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The Supreme Court decision has the great important in view of national and international implications

July 01 - 07, 2002

After listening to the heated arguments from both sides for over 9 days the Appellate Shariat Bench of the Supreme Court on Monday ordered the Federal Shariat Court (FSC) to rehear afresh the Riba case involving the question of transforming the prevalent interest-based economic system into Islamic mode of financing.

While setting aside court's earlier December 1999's judgement to switch over from Riba-based economy to an "absolute" interest free financial system, Monday's court order observed that "there are errors floating on the surface of record" of the judgement.

The five-member bench unanimous order said; "We are of the considared view that the issues involved in these cases require to be re-determined after thorough and elaborate research and comparative study of the financial systems which are prevalent in the contemporary Muslim countries of the world."

While directing the government to replace the existing economic system with an interest-free economy, the apex court on December 23, 1999 had held that all the existing rules and laws operating interest-based economy would cease to have effect by June 30, 2001. The apex court gave one-year extension on federal government sponsored-plea of the UBL to enable the military rulers upto July 2002. The Supreme Court has given a new life to the modern prevailing banking system in the country. The state consel had argued that it will lead to financial anarchy if the earlier judgement was implemented in July 2002.

The Shariat Bench of the Supreme Court which delivered the judgement on Monday comprised Chief Justice of Pakistan Justice Sh. Riaz Ahmad, Justice Munir A Sheikh, Justice Qazi Muhammad Farooq, Justice Dr. Alama Khalid Mahmood and Justice Dr Rashid Ahmed Jullundhari.

The court judgement observed that before striking down any law, the previous Appellate Shariat Bench of the apex court (of which Justice Munir A Sheikh was also member) ought have remanded the case to the Federal Shariat Court to decide the issues of inflation and indexation afresh.

The court verdict authored by Chief Justice of Pakistan Mr. Justice Riaz Ahmad Sheikh observed that since the FSC did not give a definite finding on all the issues involved in the determination to enforce an Islamic economic system, it was essential to remand the case to FSC for the resolution of the controversy on the subject.

Recalling the arguments of federation's counsel, Dr. Syed Riazul Hasan Gillani, the court order said the principal amount which is liable to be returned in a transaction of Qarz (loan) must be re-de-fined keeping in view the scope of its intrinsic value in relation to inflation so that there should be no exploitation as regards the equities of the parties.

"The (previous) Shariat Appellate Bench has not properly distinguished the terms 'usury' 'Riba' and 'interest'. The term 'Riba' has not been defined in the Holy Quran and all that has been held in the judgement under review is based on Qiyas (analogy). The Word 'usury' is a kind of 'Riba' whereas the term interest refers to 'profit'" according to arguments by Raja Akram reproduced by the court order.

While reproducing the arguments of Dr. Gilani, the Supreme Court said the impugned judgment amalgamated legal and moral aspects of Riba. And failure to distinguish between legal and moral aspects of Riba has resulted in violation of the injunction of Islam as laid down in the Holy Quran and the Sunnah of the Holy Prophet (PBUH) as well as the juristic opinions of Imam Abu Hanifa and other great jurists.

The court noted the government's argument that the FSC judgment was biased as the author of the judgment. Justice Dr. Tanzilur Rehman, the then chief justice of the FSC, had delivered the judgment with a "pre-determined mind". It was argued by the federal government that Justice Tanzilur Rehman had referred to his own books on the subject and placed reliance on the Council of Islamic Ideology which was also authored by himself and ignored the opinion of eminent jurists of Islamic World.

The judgement concluded "It would be in the fitness of things if the matter is remanded to the Federal Shariat Court which under the Constitution is enjoined upon to give a definite finding on all the issues falling within its jurisdiction.

"Resultantly, Civil Shariat Review Petition No.1 of 2000, filed by the United Bank Limited is allowed, the judgment dated 23rd December 1999 passed by the Shariat Appellate Bench and the judgment passed by Federal Shariat Court on November 14, 1991, are set aside and the cases are remitted to Federal Shariat Court for determination afresh in the light of contentions of the parties and observations which are germane to the controversy."

The Supreme Court decision is, undoubtedly, of great importance in view of the nation's ideological moorings and international economic implications. It, in fact, constitutes a dilemma for it in the objective internal and international conditions. The Appellate Shariat Bench has, therefore, rightly decided to refer the case to the Federal Shariat Court for re-hearing in view of the multifarious constitutional, legal and religious and practiced issues involved in it. There is, however, need to benefit from other Muslim countries and prestigious religious institutions like Al-Azhar to find answer to the questions raised by the two sides during the hearing of the case before the apex court's Appellate Shariat Bench. We have to find the answer with a centrist approach in keeping with the Islamic virtues of moderation, justice and pragmatism. It is neighter appropriate nor desirable to behave like an ostrich and close our eyes to the truth that Pakistan is an ideological State and also has to live with the objective international economic envioronments.

We have to be mindful of the vital aspects of the modern era, which have direct bearing on business, trade and banking. A perception had, however, emerged during the hearing of the case in the Appellate Shariat Bench that the Government had not done its home work on the issue of the introduction of Islamic banking in the country. It's a serious matter, because the case was of a great significance to the nation's future. There should have been no apathy on this count. It is, however, hoped that the Government will duly respond to the intricate issues and articulate its stand with clarity, objectivity and realistically during the re-hearing of the case by the Federal Shariat Bench, since its decision will be of far reaching consequences.