FAROOQ BROTHERS vs UNITED BANK LIMITED art — 2023 PLD 47 FEDERAL-SHARIAT-COURT

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FAROOQ BROTHERS VS UNITED BANK LIMITED art. 203-D---Federal Shariat Court, jurisdiction of---Scope---any subordinate legislation or a law even if validated or protected under Constitution cannot get itself out from the test of repugnancy at the touchstone of Injunctions of Islam i.e. Holy Quran and Sunnah simply because of its protection or validation. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 2, 2-a, 31, 38(f), 203-B(c), 203-D, 203-G & 227---Shariat petitions relating to Riba/interest---Maintainability---Federal Shariat Court, jurisdiction of---Scheme of Constitution for Islamization of laws cannot be overlooked and ignored; it starts with the Preamble followed by arts. 2, 2-a, 31 & 227 of the Constitution which ensure that the State shall enable its subjects to order their lives in the individual and collective spheres in accordance with teaching of Islam as set out in Holy Quran and Sunnah---Commitment of the State with its subjects regarding Islamization of laws guaranteed in clear and unequivocal constitutional terms have to be honoured, respected and given effect to---Islamic way of life is absolutely incomplete and impossible without an economic environment/culture and society free from Riba, usury and interest---Word Riba used in art. 38(f) of the Constitution has been admitted as a menace, economic evil and stands to be eliminated as soon as possible---No controversy regarding prohibition i.e. Hurmat of Riba---all laws challenged in the present petitions are subordinate legislation to the Constitution, so by no stretch of imagination an implied bar can be pleaded to oust an express and clear jurisdiction of the Federal Shariat Court---after 26-04-1990 the bar regarding financial institution [mentioned in art. 203-B(c) of the Constitution] does not exist, nor any subordinate legislation regarding fiscal laws can be claimed to be immune from examination of the Federal Shariat Court within the powers exercisable under art. 203-D of the Constitution---Federal Shariat Court for all intent and purposes is well within its jurisdiction to decide the present Shariat petitions. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED Ouster of jurisdiction of Court---Scope---Courts do have jurisdiction unless it is barred expressly or by necessary implication---Practice of Superior Court has been that they have preferred assumption of jurisdiction instead of abdication of jurisdiction. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Question as to whether there is any difference between the terms 'usury' (Riba) and 'interest'---Held, that the terms 'interest' and 'usury' are synonyms used to translate the meaning of the term Riba---according to the Islamic principles of jurisprudence there is no difference between Riba (usury) and interest---Hence in principle both are one and the same thing and prohibited in Islam---alteration in the name of any term does not change its legal effect---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f), 203-B(c) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Federal Shariat Court, jurisdiction of---Scope---Question as to whether mechanism of indexation and inflation should be adopted by the banking sector in Pakistan to balance the inherent imbalance in the economic transactions---Held, that such question did not come under the precinct of jurisdiction of the Federal Shariat Court because presently there did not exist any law which contains the said issue---at present, there did not exist any law, regulation or SRO of State Bank, etc., which deals with the question of indexation; therefore, the question of indexation and all the related questions in such regard, which are connected to the effect of inflation of money over the borrowed amount during the period of borrowing fall outside the scope of the jurisdiction of the Federal Shariat Court at the moment---Mechanism of indexation and inflation was a matter to be decided by the relevant authorities like the regulator of the banking sector, i.e., Sate Bank of Pakistan or the Government or the Parliament---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---'Simple interest' and 'Compound interest'---Question as to whether the term 'Riba' is confined to compound interest only, and hence in light of Islamic Injunctions only charging of compound interest on loans is prohibited and not the charging of simple interest---Held, that Riba is haraam or prohibited in every form and quantity; its prohibition is not at all dependent on its percentage or the mathematical style in which it is calculated---Phraseology or expression of the Quran used in Verse 130 of Surah aal-e-Imran itself makes it evident that in the said verse only doubled or multiplied interest is not meant or intended but it also includes even the smallest percentage of interest---Riba or interest is absolutely prohibited and forbidden---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Types of transactions falling within the definition of Riba---Concept of Riba according to Injunctions of Islam in the light of Holy Quran and Sunnah of the Holy Prophet (SaW) and views of Muslim jurists stated. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Business transaction---Question as to whether interest or Riba becomes permissible if a transaction is undertaken or made in the name of a business---Held, that all or any transaction undertaken by a bank, if it involves interest or Riba at any percentage, less or more, in any form simple or multiplied or compound, is prohibited and haram---Banking itself per se is neither permissible nor impermissible according to the Injunctions of Islam in the light of the Quran and Sunnah, and it is actually the nature of transaction which it undertakes that makes it permissible or impermissible---If its transactions are Shariah compliant then it is permissible ,and if they are not Shariah compliant or there are doubts about them of being Shariah compliant, then such transactions are impermissible and against the Injunctions of Islam---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED Jurisdiction cannot be conferred by consent if a forum otherwise lacks jurisdiction. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Islamic banking model, practicality of---Islamic Banking or interest free banking was a reality; it was not only practical but also feasible not only in Pakistan but all across the world---Calling the Islamic Banking as a whole as heela i.e. a device to avoid what is otherwise Riba, is an unfounded and baseless argument---Products of Islamic Banking issued by the State Bank are reviewed and approved from Shariah Board of the State Bank in the light of Islamic Injunctions---accounting standard adopted by the State Bank of Pakistan for such purpose are made and issued by a highly reputed International body of well recognized Islamic scholars of the world called accounting and auditing Organization for Islamic Financial Institutions (aaOIFI)---Islamic Banking is contributing a lot in bringing economic stability in the country according to its market share---Similarly, the apprehension that Islamic Banking may pose a risk to security of the country is also unfounded---State Bank of Pakistan was also making efforts to remain compatible with the international standers of Islamic Banking---Currently there are many international organizations which are systemically working on standardization of Islamic finance and Islamic banking like Islamic Financial Services Board (IFSB) and accounting and auditing Organization for Islamic Financial Institutions (aaOIFI)---In Pakistan a comprehensive framework exists for Sukuk (bonds) and regular issuance of Sukuk (bonds) can be used to make the financial system Shariah compliant and interest free at the Government Level---Gradual target can be set by Government to convert its entire borrowing to Islamic modes in next few years and stop issuance of interest-based instruments---Therefore, to eliminate Riba completely Federal Shariat Court directed all Public Sector entities to start dealing only in interest-free Shariah-compliant modes which are approved by the State Bank of Pakistan---Steps taken and standards adopted by the State Bank of Pakistan and Government of Pakistan through Ministry of Finance to promote Islamic Banking in Pakistan stated. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED Part II, Chap. 2---Principles of Policy mentioned in the Constitution---Scope---Although the Principles of Policy are non-justiciable rights, however, each such Principle mentioned in the Constitution is binding upon the government and it is the responsibility of each organ and authority of the State to act in accordance with these Principles of Policy. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Charging of interest by banks on loans given by them to their customers---Interest paid by the bank to its depositors upon their deposits in the bank---Held, that both said forms of interest were Riba, and, thus prohibited---Banking interest is Riba in all its forms and manifestation---Loan that draws any additional amount which is normally called as interest is Riba; be it the amount taken by the banks from their customers upon lending them loan for any purpose or be it the payment made by the banks to its customers against their deposits which they maintain with the banks---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Consumption loans and commercial loans---Question as to whether only the charging of interest upon consumption loans is prohibited and the charging of interest upon commercial or productive loan is not prohibited in Islam---Held, that the prohibition of Riba is absolute, irrespective of the purpose for which the loan is taken on interest---Purpose of taking a loan does not change the status of prohibition of Riba---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---International commitments on payment of interest or Riba on international loans already taken by Pakistan---Future foreign borrowing by the Federal Government---Held, that according to the Injunctions of Islam, Pakistan is bound to fulfill all or any financial obligation regarding its foreign debt, however, if it wants to make those Riba based transactions Shariah-compliant, then it is also possible but with the mutual consent of the parties---any interest stipulated in the Government borrowings acquired from domestic or foreign sources is Riba and clearly prohibited by the Holy Quran and Sunnah, therefore, in future the Government should adopt Shariah-compliant modes while borrowing either from domestic or from foreign sources---For future foreign borrowing there are enough Shariah-compliant modes available in the international financial market which can be used and which are well recognized by the International banks and financial institutions---Islamic finance structure savailable for financing infrastructure projects and shariah compliant solutions for foreignborrowing offered by major international banks and multi-lateral agencies stated. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED art. 203-D---action/activity prohibited by Shariah---Consent of any party while doing an action or activity which is prohibited and forbidden in Shariah does not make it legal or permissible. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Insurance business---Takaful---Repugnancy to Injunctions of Islam---Concept of insurance per se is not un-Islamic; its prohibition and permissibility in Shariah depends upon the modes of business in which an insurance company is involved to generate profits for itself and its customers---If an insurance company is involved in those type of modes which are linked with or based upon those activities which are prohibited in Islam like Riba, al-Gharrar or al-Qimar, then such insurance services given by a company are prohibited according to the Injunctions of Islam---Otherwise, if an insurance company is involved in any of the Shariah-csompliant business modes to generate profits for itself and for its customers then it is permissible according to the Injunctions of Islam---Islamic concept of insurance is called Takaful---Word â€œTakafulâ€ originates from the arabic word â€œKafalahâ€ which means to â€œGuarantee, Guardianship, Foster care and protective care etc.---Takaful companies undertake business in accordance with the Shariah-compliant Modes which are free from Riba, al-Gharar and al-Qimar---Concept of Takaful is based on Islamic Injunctions. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D(2)(b)---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Timeline for the Government to take necessary steps for formulation of legislation which could provide enabling legal framework necessary to transform the Conventional banking system into Riba-free or Islamic banking system---Held, that under the prevalent circumstances it is appropriate and suitable for the Federal Shariat Court to set a time line for complete implementation of present decision which is also a Constitutional requirement in terms of art. 203-D(2)(b) of the Constitution---Setting of the timeline is the requirement of the Constitution which also fulfills the requirement of Shariah as in some situations time is required for proper implementation of a Shariah ruling---Existence of Shariah Standard for audit and accounting approved by the State Bank of Pakistan and above all the existence of number of full-fledged Islamic Banks in the country in addition to many conventional Banks with branches or windows of Islamic Banking is ample evidence that the transformation from conventional banking system into Riba-free or Islamic banking system can be completed very easily---Federal Shariat Court observed that five years period is reasonably enough time for the implementation of the present decision completely i.e converting economy of Pakistan into, equitable, asset based, risk sharing and interest-free economy---accordingly the Federal Shariat Court specified 31-12-2027 as the date on which the present decision shall take effect by way of complete elimination of Riba from Pakistan---Shariat petitions were allowed. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f), 203-B(c), 203-D & 203-G---Shariat petitions relating to Riba/interest---Maintainability---Federal Shariat Court, jurisdiction of---Federal Shariat Court has jurisdiction to examine and review any law on the touchstone of the Injunctions of Islam in the light of the Quran and the Sunnah and to decide whether such law is repugnant to the Injunctions of Islam or not, irrespective of the fact if any law or the provision of any law is linked with any article of the Constitution---Federal Shariat Court has full jurisdiction over the fiscal laws also to analyze them at the touchstone of Islamic injunctions, i.e., the Holy Quran and Sunnah of the Holy Prophet (SaW)---Petitioners had challenged certain laws on the basis of Islamic Injunctions, seeking declaration that these provisions of law are against the Injunctions of Islam as laid down in Holy Quran and Sunnah (SaW) because they fall within the definition of Riba, which is prohibited in Islam---Hence, the prayer of the petitioners in their petitions cannot be and should not be viewed as a prayer for only the implementation of art. 38(f) of the Constitution, which is Principle of Policy i.e. non-justiciable right in the Constitution---Present petitions before the Federal Shariat Court were maintainable. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Interest act (XXXII of 1839), Preamble---Government Savings Banks act (V of 1873), S. 10---Negotiable Instruments act (XXVI of 1881), Ss. 78, 80, 114 & 117(c)---Land acquisition act (I of 1894), Ss. 28, 32, 33 & 34---Civil Procedure Code (V of 1908), Ss. 2(12), 34, 34-a, 34-B, 35(3) & 144(1) & O. XXI, R. 11(2)(g), O. XXI, R. 38, O. XXI, R. 79(3), O. XXI, R. 80(3), O. XXI, R. 93, O.XXXIV, Rr. 2(1)(a)(i), 2(1)(a)(iii), 2(1)(c)(i) & 2(1)(c)(ii), O.XXXIV, R. 2(2), O.XXXIV, R. 4, O.XXXIV, Rr. 7(1)(a)(i), 7(1)(a)(iii), 7(1)(c)(i) & 7(1)(c)(ii), O.XXXIV, R.7(2), O. XXXIV, R. 11, O.XXXIV, R. 13 (1), O.XXXVII, R. 2 & O.XXXIX, R. 9---Co-operative Societies act (VII of 1925), Ss. 33-a, 50, 59(2)(e), 71(2)(m) & 71(2)(ee)---Co-operative Societies Rules, 1927, Rr.14(1)(h), 22 & 41 & appendices 1 to 4---West Pakistan Money-Lenders Ordinance (XXIV of 1960), Preamble---Sindh Money-Lenders Ordinance (W.P Ordinance XXIV of 1960), Preamble---Khyber Pakhtunkhwa Money-Lenders Ordinance (W.P. Ordinance XXIV of 1960), Preamble---West Pakistan Money-Lenders Rules, 1965---agricultural Development Bank Rules, 1961, Rr. 17(1), 17(2) & 17(3)---Banking Companies Ordinance (LVII of 1962), S. 25(2)(a)---Banking Companies Rules, 1963, R. 9---Banks (Nationalization) Payment of Compensation Rules, 1974, R. 9---Defense Saving Certificates Rules, 1966---Special Savings Certificates Rules, 1990---Legal Practitioners and Bar Councils act (XXXV of 1973), S. 61(2)(c)---Life Insurance Nationalization Order (President's Order No. 10 of 1972), Preamble---War Risks Insurance Ordinance (XXXII of 1971), Preamble---Federal Employees Benevolent Fund and Group Insurance act (II of 1969), Preamble---War Risks Insurance Ordinance (XXVI of 1965), Preamble---Riots and Civil Commotion Risks Insurance Ordinance (III of 1947), Preamble---War Injuries (Compensation) Insurance act (XXIII of 1943), Preamble---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Federal Shariat Court declared that the Interest act, 1839, the West Pakistan Money-Lenders Ordinance, 1960, the Sindh Money-Lenders Ordinance, 1960, the Khyber Pakhtunkhwa Money-Lenders Ordinance, 1960, the West Pakistan Money-Lenders Rules, 1965, Section 10 of Government Savings Banks act, 1873, Sections 78, 80, 114 and 117(c) of the Negotiable Instruments act, 1881 (so far as these sections are used to support or facilitate any interest bearing transaction), Sections 28, 32, 33, and 34 of the Land acquisition act, 1894 (so far as the word 'interest' is used in these sections within the meanings of banking interest), Section25(2)(a) of the Banking Companies Ordinance, 1962 relating to interest and mark-up, Section 61(2)(c) of Legal Practitioners and Bar Councils act, 1973 (to the extent theword 'any interest' is used in this clause), the Defense Saving Certificates Rules, 1966, the Special Savings Certificates Rules, 1990, Rule 9 the Banking Companies Rules, 1963, Rules 17(1) & (2) of the agricultural Development Bank Rules 1961, Rule 9 of the Banks (Nationalization) Payment of Compensation Rules, 1974, Rules 14(1)(h), 22 & 41 along with appendices 1 to 4 of the Cooperative Societies Rules 1927 (and any circular made thereunder containing the provision of word interest), are repugnant to the Injunctions of Islam as laid down in the Holy Quran and Sunnah of the Holy Prophet (SaW)---Federal Shariat Court further declared that Sections 33-a, 50, 59(2)(e), 71(2)(m) and 71(2)(ee) of the Co-operative Societies act, 1925, Sections 2(12), 34, 34-a, 34-B, 35(3) & 144(1) and O. XXI, R.11(2)(g), O. XXI, R. 38, O.XXI, R. 79(3), O. XXI, R. 80(3), O. XXI, R. 93, O.XXXIV, Rr. 2(1)(a)(i), 2(1)(a)(iii), 2(1)(c)(i) & 2(1)(c)(ii), O.XXXIV, R. 2(2), O.XXXIV, R. 4, O.XXXIV, Rr. 7(1)(a)(i), 7(1)(a)(iii), 7(1)(c)(i) and 7(1)(c)(ii), O.XXXIV, R.7(2), O. XXXIV, R. 11, O.XXXIV, R. 13(1), O.XXXVII, R. 2 and O.XXXIX, R. 9 of Civil Procedure Code, 1908 to the extent that the word interest appears in all these provisions are repugnant to the Injunctions of Islam hence they shall be deleted and be amended appropriately---Federal Shariat Court also declared that the Life Insurance Nationalization Order, 1972, the War Risks Insurance Ordinance, 1971, the Federal Employees Benevolent Fund and Group Insurance act, 1969, the War Risks Insurance Ordinance, 1965, the Riots and Civil Commotion Risks Insurance Ordinance, 1947, and the War Injuries (Compensation) Insurance act, 1943, to the extent the word interest occurred in these laws, are against the Injunctions of Islam as laid down in the Holy Quran and Sunnah, hence the same should be deleted or alternatively changed where ever possible with any of the Shariah-compliant mode which is approved by the State Bank of Pakistan. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 2-a, 203-D & 227---Federal Shariat Court, jurisdiction of---Scope---Policy guidelines---To give a policy guideline to the government or to any sector in order to mould that sector in accordance with the principles of Islam is not the job of Federal Shariat Court---Such obligation and duty was on the Parliament to follow the guiding principles by itself keeping in view the Islamic provision of the Constitution like arts 2-a & 227 in addition to the overall framework of the Constitution or it could seek the assistance of Council of Islamic Ideology of Pakistan. Head NotesCase Description Citation Name: 2023 PLD 47 FEDERAL-SHARIAT-COURTBookmark this Case FAROOQ BROTHERS VS UNITED BANK LIMITED arts. 38(f) & 203-D---Shariat petitions---Riba/interest---Repugnancy to Injunctions of Islam---Question as to whether the prohibition of Riba in Islam changes with the change in the percentage of interest charged upon a loan---Held, that according to Injunctions of Islam, a thing which is prohibited is deemed to be prohibited completely and absolutely; its quantity does not have any effect over its prohibition, i.e., if large quantity of a thing is prohibited, a very small quantity of the same is also equally prohibited---according to the Holy Quran and Sunnah, the prohibition of Riba does not depend upon the quantum or the percentage of amount on which the interest is charged in any transaction, or the rate of interest taken in a transaction---Prohibition of Riba is absolute---Shariat petitions were allowed. Head NotesCase Description

FAROOQ BROTHERS vs UNITED BANK LIMITED art — 2023 PLD 47 FEDERAL-SHARIAT-COURT

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