Due to the current global financial crisis there is increasing interest in the Islamic Economic System, the most comprehensive book on this topic is 'The Economic System of Islam' by Sheikh Taqiuddin an-Nabhani. However as people have many questions relating to the Islamic rules of trade we will be posting related extracts from the draft translation of the Fiqh masterpiece 'The Islamic Personality, Volume 2' by Sheikh Taqiuddin an-Nabhani
THE PLEDGEE BENEFITTING FROM THE PLEDGE
Once the pledge is completed, the thing that falls under the possession of the pledgee after its possession is taken. However this does not mean that the pledgee benefits from the pledge; rather the presence of the pledged good in the possession of the pledgee is only to secure from him his debt only. The pledge remains for his owner even if the pledgee deserves the debt upon the pledger. The pledgee in the days of ignorance would own the pledge if the pledger did not pay him what he owed him at the fixed time. Islam came and invalidated this.
He (saw) said:
“The security pledge is not forfeired from its owner who pledged it. For him is its gain/benefit and against him is its damage/loss” (narrated by Ash-Shafi’I via the way of Said bin Al-Musayyab).
The Messenger’s statement “The security pledge is not forfeited from its owner” i.e. the pledgee has no right in the security pledge if the pledger could not redeem it in the stipulated time. So the pledged thing remains the property of the pledger and its benefit remains his property because it is his gain/benefit and it enters into his (saw) statement “for him is his gain/benefit.”
Furthermore, the benefit is the increase (nima) of the pledged thing so it has resulted there from, whether this increase is a benefit like residing in the house or it is a thing like the produce of the tree and the cow’s child; all of these are the property of the pledger, and the pledge contract did not take place over them, so they are not security pledge. This is because the contract is over the thing not its benefit. So long as the benefit is the pledger’s property, it is for him to receive it, thus he can rent the pledged house, and receive its rent, whether he rented it to the pledgee or another. This wage is not a pledge but rather it is the property of the pledger. It does not follow the pledge because it is not from the subordinates/belongings of the house which enter into the sale without mention like house keys. Hence, the pledgee cannot benefit from the pledged thing by the pretext that it is pledged to him, or it is under his possession; rather its benefit is for its owner.
Since the thing’s benefit is for its owner, he can gift the benefit just like he can gift the thing and he can permit whoever he wishes to benefit from the thing. Except that the pledger’s permission to the pledgee to benefit from the thing which he pledged differs from the permission to someone else. It is permitted for the pledger to permit any human being other than the pledgee to benefit from the pledged thing. As for his permission to the pledgee, it has some details. If the pledge is for price of a sale or rent of a house or any debt other than the loan, it is permitted for the pledgee to benefit from the pledged thing with the permission of the pledger. This is because it is his property so he can permit whoever he wishes to benefit from it including the pledgee and others.
There does not exist any text preventing that as there did not come any text excluding the pledgee, so the rule remains general. Since it is also permitted for the seller to increase the price and the landlord to increase the rent if it is delayed payment, it is permitted for him to allow the use of the thing as an increase on the price of the sold thing or an increase on the rent of the hired thing. This is not considered riba as the definition of riba does not apply upon it nor its reality, nor does it enter into the usurious things determined by the text. Rather it is deferred price higher than the immediate price and hiring for a deferred wage higher than the wage in cash, and these are all of the transactions permitted by the Shar’a.
Whereas if the debt is a loan such as one person lending another one thousand for a year, and he pledges to him his house and permits him to benefit of the pledge, it is not permitted for the pledgee in this case to benefit from the pledged thing even if the pledger permitted. This is due to the text coming prohibiting this.
Anas (ra) narrated that
“The Prophet (saw) was asked about the person amongst us who lends to his brother property and he presents to hima gift. He said: The Messenger of Allah (saw) said: ‘If one of you lends a loan then something is gifted to him or he is carried upon the animal, let him not mount it or accept it unless that occurred between him and the other before that’” (narrated by Al-Bukhari).
Anas narrated from the Prophet (saw) who said:
“If he lends, let him not take a gift.”
Al-Bukhari narrated in his Sahih from Abu Burdah bin Abu Musa who said:
“I reached Madinah and met Abdullah bin Salam, and he said to me: You are in a land where riba is widespread. If you have a right over a man and he gifts to you a load of straw, barley or a plant, do not take it for it is riba.”
Al-Bayhaqi extracted in Al-Ma’rifah from Fudhala bin Ubayd: “Any debt that generates a benefit is one of the aspects of riba.”
Al-Harith bin Abu Usamah narrated from the hadith of ‘Ali (ra) with the words
“that the Prophet (saw) prohibited the debt that generates a benefit”
And in the narration: “Any debt that generates a benefit is riba.” There is also the consensus (Ijma’a) that any debt wherein an increase is stipulated is forbidden. Ibn Mundhir said: ‘They had an Ijma’a that the lending person if he stipulated an increase or gift upon the one seeking a loan, and he lends based on that, then taking the increase upon that is riba.’ It is narrated from Ubayy bin K’ab and ibn Abbas and ibn Masoud that they prohibited the loan that generated a benefit. From these ahadith and athar it is clarified that the loan which produces benefit, if the increase is stipulated, it is forbidden as one opinion without difference of opinion. If the person lent anything without condition and he repaid it with increase over what he borrowed of money, it is also forbidden.
However if he gifts him a gift extra to what he borrowed, it has to be examined. If it were his custom to gift him, there is no harm in that and it is permitted for him to accept the gift. If it were not of his custom to give him a gift, then it is not permitted for him to accept it due to the hadith of Anas.
As for what Al-Bukhari narrated in his Sahih from Abu Hurayra
“that a man demanded from the Messenger of Allah (SAW) a loan he gave to him and he was harsh to him. So his companions were about (to challenge) him, so he said: ‘Leave him for the owner of the right has (maqal) contention. Buy him a camel and give it to him.’ They said: ‘We do not find except older than one year.’ He said: ‘Buy it and give it to him for the best of you are the best in repayment.’”
And as for what Abu Dawud narrated from Abu Rafi’ who said:
“The Messenger of Allah (saw) borrowed a young camel, and there came to him camels of sadaqat. He commanded me to repay the man and I said: ‘I do not find in the camels except a preferred four-year old.’ He said: ‘Give it to him for the best of the people are the best in repayment.’”
This is not considered of the category of stipulating an increase in the loan nor of the category of increase upon the amount or borrowed thing. Rather he merely paid him similar to what he borrowed but greater than it in age or body. This is an animal for an animal so it is of the type of good repayment not of the type of increase. Hence the Messenger came with the reason of increase with an expression indicating reasoning and said:
“Verily the best of you are the best in repayment”,
“Verily the best people are the best in repayment”.
The reasoning is explicit and it is the good repayment not the repayment of extra over what was borrowed. Hence in the pledge in the situation of the loan, the pledgee is prohibited from benefiting from the pledged thing as it is not of the good repayment i.e. the good repayment but rather of the type of increase over the amount or the borrowed thing whether he stipulated it or not. It is not also of the type of the gift which he used to gift to him.
However all this is if the benefiting by the pledged thing is without recompense. Whereas if the benefiting with the pledged thing is with return, such as where the pledger rents the pledgee the house for recompense, it is permitted to benefit from the pledged thing in the loan and otherwise. This is because he does not benefit from the loan but by renting on condition that it is a rent without favour. If he favoured him in this, its rule is the rule of benefiting without recompense; so it is not permitted in the loan but permitted in other things.