it must obtain special dispensation from the central bank.


Q: 10- (2) The auto finance is, I believe fairly simple to do under a forfeiting approach through a third party - the dealer. In this way ownership is retained until all the rental have been paid under Ijara wa Iktina principle.

Q: 11- (3) We are most interested in your comments about a credit card. If you have any more information we would be pleased to have it". (Ali Hasan Ali, Director General Institute of Mamie Banking and Insurance, London)

A: At first place you have asked for the instrument of  decreasing partnership and its use in house financing.

Generally speaking the concept of decreasing partnership is acceptable in Shari'ah subject to certain conditions. The general framework of this arrangement should be on the following lines:

The land or property should be purchased jointly by the financier and the ultimate beneficiary who may contribute to its price on whatever minimum ratio. For example, he can contribute 10 per cent of the price. The rest of 90 per cent shall be contributed by the financier and the property will be owned jointly by the two parties, then the property should be divided into different units e.g. each unit may be 5 per cent or 10 per cent of the whole property. The ultimate beneficiary may use the 90 per cent of the property owned by the financier for a specific rent charged by him. At the same time the beneficiary can purchase the units owned by the financier gradually within the agreed period. Whenever the beneficiary purchases a unit from the financier, the rent is reduced to that extent. For example, if he has purchased 5 units, the ownership of the financier will be reduced to 85 per cent and he will pay a rent for this 85 per cent units only and so on. In this way the ultimate beneficiary will be purchasing the units owned by the financier gradually until all the units are purchased and owned by him, and the whole property becomes exclusively owned by the ultimate beneficiary.

This arrangement is allowed in Shariah and can be usefully utilised not in house financing only, but also in financing to acquire any other fixed assets or vehicles. If you wish to know the detail§ of this arrangement, as well as the Shariah justification of such an instrument, you can consult my Arabic Book: 'Discussions on Contemporary Juristic Issues" in which I have dealt with this instrument in detail.'

Your second question relates to the issue of Auto Finance. You have suggested that it should be on the basis of hire purchase. The concept of hire purchase is not fully in accordance with Shari'ah. The acceptable form of such a finance should be either on the basis of leasing where at the end of the period of lease the lessor would be at liberty either to repossess the asset or sell it to the lessee himself or to any other party. The price of the sale can be determined at that stage by mutual consent. It may be its depreciated value or a nominal value or whatever price they may agree upon. The second acceptable form of Auto Finance may be on the principle of decreasing partnership as explained in my reply to your first question. Your third question is about the Shariah ruling about the credit cards. The credit cards prevalent in the market today are of different kinds. If the card holder has an account in the bank, which has issued the card and the bills of his purchases are directly debited to his account, there is no problem with such an arrangement, because there is no possibility of the charge of interest because the bank charges interest only in a case where the card holder defaults in the payment of bills. In the case of direct debit there is delay but if the card is not obtained on the basis of direct debit system, some contemporary scholars are of the view that this type of card should not be used by a Muslim for the reason that it may happen that the card holder delays in the payment of the bill of the issuer of the card (the financial institution) whereby he will be liable to pay interest. But in my personal view as well as in the view of some other Scholars, if a card holder is confident that he will pay the bills within the specified period without fail he can avail of this credit card and should always be cautious to pay the bill promptly before any interest is due thereon.

As for the initial fee or the annual fee charged by the issuer of the card, it cannot be taken as interest because it has no relation with the amounts of the bills actually paid by the bank. It is a service charge for undertaking certain service facilities to the card holders, hence they are permissible in Shariah. The third aspect of the credit card is that the issuer of the card charges a certain discount from the merchant who accepts a credit card. Some contemporary Scholars are of the view that it is analogous to discounting of the bills of exchange but my view is different, which is also supported by the view of many contemporary Scholars.

I feel that this discount or commission charged by the issuer of the credit card is analogous to commission charged by a broker. It is evident that the card facility brings a large number of customers to the merchants. Had he not entered into such an arrangement with the issuer of the card, those customers would have not come to him, therefore, the issuer of the card is the basic cause for securing good customers for the merchant and he can rightfully charge a commission on this service rendered to the merchant.

This is my view about the general credit cards i.e. American Express, Master Card etc.

I hope these explanations will answer your questions.

Contemporary fatawaa



Q: 12- (1) Muslim students who go to non-Muslim countries for higher education generally find out that the money sent to them by their parents is insufficient for their many needs. Thus, they take up jobs to stay even. Some times they find jobs in hotels which sell liquour and pork. Is it permissible for Muslim students to be employed in such hotels?

(2) Running a distillery or merchandising liquour or pork in non-Muslim countries are open businesses. Can Muslims also do so?

A: 1. & 2- A Muslim is permitted to take a job in hotels run by non-Muslims subject to the condition that this
Muslim employee does not take up the duty of supplying pork or serving liquour and other forbidden things to non-Muslims. For, making others drink or serving it to them is forbidden.

According to a narration from Sayyidna `Abdullah ibn `Umar, may Allah bless them both, the Holy Prophet said:

"Allah has cursed liquor and its drinker its server, its selkr, its buyer its squeezer and whoso it has been squeezed for and its carrier and whoso it has been carried to."

In Tirmidhi, a narration from Sayyidna Anas ibn Malik says:

"The Holy Prophet, has cursed ten persons connected with drinking: The squeezer of liquour and the one for whom it has been squeezed, its drinker and its carrier and the one for whom it is carried, its server and its seller and the consumer from its sale proceeds, its buyer and the one for whom it is bought."

The words of the hadith narrated by Sayyidna Anas4 appear almost identically in Ibn Majah as well:

"The squeezer of liquor and the one who orders its squeezing and the one for whom it has been squeezed, and its carrier and the one for whom it is carried, and its seller and the one to whom it is sold, and its server and the one who has been served with it."

Imam al-Bukhari and Imam Muslim*, have narrated the following hadith from Sayyidna `A'ishah Rdi.

She said: "When the concluding verses of Surah al-Baqarah were revealed, the Holy Prophets went out of the house and recited those verses before people present there. Then, he prohibited trading in liquor"

Imam Muslim has reported the following saying of Sayyidna Ibn `Abbas rdi. as attributed to the Holy Prophet:

"The one who has made drinking of liquour unlawful is the one who has also made its buying and selling unlawful."

And Imam Ahmad has reported the following narration in his Musnad:

"This is a report from Abd al-Rahman ibn Wa'lah. He says: 'Once I asked Sayyidna Ibn Abbas: 'We live in an area where we own vineyards and the major source of our income there is nothing but liquor.' To this, Sayyidna Ibn 'Abbas replied, 'A certain person came to the Holy Prophet44 and presented a leather bag full of liquor as a gift for him. Then, to him, the Holy Prophet said: The One who has made the drinking of liquor unlawful is the One who has also made its buying and selling unlawful."

In the light of the ahadith quoted above, it becomes clear that the business of liquor is also unlawful, as is its transportation from one place to the other, or its offering for consumption. The ruling given by Sayyidna Ibn Abbas also provides a clear answer to the situation in which the distilling, and buying and selling of liquor may be common local practice, still, there too, it will not be lawful for a Muslim to adopt dealing in wine as a means of his livelihood.

And as far as I know, no Faqih from among the Muslim Jurists has ruled it as permissible.

Contemporary fatawaa



Q: 8-"Yousuf has a moderate sized business. Two of his sons assist him full time in the business. Two daughters are married. Yousuf passed away. The estate is not wound up immediately. Yousuf's two sons continued with the business. Finally after ten years it is decided that the estate should be wound up and each person given his/her respective share. In the meantime, since Yousuf's demise the business which was worth at Rs. 1,000,000 / = is now worth two million.

1.1: From what amount will the shares be calculated? Will the heirs who are not in the business be regarded as sleeping partners, whose capital was employed for the ten years after Yousuf's demise, and therefore be entitled to a share from the 2 million, or will their shares be calculated only from the Rs. 1,000,000/ -, and be regarded as an Amanat in the possession of the two brothers, in the business, for the past ten years?

1.2: Will it make any difference if the heirs out of the business had been demanding their shares constantly over the past ten years but no attention was paid by those in the business (i.e. will the mas'ala be any different in this situation compared to the situation where, after the demise of Yousuf, no heir spoke any word about their shares on the 'inheritance, and the first time this matter is touched on after ten years)?

1.3: What will be the mas'ala if the shares were worked out immediately upon the death of Yousuf, but the heirs running the business did not relinquish control and continued to run the business for the next ten years, without having paid out of the shares of the other heirs, despite having undertaken to do so upon the death of Yousuf?

2.1: Is the mas'ala in the following situation the same, one partner "walks out" of the business without taking anything, and after ten years demands to be given his shares. Will he be entitled to his share from the value of the business at that time "walking out" or the present value ten years later? (M. _Ryas Patel, Isipingo Beach South Africa)

A: It is a mandatory obligation of the heirs of a deceased person that immediately after his death they divide all his estate among themselves according to the shares prescribed by the Shariah. It is very unfortunate that most of the Muslims today do not comply with the rules of Shariah in this respect, and their negligence leads to serious disputes between the heirs of the deceased, and by the passage of time the problems become more complicated.

In the instant case it was the duty of the two sons of Yousuf that they distribute the estate between the legal heirs of their father or at least they should have affected a settlement with them, either by purchasing the shares of the other inheritors in the business, or by affecting a partnership with them, or by getting their permission to continue with the business on specific terms and conditions. If they have not done so, as it appears from the question, then it was not permissible for them to continue with the business and to use the capital of other inheritors for their own benefit. Therefore, all those profits which have accrued against the shares of other inheritors are not Halaal for them. They can enjoy the profits accruing against their own shares, but they have to surrender all the profits relatable to the shares of the rest of the heirs according to their respective entitlement according to Shariah.

It does not make any difference whether the rest of the heirs had demanded their shares or not, because it was the duty of these two sons either to pay the share of each inheritor in the business or to make a settlement with them, and it was not lawful for them to use their shares without their permission.

However, it will be advisable for the benefit of both of the parties that they effect a compromise between them by taking these two brothers as active partners of the business and treating the rest of the heirs as the sleeping partners. In this case, an additional proportion of the profit may be allowed to the working partners against their labour, while rest of the heirs get lesser proportion of the profit as a steeping partner generally does.

In short, the standpoint of the two sons running the business that the shares of other inheritors must be calculated only from one million is not acceptable, neither from the point of view of Shariah nor on the basis of justice and equity. The general principle of Shari'ah in this case is that they deserve only that part of the aggregate profits which relates to their own shares of inheritance, and the rest of the profits should be surrendered to each of the inheritors according to his entitlement in the inheritance. However, both the parties may effect a compromise by treating the business as partnership between all the inheritors, whereby the proportionate profit of the two working sons may be increased vis-a-vis the other partners on account of their labour. Such a compromise will be more advisable because it seems to be more equitable keeping in view the circumstances referred to in the question.

The case of a partner who walks out of the business without taking anything is different from the case of inheritance, because such a person has terminated the contract of partnership through his own free will. Therefore, he is entitled to those profits only which have accrued upto the time of the termination of the partnership.' He was entitled to get these profits at the time he left the business, but his failure to do so is a tacit permission to the remaining partners for continuing the business and treat his share of profit as trust with them. Therefore, he cannot claim the additional profit accruing after he terminated the partnership. On the contrary, in the case of inheritance the business after the death of the original owner came into the joint ownership of the inheritors and no inheritor can use the share of the other without his express permission, and even if other partners remain silent it did not mean that they had terminated their partnership with their free will. Therefore, the analogy of regular partnership cannot be applied here.

Contemporary fatawaa


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