ISLAMABAD, June 24: The Shariat Appellate Bench of the Supreme Court on Monday set aside its earlier judgment in which it had directed the government to eliminate Riba from economy by June 30, 2002. The bench remanded the case back to the Federal Shariat Court for a fresh decision.

Today’s decision has given a new life to the modern banking system of the country which was declared un-Islamic in the FSC judgment.

The government had sought reversal of the judgment which the FSC had delivered in 1992, declaring all forms of interest-based banking un-Islamic.

On Dec 23, 1999, the Shariat Appellate Bench had upheld the FSC judgment, and directed the government to transform the economy into Shariat’s principles by eliminating all forms of interest-based banking.

Headed by Chief Justice Shaikh Riaz Ahmad, the Shariat Appellate Bench set aside its earlier judgment after hearing the UBL’s review petition which was supported by the federal government. Earlier on Saturday, the bench had reserved its judgment.

In its Monday’s order, the bench stated that a case for review of the impugned judgment was made out as there were errors floating on the surface of record. It held: “We are of the considered view that the issues involved in these cases require to be determined after thorough and elaborate research and comparative study of the financial systems which are prevalent in the contemporary Muslim countries of the world.”

The court stated that the FSC did not give a definite finding on all the issues for the resolution of the controversy involved in these cases.

“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 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 opinion of jurists such as Shaikh Mohammad Abduhu, Shaikh Rashid Rida, Abdul Razzak Sanhuri, the former Shaikul Azhar, Mahmood Shaltut, and present Shaikul Azhar, Dr Muhammad Sayyid Tantawi.

The Supreme Court required the FSC that besides the arguments of the parties, it should also keep these points in view:

a) That the loans should be indexed, meaning thereby that the debtor must pay an additional amount equal to the increase in the rate of inflation during the period of borrowing.

b) That the loans should be tied up with gold, and it should be presumed that the one who has loaned Rs1,000 has actually loaned as much gold as could be purchased on that date for Rs1,000, and must repay as much rupees as are sufficient to purchase that much of gold.

c) That the loans should be tied up by a hard currency like dollar.

d) That the loss of the value of money should be shared by both creditors and lender in equal proportion. If the value of money has declined at a ratio of 5 per cent, 2.5pc should be paid by the debtor and the rest should be borne by the creditor, because the inflation is a phenomenon beyond the control of either of them. Being a common suffering, both should share it.

The court decided the case after hearing Raja Muhammad Akram, counsel for the United Bank; Makhdoom Ali Khan, the Attorney-General; Raza Kazim and Dr Syed Riazul Hasan Gilani, counsel for the federation; Muhammad Ismail Qureshi, Shaikh Khizar Hayat, ASC; M.A. Farani, Engineer Muhammad Saleemullah and Hashmat Ali Habib on behalf of the Jamiat Ulema-i-Pakistan.

The UBL counsel had placed reliance on verses 2:262-282, 3:130, 12:108, 18:49-50, 25:73-75, 30:39, 34:46 and 73:20 of the Holy Quran and extracts from Tarjuman-ul-Quran by Maulana Abul Kalam Azad, Tafseer-ul-Quran by Sir Syed Ahmed Khan and Ma’arif-ul-Quran by Mufti Muhammad Shafi to contend that verses 2:262- 282 mainly refer to ‘Sadqaat’, i.e. spending in the cause and for pleasing of Allah.

The UBL counsel contended that Holy Quran did not prohibit what was “reasonable and fair” and all that it prohibited was “doubled” and “multiplied”.

The federation counsel argued that in view of the bar, contained in Article 203 B(c) of the Constitution, the FSC had no jurisdiction to embark upon declaring Riba as Haram i.e. illegal or impermissible inasmuch as by virtue of Article 38(f) of the Constitution a duty had been cast upon the federal government, and not the FSC, to eliminate Riba as early as possible and therefore the FSC as well as the Shariat Appellate Bench of this court had no jurisdiction to step into the shoes of the federal government to eliminate Riba by fixing a time-frame.

The Shariat Appellate Bench comprised Chief Justice Shaikh Riaz Ahmad, Justice Munir A. Sheikh, Justice Qazi Mohammad Farooq, Justice Dr Allama Khalid Mahmood, and Justice Rashid Ahmad Jullundhari.