P L D 2023 Federal Shariat Court 47 (PLP)

DR. SYED MUHAMMAD ANWER, J.

The Civil Shariat Review Petition No. 01 of 2002 filed by the United Bank Limited was allowed by the Hon'ble Shariat Appellate Bench of the Supreme Court on 24.06.2002 under its Shariat Review Jurisdiction; resultantly, judgment dated 23.12.1999 in Civil Shariat Appeals Nos.11 to 19 of 1992 and the judgment dated 14.11.1991 of the Federal Shariat Court passed in Shariat Petitions Nos.42-I + 45-I of 1991, etc. were set aside and the cases were remitted to the Federal Shariat Court for determination afresh in the light of contentions of the parties as noted in the said judgment and observations made upon them, which were germane to the controversy. According to the said judgment, parties were permitted to raise any other issue relevant to these cases in addition to the points raised before the Hon'ble Shariat Appellate Bench of the Supreme Court. The Federal Shariat Court was also allowed by the Hon'ble Shariat Appellate Bench of the Supreme Court through its judgment dated 24.06.2002 to take into consideration any point on its own motion or from any other aspect, which it may found relevant for determination of issues involved therein.

2. The background of the case is that the United Bank Limited filed a Civil Shariat Review Petition No.01 of 2000 under Article 188 of the Constitution of the Islamic Republic of Pakistan, seeking review of the judgment dated 23.12.1999 passed by the Shariat Appellate Bench of the Supreme Court in Shariat Appeals Nos.11 to 19 of 1992, whereby the judgment dated 14.11.1991 of the Federal Shariat Court was affirmed and it was declared that Riba in all its forms and manifestations was prohibited by the Holy Qu'ran and Sunnah of the Holy Prophet (SAW) in addition to that many laws were declared as repugnant to Islamic Injunctions.

3. The Federal Shariat Court after in-depth discussion and hearing the view point of subject specialists and scholars declared the laws and provisions of laws, as repugnant to the injunctions of Islam through its judgment (PLD 1992 FSC 1). An appeal was filed in the Shariat Appellate Bench of the Supreme Court and the impugned judgment of the Federal Shariat Court was up held by the Shariat Appellate Bench of the Supreme Court vide its judgment titled Muhammad Aslam Khaki v. Muhammad Hashim (PLD 2000 SC 225); consequently following laws were declared repugnant to the injunction Islam with the direction that these laws will cease to have effect from 31st March, 2000:

1. The Interest Act, 1839.

2. The West Pakistan Money-Lenders' Ordinance 1960

3. The West Pakistan Money-Lenders Rules, 1965.

4. The Punjab Money-Lenders' Ordinance, 1960

5. The Sindh Monery-Lenders Ordinance, 1960.

6. The N.W.F.P. Money-Lenders' Ordinance, 1960.

7. The Balochistan Money-Landers, Ordinance, 1960.

8. Section 9 of the Banking Companies Ordinance, 1962. The provisions of the following laws which contained the term 'interest' within the meaning of Riba were declared repugnant to the injunction of Islam.

1. Section 10 of the Government Saving Banks Act (V of 1893).

2. Sections 79 and 80 of the Negotiable Instruments Act (XXVI of 1881) in respect of interest on money claims, "Mark-up), "Services charges", etc.

3. Sections 114 and 117(c) of Negotiable Instruments Act of 1881).

4. Sections 28,32,33 and 34 Land Acquisition Act (I of 1894).

5. Sections 34, 34-A, 34-B and O.XXXVII, R.2(a) of Civil Procedure Code (V of 1908) relating to interest, Mark-up, lease, hire purchase and service charges.

6. Sections 2(12), 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, R.2(1),(a)(i)&(iii),(c); O.XXXIV, R.11, O.XXXIV, R.4(1) and (2), O.XXXIV, R.7(a)(c)&(2), O.XXXIV, R.11, O.XXXIV, R.13(1) and (2) O.XXXIX, R.9 of Civil Procedure Code regarding interest.

7. Section 59 of the Co-operative Societies Act (VII of 1925), provision relation to interest.

8. Rules 14(1) (b), 22 and 41 of Co-operative Societies Rules, 1927, provision of interest.

9. Sections 3-BB (1) (b), 27(3), 29(8)(b), C(iii),47-B and 81(2) (d) of Insurance Act, 1938, provisions for a range of rates of interest etc.

10. Section 22(1) of the State Bank of Pakistan Act (XXXII of 1956) relating to purchase of Bills, Debenture, bonds etc, on the basis of interest.

11. Rule 17(1)(1)(3) of Agricultural Development Bank Rules, 1961.

12. Section 25(2)(a) & (b) of the Banking Companies Ordinance (LVII of 1962) regarding giving of directions by State Bank regarding rates of interest or Mark-up.

13. Rule 9(2) &(a) of the Banking Companies Rules, 1963.

14. Rule 9 of the Banks (Nationalization) Payment of Compensation Rules, 1974.

15. Section 8(2)(a)&(b) of the Banking Companies (Recovery of Loans) Ordinance (XIX of 1979) relating to interest and Mark-up.

16. Banks (Nationalization) Payment of Compensation Rules, 1974.

17. Banking Companies (Recovery of Loans) Ordinance, 1979.

4. In addition to that the Shariat Appellate Bench of the Supreme Court also held as follows:- a. Any amount big or small, over the principal, in a contract of loan or debt in " riba " prohibited by the Holy Quran, regardless of whether the loan is taken for the purpose of consumption or for some production activity; there is no difference between different types of loans so far as the prohibition of Riba is concerned. The prohibition of Riba is absolute irrespective of the fact whether the additional amount stipulated over the principal loan or debt is small or large. b. All the prevailing forms of interest either in the banking transactions or in private transactions do fall within the definition of Riba. c. Similarly any interest stipulated in the Government borrowings acquired from domestic or foreign sources is Riba and clearly prohibited by the Holy Quran.

5. In addition to that the Shariat Appellate Bench of the Supreme Court directed the Federal Government to take certain steps which according to the court were necessary to transform the economy of Pakistan like, the Government should take strict austerity measures to drastically curtail the Government expenditure, and deficit financing should be controlled. It also suggested certain laws to be framed like, an Act to regulate the Federal consolidated Fund and Public Account, Provincial Consolidated Fund and Public Account requires to be enacted by the parliament and the Provincial Assemblies for their proper regulations; and laws similar to the freedom of information Act, the Privacy Act and Ethics Regulations of United States, Financial Services Act of Britain be enacted. Shariat Appellate Bench of the Supreme Court suggested certain offices to be established like, Serious Fraud Office (SFO) to control white collar and economic crimes, Credit rating agencies in the public sector etc.

6. The Shariat Appellate Bench of the Supreme Court directed certain special departments to be established within the State Bank. In addition to that for transformation of the existing financial system to the one conforming to Shariah certain time lines were also given by the Shariat Appellate Bench. The Government was directed to convert the domestic inter Government borrowings as well as the borrowings of the Federal Government from State Bank of Pakistan on interest free basis.

7. The Shariat Appellate Bench of the Supreme Court vide its judgment (PLD 2002 SC 801) in the Review Order held: "we are of the considered 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. Since the Federal Shariat Court did not give a definite finding on all the issues involved determination whereof was essential to 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 within its jurisdiction." 8. "Resultantly, Civil Shariat Review Petition No. 1 of 2000 filed by the United Bank Ltd is allowed, the judgment dated 23th December, 1999 passed by the Shariat Appellate Bench of this Court in Shariat Appeals Nos.11 to 19 of 1992 and the judgment dated 14th November, 1991 of the Federal Shariat Court passed in Shariat Petitions Nos.42-I+45-I of 1991 etc, are set aside and the cases are remitted to the Federal Shariat Court for determination afresh in the light of the contentions of the parties noted above and the observations made which are germane to the controversy. Besides the points raised before this Court, the parties would be at liberty to raise any other issue relevant to these cases and the Federal Shariat Court may also, on its own motions, take into consideration any other aspect which may arise or may be found relevant for determination of the issue involved herein."

9. The Review Petition was decided in 24.06.2002, whereby the judgment dated 23.12.1999 passed by Shariat Appellate Bench of the Supreme Court and judgment dated 14.11.1991 of the Federal Shariat Court were set aside and the cases were remanded to this Court for re-determination afresh in the light of contentions of the parties as noted in the said judgment and observation made upon them, which were germane to the controversy. Two decades have passed since the announcement of the judgment in the Review Petition, and ever since the matter kept pending adjudication which is not at all an appreciable state of affairs. Although, this delay happened due to one or the other practical and procedural hindrances but still no excuse can be made acceptable. Nevertheless; this dark cloud of delay has a silver lining too. The delay has brought certain positive changes in the matter in issue of this case, i.e., the introduction and promotion of Islamic Banking or Interest-Free Banking in Pakistan at an exponential level took place during this period. During this period of last 20 years Islamic Banking has become a reality in Pakistan. Many topics which were considered as mere academic debate have become real and practical issues, like different modes of Islamic financing their practicality and operations at individual as well as at corporate level. Both the judgments which were set aside by the Remand Order of the Hon'ble Shariat Appellate Bench of the Supreme Court contained a very thorough and elaborative juristic literature on a very sound academic footing, which was appreciated and praised not only in Pakistan but all over the world in the relevant circles attached to the field of Islamic financing or Islamic Banking. Academically both the judgments are considered as master piece and land mark judgments for laying the foundation of Islamic Banking in the contemporary world. During the past 20 years both the judgments provided practical help and guideline for the development of Islamic Banking in Pakistan. At present, Islamic Banking, i.e., Interest Free Banking is a reality not only in Pakistan but all across the world. Resultantly, the significance of so many questions are changed, which were debated and agitated upon by the parties previously, while arguing those petitions in the Federal Shariat Court and in the Shariat Appellate Bench of the Supreme Court as well as in the review petition. For example, the question whether Islamic Banking is practical, viable and feasible or not in Pakistan or whether the implementation of Islamic Banking in Pakistan will impose any risk to the stability and security of Pakistan or not. All such questions perhaps have lost their significance which were previously relevant when the case was pending and was argued in the Hon'ble Shariat Appellate Bench of the Supreme Court. As a consequence of this change, the gravity of the importance of some academic questions have changed with Islamic Banking being regulated by the State Bank of Pakistan with the able and appropriate advice and guidance of its Shariah Board. In light of this background, we have divided the questions for our determinations in the following categories to dilate upon them accordingly: i) Firstly, questions or points raised by the petitioner in the Review Petition before the Supreme Court were almost the same, which were earlier raised by them either before the Federal Shariat Court or Shariat Appellate Bench of Supreme Court and most of these questions were dilated upon elaborately. Some of these questions are repetitions of one or two points in different ways. For instance some of these points which were raised by the petitioners, in the Review Petition, and were noted down by Shariat Appellate Bench of the Supreme Court in para 6 can be summed up in the following manner: a. Does the Holy Quran only prohibit Riba which is doubled and multiplied interest and it does not prohibit what is reasonable and fair? b. The Riba has not been defined in the Holy Quran and all that has been held in the judgment under review is based on Qiyas. c. The definitions and differentiation between usury, Riba and interest have not been properly distinguished. d. Charging of Riba on personal loans is prohibited while it is not prohibited on productive, industrial or commercial loans. e. Banking is a kind of business and business is permissible in Islam. (reference para 11) f. Banking interest is not Riba. ( reference para 16 of the Remand Order)

10. In general these are those questions which are off and on raised and relied upon by those persons or scholars who try to derive some kind of exception from the complete and absolute prohibition of Riba. Although, these and other similar questions were dilated upon elaborately by the Federal Shariat Court and the Shariat Appellate Bench of the Supreme Court; but still we intend to re-determine these questions and some other similar type of questions for compliance with the direction of the Shariat Appellate Bench of the Supreme Court. We have formulated different questions of determinations to answer and address all such questions. It was also argued by the petitioners in the Review Petition that judgment of the Federal Shariat Court was authored with some predetermined mindset (Reference para 9 of the Remand Order). Though this argument of the petitioners in the review petition was perceptibly subjective, still we have consulted and relied upon the relevant books, article and other literature as much as possible covering opinions of all schools of Islamic jurisprudence belonging to every geographic location of the world. We have relied upon the consensus oriented opinion of the contemporary world like opinions of Islamic Fiqh Academy (IFA) of the Organization of the Islamic Cooperation (OIC) and obviously the corpus of classical literature of exegetes and Islamic Jurisprudence. For Example while concluding just one point of determination i.e whether the interpretation of Verse 3:130 Holy Quran means that only 'doubled and multiplied' Riba is prohibited and what is reasonable and fair is not prohibited. We consulted more than one hundred exegetes (Tafaseer) written by the scholars of different schools of thoughts, from different countries and background and were from different era of that last fourteen hundred years. ii) Secondly, some points were raised by the petitioner while arguing the Review Petition but have either become irrelevant or have become less important due to the changed reality regarding the progress and proliferation of interest-free banking in Pakistan and the world over, specially in the last two decades, i.e., after the decision of the Review Petition. This category mainly includes the doubts raised by the Federal Government regarding the practical implementation of interest free banking in the country or the transformation of economy from conventional banking to Islamic banking, etc., the points which were raised by the counsel for the petitioner in the review petition in this context were mainly reproduced in para-7 of the Review Order. For example: a. Implementation of interest free banking is not practical or feasible (Reference on para 7 and para 14 of the Remand Order). b. If the interest-free banking is introduced it will pose high degree of risk to the stability of Pakistan.

11. Such type of apprehensions and questions which were earlier raised by the Federal Government through Ministry of Finance and State Bank of Pakistan have practically become irrelevant since the interest-free Banking or Islamic Banking is now a reality not only in Pakistan but all across the world. To explain this we have formulated points of determination to dilate upon the point whether there is a proper legal and regulatory framework available in Pakistan for the Islamic Banking or not. What is the status of Islamic Banking in Pakistan and what are the different practical examples of Islamic Banking available in the world. iii) Thirdly, when this case was being heard previously before the Federal Shariat Court , subsequently in the Shariat Appellate Bench Supreme Court and finally during the hearing of the Review Petition in the Shariat Appellate Bench of the Supreme Court, the respondents in this case in one way or the other relied upon one of the arguments which were made by scholars who attempted to either create some exception from the general principle of prohibition of Riba; or tried to legitimize wholly or partly Riba in the name of banking interest. Secondly; while arguing the case earlier before the Sahriat Court and Shariat Appellate Bench of the Supreme Court the respondents did rely upon the opinion of these scholars but could not produce the primary reference material of the scholar so referred to, based on the Quran and Sunnah as required. Normally these are the personal opinions of the scholars so referred. Most of the time such opinions were an attempt to portray the conventional interest based banking system as an unavoidable practice in the contemporary world. In this regard either they did not give any proper resource material or they gave the secondary resource material like, article and journals etc. which contained the view point of a third scholar about their point of view. The points so raised by such scholars do not affect the Ijma (consensus) of the scholars of Ummah about the absolute prohibition of Riba. Furthermore, the proliferation of Interest-free banking internationally has changed the relevance of these personal opinions of some scholars. Moreover the phenomenon of Islamic Banking has not only remained restricted to the Muslims only but the non-Muslims are also espousing Islamic Banking. For example the international banks like Standard Chartered and HSBC etc., are pretty much involved in practicing Islamic Banking. In addition to this the International Financial Institutions like World Bank, Asian Development Bank and even the International Monitory Fund (IMF) have adopted a policy of inclusiveness regarding Islamic Banking. This international acceptability of the Interest-Free banking or the Islamic Banking based on absolute prohibition of Riba has further recognized the already established Ijma (consensus) of the Ummah that Interest-free Banking is Riba free Banking. With this back ground to address these issues we have, inter alia, formulated a few points of determination to cover all those points raised by the scholars and addressed them in the light of the Injunctions of Islam as laid down in the Quran and Sunnah. iv) Fourthly, there are certain points which were raised before the Hon'ble Shariat Appellate Bench of the Supreme Court in the proceedings of Review Petition and were noted in the Review Order (e.g. Reference para 10 and para 15 of the Remand Order); but before us, both the parties stated that they do not want to stress upon those points. Therefore, we have decided to dilate upon those points only to the extent as much required. This category includes the following types of issues: a. In which manner the inflation and indexation is to be tackled in the country, (Reference para 15 of the Remand Order); b. In which manner the economy is to be transformed from conventional style to Islamic one, or c. What is the relevance of Riba al-Fadl in banking or fiscal matters? etc. v) Fifthly, the petitioner raised some questions before the Hon'ble Shariat Appellate Bench of the Supreme Court for the very first time like question regarding the jurisdiction of the Federal Shariat Court over the matter in issue (Reference Para 12 of the Remand Order) Such questions are thoroughly considered and dilated upon at length by us since they are raised for the very first time in this case after many decades of its initiation. vi) Sixthly, during the arguments of the case before the Federal Shariat Court and the Shariat Appellate Bench the opinion of certain scholars have been referred from the respondents' side, by the National Bank of Pakistan, and were thoroughly examined, but despite that this point was reiterated again, during the hearing of the Review Petition. The Review Order only got reference of the names of those scholars without reference to their specific opinion. Their opinions have always been taken as "exception" and were generally either not accepted in some cases and refuted or rejected, in other cases by majority of the scholars and academic bodies all across the world. In order to have clarity and keep the record straight, inter alia, one of the questions we posed to the respondents including the lawyers of National Bank, and the State Bank of Pakistan, is: "Is there any effective and impressive findings of the scholars named Shaikh Muhammad Abduhu, Shaikh Rashid Rida, Abdul Razzaq Sanhuri, Shaikul Azhar Mahmood Shaltut, Shaikul Azhar, Dr. Muhammad Sayyid Tantawi, Abdul Wahab Khallaf and Dr. Maroof Daoualibi on the subject under discussion?" This question is relevant in this case from two aspects: Firstly; these scholars who attempted either to create some exception from the general principle of absolute prohibition of Riba; or they tried to legitimize Riba wholly or partly on one pretext or the other. Secondly; while arguing the case earlier before the Federal Shariat Court and Shariat Appellate Bench of the Supreme Court the respondents did rely upon the opinion of these scholars but could not produce the primary reference material. Either they did not give any proper resource material or they gave the secondary resource materials like, article and journals etc. which contain the view point of a third scholar about the point of view of these scholars. With this back ground we circulated among the parties this specific question. Therefore we thought it necessary to give them another chance to produce the proper reference material if any. In response the National Bank of Pakistan firstly gave a detailed reply explaining that that the National Bank of Pakistan is currently operating 189 branches, which are completely dealing in the Islamic Banking under the name of National Bank of Pakistan Aitemaad in accordance with the Shariah-Compliant Modes duly approved by the State Bank of Pakistan. This stance of the National Bank of Pakistan taken in its reply was evident enough to demonstrate change in its strict stance against Islamic Banking. In addition it also did give answer to the above mentioned question which was lacking any primary reference in their reply. More importantly when the Head of its Shariah Board Mufti Ehsan Waqar, appeared before us, the counsel appearing on behalf of National Bank of Pakistan Mr. Khalid Mehmood Siddiqui, Advocate in presence of Mufti Ehsan Waqar, Head of Shariah Board of National Bank of Pakistan made a statement on 25.03.2022 that National Bank of Pakistan is not pressing its reply after consulting Mufti Ehsan Waqar, Head of Shariah Board of National Bank of Pakistan. In response of the same Question the State Bank of Pakistan gave the following reply; which was adopted by the Attorney General for Pakistan on behalf of the Federal Government. The answer of the State Bank of Pakistan to the above mentioned question is as follows: "The opinion/findings of the above mentioned scholars, which have been extracted from various research articles/books are as under: i. Shaikh Muhammad Abduhu: a. Dr. Abdul Azim Islahi1 Professor, Islamic Economics Institute King Abdulaziz University, Jeddah Saudi Arabia in his paper titled "Economic Thought of Muhammad Abduh: An omitted aspect of his biography" has narrated as follows: b. "On interest: Once when someone enquired from Rashid Rida, the famous scholar and a student of Abduh, about the latter's opinion regarding depositing in investment funds and partaking of such profits, the former observed: c. If there is any official fatwa of ustadh imam (Mohammad Abduh) regarding investment funds, then it must be in the collection of his fatawa with the Ministry of Justice. It can be obtained from there. I have not seen any fatw. in this respect. However, I heard him saying in one of his meetings with khedive, the substance of which is: d. The Government has established a saving fund in the post office department through royal decree, to facilitate the poor to deposit their savings, so that it can be invested for them. It has been known that about 3,000 poor depositors did not withdraw the profits accrued to them according to the decree. So the Government enquired from me: 'Is there any Shari'ah way to make this profit valid (halal), so that the poor would not be committing any sin by profiting from it?' At this, I orally replied that it could be done by observing Shari'ah rules of mudarabah partnership in the investment of money deposited in a saving fund, thus the chief superintendent talked to the khedive regarding a modification of the royal decree and its Shari'ah compliance." ii. Shaikh Rashid Rida a. In the chapter The modern debate over Riba in Egypt of the book Interest in Islamic Economics Understanding Riba edited by Abdulkader Thomas2 the following is mentioned: b. "Riba regarded the original interest rate set on a loan as lawful, despite being in consideration for the delayed term of payment. If, however, at maturity, another interest charge is made in consideration for deferring the payment further, that interest charge constitutes unlawful which if repeated constitutes riba al-jahiliyya." iii. Dr. Muhammad Sayyid Tantawi a. Mahmoud A. El-Gamal, Chair of Islamic Economics, Finance and Management, and Professor of Economics and Statistics, at Rice University in Houston, Texas in his paper "Interest" and the Paradox of Contemporary Islamic Law and Finance3 mentions Sheikh-al-Azhar Muhammad Sayyid Tantawi's fatwa/stance on interest as follows: b. "The essence of the fatwa is that bank depositors should be viewed as passive investors and banks should be viewed as their investment agents. The problem of interest on bank deposits is thus reduced to one which permits pre-specifying the "profits" to which depositors are entitled as a percentage of the capital, instead of specification as a percentage of actually realized profits." c. "Elsewhere, Tantawi elaborated on the fatwa's justification of fixing the profit share as a percentage of the partnership's capital on moral hazard considerations. In his book, Tantawi stated that "non-fixity of profits [as a percentage of capital] in this age of corruption, dishonesty and greed would put the principal under the mercy of the agent investing the funds, be it a bank or otherwise." iv. Abdul Razzak Sanhuri a. Haider Ala Hamoudi, Assistant Professor of Law, University of Pittsburgh School of Law and author of article titled Baghdad Booksellers, Basra Carpet Merchants, and the Law of God and Man: Legal Pluralism and the Contemporary Muslim Experience4" has commented on the Sanhuri's Civil Code under the section titled "The Civil Code and the Shari'a" as follows: b. "Sanhuri describes at great length how the taking of interest on loans can be reconciled with classical Sunni thought." c. Dr. Mohammad Omar Farooq, Associate Professor of Economics and Finance at Upper Iowa University, in his paper The Riba-Interest Equivalence: Is there an Ijma (consensus)? 5 mentions as follows : d. "His views were similar to 'Abduh and Rida' [also, see Saleh, pp. 28-29; Netzer, 2004]. In the 1940s Egyptian jurist al-Sanhuri argued that the Qur'an sought chiefly to ban interest on interest", i.e., compound interest. [Vogel and Hayes, p. 46]. v. Shaikh ul Azhar Mahmood Shaltut a. Dr. Fathi Osman, in his book, Concepts of the Qur'an: A Topical Reading (2nd edition, Los Angeles, MVI Publications, 1999), p. 919, mentions the following: "Muhammad Abduh, the distinguished Egyptian mufti and commentator on the Qur'an [d. 1905], considered the interest paid by the post offices for the savings there as lawful, an opinion later supported by Mahmud Shaltut, the former Sheikh of al-Azhar [d. 1962] Moreover, he allowed for the interest on state bonds, if the economic development and the individual and public interests require issuing them [al-Fatawa, 8th., Cairo: 1975, pp. 351- 355]. Additionally, Shaltut agreed to any transaction with any fixed interest in advance, if it was offered by the Muslim state or any establishments' subsidiary to the state or affiliated with it, as it assumed that there is no exploitation of either party in such cases." vi. Abd al-Wahhab al-Khallaf a. In the chapter "The modern debate over Riba in Egypt" of the book Interest in Islamic Economics- Understanding Riba edited by Abdulkader Thomas6 the following is mentioned on page 82: b. "Tantawi then quotes Shaykh Abd al-Wahab Khallaf: Thus mudaraba takes place according to the agreement of the parties. We are presently in an era in which the uprightness of people has diminished, and if the investor is not guaranteed a fixed return then his partner will take advantage of him." vii. Dr. Marouf al-Daoualibi a. Dr. Mohammad Omar Farooq, Associate Professor of Economics and Finance at Upper Iowa University, in his paper The Riba-Interest Equivalence: Is there an Ijma (consensus)? 7 mentions as follows : "In the 1930s, Syrian scholar Marouf al-Daoualibi suggested that the Qur'an bans interest only on consumption loans, not investment loans."

12. Once again the State Bank of Pakistan as well as the Federal Government of Pakistan failed to provide the actual source of the opinions of majority of the scholars who are referred herein above and they relied mostly on the secondary type of sources. That means to answer the specific question which we asked they relied on somebody else's point of view about them. Even though to fulfill the direction of the Shariat Appellate Bench of the Supreme Court, for re-determination of these questions we have examined the opinions of the above mentioned scholars irrespective of the fact whether they are placed before us through primary source or secondary. To examine this aspect of the case we concluded that the crux of arguments forwarded by the above mentioned scholars who intend to by-pass the strict prohibition of charging interest on a loan can be summed up in either of the following statements:

1. Riba is prohibited on the loan taken for personal needs and Riba is not prohibited if the loan is taken for commercial or productive purposes.

2. Only that Riba which was known in Arab society when those verses of the Quran were revealed is forbidden and prohibited.

3. The Riba on usurious loans is prohibited whereas the interest which is fair and just is not prohibited.

4. The simple interest upon a loan is permissible and charging of doubled and multiplied interest upon a loan is prohibited.

13. We would discuss in detail these points while determining the relevant points of determination. Additionally, at this point it is essential to understand that the approach which is adopted by some of the respondents is fundamentally flawed. This is because, relying on one odd opinion advocated by a few scholar without having any basis for their arguments does not affect the status of the opinion upon which there is consensus of the overwhelming majority of scholars of the Ummah which in turn is further supported by the opinion of the highly reputed research bodies like International Islamic Fiqh Academy of OIC, and Auditing and Accounting Organization of Islamic Finance Institute AAOIFI etc. This opinion is not only accepted but also followed by Islamic Financial Institutions all across the world. More importantly, when the Shariah Standard of AAOIFI is already adopted by the State Bank of Pakistan itself the objection made by the State Bank of Pakistan to the concept of Interest free Banking is contradictory. In addition to this, the State Bank of Pakistan relied on some apparently obscure statement of those scholars which are refered above. For Example to answer one of our questions The State Bank in its reply explained the point of view of Abd al-Wahhab al-Khallaf and Tantawi as: "In the chapter "The modern debate over Riba in Egypt" of the book Interest in Islamic Economics- Understanding Riba edited by Abdulkader Thomas8 the following is mentioned on page 82: "Tantawi then quotes Shaykh Abd al-Wahab Khallaf: Thus mudaraba takes place according to the agreement of the parties. We are presently in an era in which the uprightness of people has diminished, and if the investor is not guaranteed a fixed return then his partner will take advantage of him."" This point of view is highly subjective in nature in a way it is not even a point of view rather it is an apprehension which can be adequately dispelled or removed by analyzing the actual data regarding the success of Islamic Banking all over the world, which we would analyze in detail while examining the relevant points of determination in this regard.

14. The reliance of the State Bank of Pakistan on such a flimsy plea to oppose Islamic Banking or Interest-free Banking is unfounded. Moreover, the reply of the State Bank of Pakistan does not suit to prevalent circumstances where the State Bank of Pakistan has already committed to implement Interest-Free Banking and as a result thereof the Islamic Banking Industry is exponentially flourishing in Pakistan.

15. The following Jurist Consults appeared before this Court and expressed their scholarly opinion on different aspects of this case: 1) Dr. Tahir Mansoori 2) Dr.Hafiz Muhammad Tufail 3) Dr. Muhmmmad Ayub 4) Dr. Attique-al-Zafar 5) Dr. Muhammad Yousaf Farooqi 6) Dr. Ejaz Ahmed Khan 7) Dr. Qasim Following Scholars from the foreign countries did submit their views and comments on the subject of Riba and Islamic Banking:

1. Dr. Wahbah -al Zuhaili was a world famous Islamic Scholar who did submit his comments in writing.

2. Dr. Sami bin Ibrahim al Suwailem, Chief Economist in the Institute of Islamic Research and Training, a group of Islamic Bank for Development.

3. Mr. Wadelo. Following Scholars, Economists and Lawyers, have submitted their opinion during the proceedings of this case:

1. Anwar Mansoor Khan, former Attorney General for Pakistan/Senior ASC.

2. Dr. Babar Awan, ASC.

3. Dr. Fareed Ahmed Paracha, Assistant Secretary-General Jamat e Islami Pakistan

4. Siraj-ul-Haq, Ameer Jamat-e-Islami.

5. Dr. Atif Waheed (Tanzeem-i-Islami).

6. Mr. Waqar Masood Khan, former Federal Secretary, Advisor to Prime Minister, submitted a book titled "Transition to a Riba Free Economy" authored by himself.

7. Sujha Udin Shaikh, Ameer Tanzeem-e-Islami.

8. Dr. Humaira Awais Shahid

9. Prof. Dr. Fahim Khan.

10. Qazi Irfan,

11. Rafiq Nizami Advocate.

12. Tariq Abdul Majid

13. Shahzad Shaukat, Chartered Accountant.

14. Farooq I.A.

15. Amanatullah, Advocate for the KP Government,

16. Younas Mayo Advocate High Court.

17. Dr. Shams ul Haq Hanif Islamic Scholar

18. Erum Yousaf Advocate

19. Salman Akram Raja Advocate Supreme Court of Pakistan

20. Syed Iqbal Hashmi Advocate Supreme Court.

21. Prof. Muhammad Asif

22. Mr. Salamat Ali Chohan

23. Muhammad Asif Sheraz

24. Muhammad Saeed Raee

25. Mr. Tahir Mehmood Hamdani

26. Syed Arshad Hussain, Advocate

27. Zareen Qureshi Wing Commander (R)

28. Shakeel Ahmed.

29. Mufti Asmat Ullah, amicus curiae

30. Ahmed Ali Siddiqui, amicus curiae.

31. Mufti Ahsan Waqar, Head Shariah Board, NBP. The Research Wing of this Court, the Library Staff and the attached Staff Members helped us in accumulating the relevant material available duly submitted by experts and general public who were interested to give their inputs. In this regard the names of Dr. Motia-ur-Rehman, Senior Research Adviser and Mr. Asmat Ali Khan, Research Officer, are worth mentioning.

16. After hearing the parties at length and reviewing the voluminous material provided by the parties, amicus curiae, jurist-consults and other experts from general public, who were keen and interested in providing their input in the case. We have formulated certain points of determination. We gave serious thought to every point raised before us through verbal or written arguments. In addition, we conducted elaborate and thorough research to understand all the points raised by the petitioners in Civil Review Petition before Shariat Appellate Bench of the Supreme Court. Moreover, we have thorough consideration to all the fundamental points involved in this case. After undertaking all this exercise, we are of the view that following are some basic points which need our determination: i) Whether the Federal Shariat Court has jurisdiction to adjudicate upon the matter as prayed for in different Shariat Petitions pending adjudication before it. ii) What is 'Riba' according to injunctions of Islam in the light of Holy Qur'an and Sunnah of the Holy Prophet and how it is defined by the Muslim jurists and scholars in the light of Holy Qur'an and Sunnah? iii) Whether the term 'Riba' is confined to compound interest only, hence in the light of Islamic injunctions only charging of compound interest on loans is prohibited and not the charging of simple interest. iv) Whether the prohibition of Riba in Islam changes with the change in the percentage of interest charged upon a loan and is there any difference between usury and interest? v) 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. vi) Whether the Islamic Banking model is practical or not and is the Islamic Banking a kind of heela (حيلة ). vii) What is the status of Islamic banking worldwide especially in the Islamic world and in Pakistan? viii) Whether the interest or Riba becomes permissible if the transaction are undertaken or made in the name of business. ix) Whether mechanism of indexation and inflation should be adopted by the banking sector in Pakistan to balance the inherent imbalance in the economic transactions. x) Whether the charging of interest by banks on loans given by them to their customers is Riba or not; and whether the charging of interest by the depositors of a bank upon their deposits in the bank is Riba or not according to the Injunctions of Islam. xi) Whether Pakistan will have to obey its international commitments on payment of interest or Riba on international loans already taken, and how to deal with the future foreign borrowing of the Government in accordance with the Islamic Injunctions. xii) Whether the Federal Shariat Court should give timeline to the Government to take necessary steps for formulation of legislation which can provide enabling legal framework necessary to transform the Conventional Banking System into Riba-Free or Islamic Banking System.

17. Now, we take these points of determinations one by one: Determination Point-I Whether the Federal Shariat Court has jurisdiction to adjudicate upon the matter as prayed for in different Shariat Petitions pending adjudication before it. During hearing of review petition the then Attorney-General for Pakistan Mr. Makhdoom Ali Khan raised questions regarding jurisdiction of the Federal Shariat Court as well as the maintainability of the petition before the Shariat Court, which was noted by the Hon'ble Shariat Appellate Bench of the Supreme Court of Pakistan (hereinafter Supreme Court) in the Review Order in the following manner: "Mr. Makhdoom Ali Khan, learned Attorney General for Pakistan vehemently contended that the Federal Shariat Court as well as the Shariat Appellate Bench did not at all deal with the question of jurisdiction as well as maintainability of the petitions before the Federal Shariat Court with reference to the provisions of Articles 29, 30(2), 38(f), 81(c) and 121(c) of the Constitution of the Islamic Republic of Pakistan, 1973 and have only referred to the constitutional provisions relating to jurisdiction of the Federal Shariat Court to examine fiscal laws. We have also noticed that the payment of interest finds mention in Article 161 as well as the definition of the expression 'pension' in Article 260 of the Constitution. Regarding the provisions of the Constitution as contained in the Principles of Policy in relation to elimination of Riba it was observed by the Federal Shariat Court that the government did not make any effort to achieve the objective set out therein and the judicial aspect of the case was not taken into consideration. In this behalf, reference may be made to the observations made by Dr. Tanzil-ur-Rahman, C.J. at page 51 of the judgment, which read as under: "

55. As to interest, Pakistan's Constitution, 1956 provides that the State shall endeavour to eliminate Riba as early as possible (Art.28-F), but no effort was made to realize that objective. In 1962 Constitution, it was, again, provided in the principles of policy (No.18) that Riba (usury) should be eliminated. Similar provision was again made in the Constitution of 1973, (Art.38-F)." The learned Attorney General Mr. Khalid Javed Khan appeared and reiterated the objection regarding the jurisdiction of Federal Shariat Court on the lines it was earlier raised before the Supreme Court by Mr. Kakhdoom Ali Khan, the then Attorney General for Pakistan. Mr. Salman Akram Raja, the counsel of State Bank of Pakistan also reiterated the same objections.

18. Mr. Anwar Mansoor Khan, Senior Advocate Supreme Court appeared as amicus curiae in this case. He assisted the Court on the point of jurisdiction, i.e., whether Federal Shariat Court has jurisdiction to hear and decide this matter or not, as this point was raised primarily by Mr. Makhdoom Ali Khan, the then Attorney General for Pakistan. Mr. Anwar Mansoor Khan stressed on the fundamental provisions of the Constitution of Islamic Republic of Pakistan, 1973, which highlight the Islamic characteristics of the Constitution and the State of Pakistan. He reiterated the opening para of the preamble, which states as under: "Whereas sovereignty over the entire Universe belongs to Almighty Allah alone, and the authority to be exercised by the people of Pakistan within the limits prescribed by Him is a sacred trust; Mr. Anwar Mansoor Khan read out another para from the preamble, which reads as follow: "Wherein the Muslims shall be enabled to order their lives in the individual and collective spheres in accordance with the teachings and requirements of Islam as set out in the Holy Quran and Sunnah;" He related the aforesaid paragraphs of the preamble with the Article 2A of the Constitution. After reading the Article 2A, he drew the attention of this Court towards an annexure of the Constitution which contained the Objective Resolution, which clearly and undoubtedly outlined the raison d' tre of the Constitution of Pakistan by its constituent Assembly, which is wholly and solely Islamic. Mr. Anwar Mansoor Khan stressed upon the following paras of the Objective Resolution: Whereas sovereignty over the entire universe belongs to Allah Almighty alone and the authority which He has delegated to the State of Pakistan, through its people for being exercised within the limits prescribed by Him is a sacred trust; This Constituent Assembly representing the people of Pakistan resolves to frame a Constitution for the sovereign independent State of Pakistan; Wherein the Muslims shall be enabled to order their lives in the individual and collective spheres in accordance with the teachings and requirements of Islam as set-out in the Holy Quran and the Sunnah;" After that he explained in the light of Article 203B(c) what does law mean for Federal Shariat Court? He read out Article 203B(c), which states: 203B. In this Chapter, unless there is anything repugnant in the subject or context,

(c) "law" includes any custom or usage having the force of law but does not include the Constitution, Muslim personal law, any law relating to the procedure of any court or tribunal or, until the expiration of [ten] years from the commencement of this Chapter, any fiscal law or any law relating to the levy and collection of taxes and fees or banking or insurance practice and procedure; On the basis of this Article, he forwarded the arguments that any law whatsoever its scope may be, except the Constitution, comes under the jurisdiction of Federal Shariat Court to examine it on the touchstone of Holy Quran and Sunnah whether that law is against the Injunctions of Islam or not. He related his arguments with the fact that the petitioners have challenged certain law(s). According to the petitioners the impugned law(s) are against the Injunctions of Islam. After that he read out Article 203D, which reads as follow: 203D. (1) The Court may, [either of its own motion or] on the petition of a citizen of Pakistan or the Federal Government or a Provincial Government, examine and decide the question whether or not any law or provision of law is repugnant to the Injunctions of Islam, as laid down in the Holy Quran and the Sunnah of the Holy Prophet, hereinafter referred to as the Injunctions of Islam. (A) Where the Court takes up the examination of any law or provision of law under clause (1) and such law or provision of law appears to it to be repugnant to the Injunctions of Islam, the Court shall cause to be given to the Federal Government in the case of a law with respect to a matter in the Federal Legislative List, or to the Provincial Government in the case of a law with respect to a matter not enumerated [in the Federal Legislative List], a notice specifying the particular provisions that appear to it to be so repugnant, and afford to such Government adequate opportunity to have its point of view placed before the Court. (2) If the Court decides that any law or provision of law is repugnant to the Injunctions of Islam, it shall set out in its decision: (a) the reasons for its holding that opinion; and (b) the extent to which such law or provision is so repugnant; and specify the day on which the decision shall take effect Provided that no such decision shall be deemed to take effect before the expiration of the period within which an appeal therefrom may be preferred to the Supreme Court or, where an appeal has been so preferred, before the disposal of such appeal. (3) If any law or provision of law is held by the Court to be repugnant to the Injunctions of Islam, (a) the President in the case of a law with respect to a matter in the Federal Legislative List or the Concurrent Legislative List, or the Governor in the case of a law with respect to a matter not enumerated in either of those Lists, shall take steps to amend the law so as to bring such law or provision into conformity with the Injunctions of Islam; and (b) such law or provision shall, to the extent to which it is held to be so repugnant, cease to have effect on the day on which the decision of the Court takes effect." Reading the Article stressing upon a phrase of Article (203D), which says "the question whether or not any law or provision of law is repugnant to the Injunctions of Islam" he made an argument that the Federal Shariat Court has full and complete jurisdiction to hear and decide these petitions. He drew the attention of this Court that initially there were certain restrictions upon the jurisdiction of Federal Shariat Court related to Muslim Personal Law, and until the expiration of 10 years from the commencement of this Chapter, any fiscal law or any law relating to the levy and collection of taxes and fees or banking or insurance practice and procedure. These limitations are mentioned in Article 203B(c) which was incorporated in the Constitution in 1980 through the Constitution Amendment Order, 1980 (P.O. No.1 of 1980), Article 3, for the "existing Chapter 3A" (w.e.f. 26th May, 1980). Hence, the limitation for barring the jurisdiction of Federal Shariat Court on certain areas mentioned above ended after 10 years commencing from 1980 ending in 1990 and now 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).

19. After making all these arguments, he made it a point that the jurisdiction over the matter to decide it in accordance with Article 203D(2), the Hon'ble Shariat Appellate Bench of the Supreme Court under its Shariat Review Jurisdiction decided the matter and remitted it back for its determination afresh. In support of his arguments, he read out para-19 of the Review Order, which is reproduced hereunder: "Resultantly, Civil Shariat Review Petition No.1 of 2000 filed by the United Bank Ltd. is allowed, the judgment, dated 23rd December, 1999 passed by the Shariat Appellate Bench of this Court in Shariat Appeals Nos.11 to 19 of 1992 and the judgment, dated 14th November, 1991 of the Federal Shariat Court passed in Shariat Petitions Nos.42-I + 45-I of 1991 etc. are set aside and the cases are remitted to the Federal Shariat Court for determination afresh in the light of the contentions of the parties noted above and the observations made which are germane to the controversy. Besides the points raised before this Court, the parties would be at liberty to raise any other issue relevant to these cases and the Federal Shariat Court may also, on its own motion, take into consideration any other aspect which may arise or may be found relevant for determination of the issues involved herein."

20. He made it a point that remitting the matter back to the Federal Shariat Court after recording all the contentions of the parties clearly means that the Federal Shariat Court has jurisdiction over this matter to hear and decide; otherwise the Hon'ble Shariat Appellate Bench could have decided this question of jurisdiction when was raised before it.

21. Dr. Zaheer-ud-Babar Awan, Senior Advocate Supreme Court also appeared as amicus curiae in this case. He made arguments on the point of jurisdiction, i.e., whether the Federal Shariat Court has jurisdiction to hear and decide this matter or not? Dr. Babar Awan unequivocally stated that Federal Shariat Court has complete and exclusive jurisdiction to adjudicate upon this issue. It has exclusive power in the Constitution, which no other court has to declare any law whether is it in accordance with the Injunctions of Islam as laid down in Holy Quran and Sunnah or not. For the reasons stated below, he stated that constitutionally the decisions of the Federal Shariat Court has binding force in them. He was also of the view that the judgment of the Shariat Appellate Bench was never set aside by the Review Order, rather the judgment of the Shariat Appellate Bench was upheld by the Hon'ble Supreme Court while deciding the Review Petition in the form and manner, it was decided. Dr. Babar Awan also read out the relevant paragraphs of the preamble along with the Article 2A of the Constitution to highlight and to elucidate the meanings and importance of phrase "the Islamic Injunctions" in the Constitution. He also relied upon Article 227 of the Constitution, which requires from a government to bring all laws in conformity with the injunctions of Islam as laid down in the Holy Quran and Sunnah. Article 227(1) reads as follows: 227. (1) All existing laws shall be brought in conformity with the Injunctions of Islam as laid down in the Holy Quran and Sunnah, in this part referred to as the Injunctions of Islam, and no law shall be enacted which is repugnant to such injunctions." He placed Articles 203D(1) and 203D(1A) in juxtaposition to Article 227 (1) to show that there lies no ambiguity, whatsoever, regarding jurisdiction of Federal Shariat Court to examine and decide whether the laws or the provisions of any law, under challenge before this Court are repugnant to the Injunctions of Islam as laid down in Holy Quran and Sunnah of the Holy Prophet (PBUH) or not. He read out Articles 203D(1) and (1A), which are as follows: 203D. (1) The Court may, [either of its own motion or] on the petition of a citizen of Pakistan or the Federal Government or a Provincial Government, examine and decide the question whether or not any law or provision of law is repugnant to the Injunctions of Islam, as laid down in the Holy Quran and the Sunnah of the Holy Prophet (SAW), hereinafter referred to as the Injunctions of Islam. (1A) Where the Court takes up the examination of any law or provision of law under clause (1) and such law or provision of law appears to it to be repugnant to the Injunctions of Islam, the Court shall cause to be given to the Federal Government in the case of a law with respect to a matter in the Federal Legislative List or to the Provincial Government in the case of a law with respect to a matter not enumerated in the Federal Legislative List, a notice specifying the particular provisions that appear to it to be so repugnant, and afford to such Government adequate opportunity to have its point of view placed before the Court." According to him while deciding the matter, this Court has to keep in mind that Islam is the founding principle of the Constitution and the State.

22. We have heard the arguments on this point forwarded by learned counsel of the petitioners as well as the arguments given by two amicus curiae mentioned in this case. The question regarding the limitation on the jurisdiction of Federal Shariat Court on the same lines and grounds was raised earlier in different cases but the Shariat Appellate Bench of the Supreme Court finally decided the matter by holding that the Federal Sharait Court has complete jurisdiction to adjudicate upon such matters, i.e., the 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.

23. This issue of jurisdiction on these lines first came up in case titled Government of N.-W.F.P. through Secretary, Law Department v. Malik Said Kamal Shah [PLD 1986 Supreme Court 360]. In this case an indirect inferential bar was pleaded deduced from some provisions of the Constitution like Articles 269, 268(2) and 8(3). It was pleaded that the Federal Shariat Court has no jurisdiction to adjudicate upon the matter on the jurisdiction that the provisions of law, which are under examination of the Federal Shariat Court through Shariat Petitions have constitutional protection, hence, the jurisdiction of Federal Shariat Court is barred. Upon this plea, it was held by the Federal Shariat Court that: "The question arises : can the Court declare anything invalid or bad which is declared valid by the Constitution? The answer to this question must be in the negative. But here the Court is confronted with another difficulty which to say the least is insurmountable. It cannot declare any provision of the Constitution as repugnant to Islamic Injunction. Any declaration of repugnancy with Shariah of the provisions of law placing ceiling on ownership or reducing it, would amount to declaration of those Constitutional provisions as bad which declare those laws either valid or untouchable." [PLD 1986 SC 360 Page 465] However, the Shariat Appellate Bench held that the provisions of the Constitution themselves are immune from scrutiny of the Federal Shariat Court and not the laws made on the authority of any provision of the Constitution. The relevant portion of the judgments at page-466, which is as follows: "We do not think that any such bar in fact exists so far as the new Constitutional dispensation is concerned. An entirely new power was conferred on the Specified Courts or benches thereof. A test of repugnancy i.e. Injunctions of Islam was prescribed. This empowerment had its own inhibitions and limitations, and, but for these, it transcended all constitutional protections and safeguards. For example all laws, but not the Constitution, Muslim Personal Law, any law relating to the procedure of any Court or Tribunal" or, any fiscal law or law relating to the levy and collection of taxes and fee or banking or insurance practice and procedure" could be tested on this standard "notwithstanding anything contained in the Constitution". To apply this test of repugnancy to the Constitution or a provision thereof is one thing and to apply this test to any other law, validated, continued or protected under the Constitution is another. The first is prohibited, the second is not." [PLD 1986 SC 360 ref:/page-660]

24. In another case titled Nusrat Baig Mirza v. Government of Pakistan and another [PLD 1991 Supreme Court 509], the relevant portion of the judgments as follows: "We notice that the Federal Shariat Court in the judgment under appeal has clearly held that "the impugned memorandum fell in the category of usage having the force of law and therefore it could be considered by this Court under Article 203-D" but the main reason given by the learned Federal Shariat Court for rejecting the petition of the appellant was that the impugned rules and memorandum were protected under Art.27(1) of the Constitution. This view of the Federal Shariat Court, as mentioned earlier, cannot be upheld in view of the judgment of this Court quoted above. Even if it is proved that the Rules and Memorandum under consideration were framed under the authority of Article 27(1) of the Constitution, they cannot be held to be the provisions of the Constitution itself and their examination in the light of the Injunctions of Islam does not amount to examining a provision of the Constitution. We, therefore, hold that the Federal Shariat Court has the jurisdiction to entertain the petition of the appellant under Article 203-D of the Constitution and has the jurisdiction to decide whether or not the impugned laws are repugnant to the Injunctions of Islam as laid down in the Holy Qur'an and Sunnah." [PLD 1991 Shariat Appellate Bench Supreme Court 509 ref:/p. 513] [Emphasis added]

25. The same question was again discussed in the case of Qazalbash Waqf and others v. Chief Land Commissioner, Punjab, Lahore and others [PLD 1990 Supreme Court 99] and it was again found that in view of the non obstante clause appearing in the Article 203-A the laws promulgated under or protected by any provision of the Constitution cannot be given the status of the "Constitution" itself as contemplated in Article 203-C. Hence they are not immune from their examination on the touchstone of the Holy Quran and Sunnah. In this case, it was held at page-138: "The learned counsel appearing for the appellants have generally argued that non-obstante clause in Chapter 3-A should be given its full effect so as to subordinate every other provision of the Constitution and the limitations on the jurisdiction, if any, should be read within the provisions of Chapter 3-A and not outside it. The law brought for examination under Chapter 3-A was the Regulation and the Act and not any provision of the Constitution and, therefore, the limitation contained in clause (c) of Article 203-B does not get attracted, if indirectly constitutional provision gets affected. What is authorised directly and expressly cannot be denied or neglected on inference or indirectly."

"It is correct as observed in Said Kamal's case (PLD 1986 SC 360) that the Petitions from which the present Appeals have arisen do not expose any constitutional provision as such to the test of repugnancy or invalidity as is provided for in Chapter 3-A. The, provisions of the Regulation and the Act are under challenge and they qualify as law as defined in Chapter 3-A. It is true that if the material provisions of the Regulation and the Act are declared to be repugnant to the injunctions of Islam in the manner as the appellants seek them, the consequences under Article 203-D, clause (3) sub-clause (b) may have in substance the effect of contravening what is prescribed in Article

253. But then the question is whether the expression \"law\" in clause (2) of Article 253 has that extensive connotation as to include judicial pronouncements as well?"

26. Mr. Salman Akram Raja while arguing pointed out the provisions of Articles 29, 30(2) 38(f) 81(c) and 121(c) of the Constitution to be relevant in support of his argument, in addition to that he also referred to Article 161 which contains mentioning of word "interest" in it and Article 260 of the Constitution wherein the definition of the expression "pension is mentioned" which contains the word "interest" in it. The first Article upon which these arguments regarding the bar on the jurisdiction of Federal Shariat Court was relied upon is 81(c) of the Constitution, which s5ates as under: "81(c) all debt charges for which the Federal Government is liable, including interest, sinking fund charges, the repayment or amortisation of capital, and other expenditure in connection with the raising of loans, and the service and redemption of debt on the security of the Federal Consolidated Fund" The Article 81 of the Constitution is related to the expenditure which can be charged from the Federal Consolidated Fund.The term "interest" as mentioned in this Article does not protect the charging of interest by the banks in the country. The second Article mentioned is Article 121(c), which states as follows: 121. (c) all debt charges for which the Provincial Government is liable, including interest, sinking fund charges, the repayment or amortisation of capital, and other expenditure in connection with the raising of loans, and the service and redemption of debt on the security of the Provincial Consolidated Fund;" This Article is in verbatims to Article 81(c). The only difference is that it is related to the Provincial Consolidated Fund like Article 81(c) here also the term "interest" is not used in any general sense which does not legitimize the charging of interest by the bank all across the country. The fourth Article he referred to in support of his arguments is Article

161. The whole Article 161(1)&(2) does not contain the word "interest" in it. However, an explanation to clause (2) of Article 161 does contain the word "interest" in it in the following manner:

161. Explanation.

For the purposes of this clause "net profits" shall be computed by deducting from the revenues accruing from the bulk supply of power from the bus-bars of a hydro-electric station at a rate to be determined by the Council of Common Interests, the operating expenses of the station, which shall include any sums payable as taxes, duties, interest or return on investment, and depreciations and element of obsolescence, and over-heads, and provision for reserves. [Emphasis added] In this explanation the word "interest" is written before a disjunctive "or" as "interest or return on investment". Even here the word "interest" does not appear in any binding sense. Lastly, he relied upon Article 260 of the Constitution. Article 260 contains definition of some expressions which are used in the Constitution; one of them is the term pension which states as follows: "pension" means a pension, whether contributory or not, of any kind whatsoever payable to, or in respect of, any person and includes retired pay so payable, a gratuity so payable, and any sum or sums so payable by way of the return, with or without interest thereon or any addition thereto, of subscriptions to a provident fund; [Emphasis added]

27. Mere reading of this expression shows us that the charging of interest upon the payable sums is optional it is not compulsory; hence, it is not binding in every situation. Hence, its applicability cannot be stretched to provide the ground to legitimize interest in the banking system of Pakistan.

28. We have examined all the Articles mentioned hereinabove and are of the view that they put no bar or restriction upon the jurisdiction of Federal Shariat Court to examine the laws challenged by the petitioners through their petitions only on the basis that the term "interest" is used in these articles of the Constitution. However, the mentioning of Article 38(f) here is out of the place because it talks about the elimination of Riba from the country as early as possible. The presence of Article 38(f) in the Constitution of Pakistan is all the more reason provided by the Constitution to the Federal Shariat Court to adjudicate the petitions pending before it challenging the existence of Riba interest in various laws. Moreover the counsel of the petitioners categorically stated that they have not filed the petitions on the basis of Article 38(f). We have observed following points are of due relevance: i) Firstly, none of the petitioners have invoked the jurisdiction of this Court on the point of violation of a principle of policy. On the contrary, all the petitioners have invoked the jurisdiction of Federal Shariat Court by challenging some laws or the provisions of law on the ground that these laws or their provisions are against the Injunctions of Islam as stated in Quran and Sunnah. In the light of Chapter 3A of the Constitution, it is the exclusive jurisdiction of the Federal Shariat Court to be exercised in such matter. Upon this point, Articles 203D and 203DD along with Article 203(f) are very much clear and there is plethora of judgments of the Apex Court regarding the exclusive jurisdiction of Federal Shariat Court in this regard. This exclusivity of jurisdiction is categorically mentioned in Article 203(G) of the Constitution, which states as follows: 203G. Save as provided in Article 203F, no court or tribunal, including the Supreme Court and a High Court, shall entertain any proceedings or exercise any power or jurisdiction in respect of any matter within the power or jurisdiction of the Court. Decision of Court binding on High Court and courts subordinate to it.

29. By virtue of provisions of Article 203(G) of the Constitution, the Supreme Court or even a High Court had no jurisdiction to test repugnancy or contrariety of any existing law or any legal provision to the Injunctions of Islam as laid down in the Holy Quran and Sunnah and such jurisdiction is vested exclusively in the Federal Shariat Court and the Shariat Appellate Bench of the Supreme Court. The Apex Court held this principle in its judgment reported as Zahid Rehman v. The State [PLD 2015 SC 77] as follows: "speak of the Injunctions of Islam and it must never be lost sight of that by virtue of the provisions of Article 203G of the Constitution of the Islamic Republic of Pakistan, 1973 this Court, or even a High Court, has no jurisdiction to test repugnancy or contrariety of any existing law or legal provision to the Injunctions of Islam as laid down in the Holy Qur'an and Sunnah and such jurisdiction vests exclusively in the Federal Shariat Court and the Shariat Appellate Bench of this Court"

30. This exclusivity of Jurisdiction to examine as to whether a provision of law is repugnant to injunctions of Islam or not vests in the Federal Shariat Court. This point has been consistently examined and reviewed as such in the light of Article 203(G) of the Constitution in many other Judgments of the Honorable Supreme Court, High Courts and of Federal Shariat Court like Saeed Ahmad Malik v. Shamim Akhtar and others (1999 SCMR 1558), Ali Azhar v. Arzoo Fatima (PLD 2022 Sindh 1) and Mian Abdur Razzaq Aamir and others v. Federal Government of Islamic Republic of Pakistan and others (PLD 2011 FSC 1).

31. Hence, the question raised by the counsel of the Federal Government is out of the place and baseless. ii) Secondly, when any relief is sought by a petitioner on some others provision of law or constitution, the solution of which is coincidently in line with any principles of policy, it does not mean that the petitioner is seeking relief on the basis of a principles of policy, rather in such a situation the petitioner can make a petition and may rely on any principles of policy, which is in line with the relief he sought. The petitioners have challenged some 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 a non-justiciable right in the Constitution. This perception is completely wrong and holds no weightage. iii) Thirdly, although the principles of policy are non-justiciable rights, however, each principles of policy 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 so is the case of Article 38(f) by virtue of which Riba had to be eliminated as early as possible from Pakistan. The Government is bound to follow the principles of policy as elaborated in several judgments. Reference in this context is placed on the case of 2015 SCMR 1739, 2012 SCMR 779, PLD 2016 SC 189, 2005 SCMR 100, PLD 2015 SC 275 and PLD 1984 SC 439. iv) Fourthly, it is the intention of the framers of the Constitution that the Government is supposed to act upon the principles of policy stated in Chapter-2 of the Constitution progressively. In order to maintain a check upon the working of the government, Article 29(3) was inserted by virtue of which the President of Islamic Republic of Pakistan in relation to the affairs of Federation and the Governor of each Province, in relation to the affairs of the Province are bound to submit an annual report on the observance and implementation of the principles of policy. This provision was inserted in the Constitution by its framers to keep the Government at course in accordance with the principles of policy stated in the Constitution. Article 29(3) of the Constitution states as follows: "29. (3) In respect of each year, the President in relation to the affairs of the Federation, and the Governor of each Province in relation to the affairs of his Province, shall cause to be prepared and laid before [each House of Majlis-e-Shoora (Parliament)] or, as the case may be, the Provincial Assembly, a report on the observance and implementation of the Principles of Policy, and provision shall be made in the rules of procedure of the National Assembly [and the Senate] or, as the case may be, the Provincial Assembly, for discussion on such report." Hence, if Article 38(f) read in juxtaposition with Article 29(3) then the making of sporadic reference to Article 38(f) do not render the petitions incompetent as claimed.

32. During the course of arguments, this aspect of principles of policy was pointed out to the Attorney General for Pakistan specifically with regard to Article 38(f) and also with regard to all the other principles of policy in response to which the Attorney General Mr. Khalid Javed Khan professionally responded to the query and submitted that he will communicate this observation of the Court to the President of Pakistan so that this aspect of the Constitution should be observed and acted upon accordingly in future. v) Fifthly, Article 38(f) is unique in its construction and intention. It is time bound when it says that "the State shall eliminate Riba as early as possible" unlike all other principles of policy all of which are open ended as no time limit is placed in any sense on any of them except on Article 38(f). This does not mean that the Government can take a plea in perpetuity that it is indulged in such exercise of elimination of Riba. On the contrary, the fact is that despite the lapse of almost half a century, no concrete steps have so far been taken by the Government to eliminate Riba from Pakistan and the Government is apparently indulged in a never ending exercise of eliminating Riba from the country. If this aspect of Article 38(f) is read in juxtaposition with the responsibilities placed on the organ and the authority of the State mentioned in Article 29 of the Constitution, the question can be asked from the relevant organs and authorities of the State. vi) Sixthly, the petitions pending before this Court have rightly invoked the jurisdiction of this Court and the final disposal of these petitions will be an auxiliary step in the direction to achieve the ultimate goal of elimination of Riba from the country as set out in Article 38(f) of the principles of policy. The goal of elimination of Riba is set out constitutionally; hence, the outcome of these petitions in either case will help the Government of Pakistan in achieving this goal.

33. In the light of above-mentioned arguments, the question which was formulated by us to decide the issue of objection raised by the respondent regarding the jurisdiction of Federal Shariat Court, i.e., whether the Federal Shariat Court has jurisdiction to adjudicate upon the matter as prayed for in different Shariat Petitions pending adjudication before it. We concluded to hold without any hesitation that the Federal Shariat Court has exclusive jurisdiction to decide these matters; hence, the petitions are maintainable before us. Determination Point-II What is 'Riba' according to injunctions of Islam in the light of Holy Qur'an and Sunnah of the Holy Prophet and how it is defined by the Muslim jurists and scholars in the light of Holy Qur'an and Sunnah? The counsel for UBL raised several questions before the Honorable Supreme Court of Pakistan while arguing the Review Petition and the honorable Supreme Court noted these questions in paragraph 6 of the Remand Order, one of them is: The term "Riba" has not been defined in the Holy Qur'an and all that has been held in the judgment under review is based on Analogy/Qiyas .

34. To resolve and re-determine this question, we have formulated the above mentioned question. So far as the arguments advanced in the review petition, by the Counsel of M/s UBL, that the term 'Riba' has not been defined in the Holy Qur'an? The argument is too weak and erroneous per se. There are many fundamental terms used in the Holy Qur'an which have never been 'expressly defined' therein. The Quran is not a dictionary or legal lexicon. Amongst all, the best example is word Salat , the recognized pillar9 of faith and the religion10, revealed in the Holy Qur'an in numerous verses. Without its observation, the faith of a Muslim remains incomplete; but it is not defined in the Holy Qur'an.

35. It is defined by the Prophet and understood by us through ahadith and Sunnah al Nabaviyah and practice of His Companions i.e. Sahaba (). Qiyas or analogy done by Islamic jurists for any Hukam-i-Shari is always based on Qur'an and Sunnah, and the attempt to define the term 'Riba' by the Muslim Jurists and scholars is no exception to this rule of Islamic Jurisprudence.

36. The meaning of the term "Riba" and how it is defined in the Qur'an and Sunnah has been very elaborately explained and discussed in the judgment of the Federal Shari'at Court from page 60 to page 70 in general. The counsel of the petitioner, during course of arguments before us, categorically stated that he relied on the points discussed earlier and dilated upon by the Federal Shari'at Court and which were elaborately mentioned in the judgment. However, to comply with the directions of the Honorable Shariat Appellate Bench of the Supreme Court for re-determination of the issues afresh, we have elaborated the term "Riba" as it appears in the Qur'an and Sunnah, in addition to the fact regarding how it already has been explained by the Muslim Jurists, muhadithin and mufasareen etc. over the centuries. We have gone through how it is defined and perceived by the institutions of the world which are involved in the promotion and adoption of Islamic Banking or Islamic Finance because these institutions are practicing interest-free or Riba-Free banking worldwide. 'Riba' is undisputedly, categorically, explicitly and absolutely prohibited by Nass-i-Qati, i.e., Qur'an and Sunnah. There is consensus and unanimity amongst the scholars that the word 'Riba' means to increase, to grow, and to rise.

37. To know the literal meaning of this word some of the Standard Arabic dictionaries are referred herein below:

1. Ibn-e-Faris[1] defined 'Riba' as: [2]

2. Al-Jawhari[3] explained the literal meaning of the word 'Riba': [4]

3. Al-Fayyumi[5] explain the meaning of the root word of 'Riba' in his book[6] as: [7]

38. After noting the literal meaning of the word 'Riba' the technical meaning in which this word 'Riba'. is used in the Qur'an is more important to reach at a just conclusion of the case. The meanings of the term 'Riba' as explained by eminent exegesis writers of the Qur'an (mufasareen) and how it has been defined by the jurists over the centuries is necessary. This stands explained in the following paragraphs, as the different mufassirin and jurists have defined the term 'Riba' as follows:

1. Al-Mawardi[8] in his exegesis defined the 'Riba' as: [9] 'Riba' is to increase the amount of loan in return for giving respite.

2. In exegesis of Imam al-Nasafi[10], the term 'Riba' defined as under: [11] In exchange for wealth, there would be an increase in wealth which is devoid of any reward.

3. According to Ibn-e-Atiya al-Andalusi[12], 'Riba' is: [13] It is like a lender asking the borrower; either pay the loan or increase your liability. So the owner of the wealth would increase the amount of wealth, and stop demanding. So the lender would increase in the amount of loan and present hiself from demanding of the loan.

4. Al-Zajaj[14], in his Tafsir defined as: [15] Every loan on which more wealth is taken or on which profit is taken.

5. Imam at-Tabri[16] defines 'Riba' in his tafsir as: [17] 'Riba' is an increase that the owner of the money lends to the borrower on deferment of the loan.

6. Imam As-Sarkhasi[18] defined 'Riba' in his famous book as under: [19] 'Riba' in Arabic literary meaning is 'addition'. It is said in Arabic that means he added or increased. Moreover, the raised ones among the houses are called 'Rabwah'. In Shari'ah perspective, such an increase which is in addition to the conditions of sale, is called 'Riba'.

7. Ibn al-Arabi[20] explained 'Riba' as: [21] (Arabs) used to deal with sale and usury. According to him, it was customary for a person to give a loan to another for a fixed period of time. So when that time passed, he would say, Will you repay the loan or increase the amount on you? That is, will you give me more wealth in return for which I will be patient by giving respite. So Allah forbade usury and (this) increase (forbidden).

8. Ibn al-Arabi further said that: [22] 'Riba' means giving a new respite at the end of time which is extended to the original contracted money. Allah, may He be glorified and exalted, rejected the idea of those who considered this increase as halal and clarified that when the respite is over and the debtor has nothing to pay, then he should be given a respite for an easy period.

9. Allama Aini[23] said: [24] In the Shari'ah, 'Riba' is an increase the initial contract. This is the definition given by Ibn al-Athir. Our scholars say: 'Riba' is increase in the principal amount which can be taken without any recompense. Like selling ten dirhams for eleven dirhams, that one dirham is more than that, and there is nothing to recompense that one Dirham so that is the exact 'Riba'.

10. Imam al-Sana'ani[25] defined 'Riba' as: [26] 'Riba' Mal is said to be an excess in which there is no consideration.

11. Mullah Ali al-Qari[27] said: [28] [29]

12. Ibn Abidin[30] explained 'Riba' as: [31] An increase without any compensation. 13. al-Shirbiniy[32] defined as: [33] Making a contract in exchange for an exchange without any similarity which is not according to the Shari'ah standard or delay between the exchanges or one of them.

39. There are 12 verses in the Qur'an which deal with the term 'Riba' which is relevant to this case. The term 'Riba' is used in Surahs: al-Baqarah, Aal-e-Imran, al-Nisa and ar-Rum. Sequence of the revelation of these verses is different from the sequence in which they occur in the Qur'an. The sequence of their revelation is important to understand because the verse which declared complete prohibition of 'Riba' in all its forms and manifestation was revealed gradually. This aspect of gradualism or stepwise approach in imposing full prohibition of 'Riba' is explained below to understand that the prohibition of 'Riba' though categorically and explicitly mentioned in the Holy Qur'an was revealed gradually. Hence, all the verses of the Holy Quran regarding the prohibition of Riba must be read and understood collectively. Any attempt to read any of such verse out of context may cause misunderstanding in comprehending the full meaning of prohibition of Riba. It is one of the aspects of Shariah that some of the commands of Allah or ahkam were revealed gradually, well known amongst them is the revelation of Hukum of prohibition of liquor in the Quran.

40. The prohibition of 'Riba' is also among such ahkam which were revealed gradually. The very first Ayah which was revealed in this regard was Verse 39 of Surah ar-Rum which revealed in the year 6 Nabawi in Makkah it says: [34] [35]

39. That which ye lay out for increase through the property Of (other) people, will have No increase with God: But that which ye lay out For charity, seeking The Countenance of God, (will increase): it is These who will get A recompense multiplied.

41. The principle of gradual and stepwise revelation of rulings in Qur'an is termed as: tadreej in Fiqh. Instead of abrupt prohibition of 'Riba', the rulings were revealed in gradual and stepwise fashion, same is pointed by various eminent scholars in their exegesis upon Ayah 39 of Surah ar-Rum, the first ever verse revealed in the context of prohibition of 'Riba'. Syed Abul A'la al-Mawdudi[36] explained the flaccidity reflected therein: [37] [38] [39] Justice Pir Muhammad Karam Shah al-Azhari[40] phrased the similar findings: [41] Maluana Abdul Rehman Kailani [42] has explained the revelation of prohibition of 'Riba' in gradual manner in the following way in his exegesis: [43] The second hukam which was revealed in this regard is in ayaat 160-161 of Surah an-Nisa which was revealed in Madina soon after Hijrat they say: [44] [45]

160. For the iniquity of the Jews We made unlawful for them certain (foods) good and wholesome which had been lawful for them; in that they hindered many from God.s way.

161. That they took usury (interest) though they were forbidden; and that they devoured men.s substance wrongfully; We have prepared for those among them who reject faith a grievous punishment. Jurist as-Sabuni[46] explained the concept of gradual revelation of certain ahkam. He further analyzed the gradual revelation of ayaat of Surah an-Nisa and he correlated it with the gradual revelation of verses that prohibited liquor, in the following manner: [47] [48] [49] The third ayah which was revealed in this sequence was ayah 130 of Surah Aal-e-Imran which says: [50] [51]

130. O ye who believe! devour not usury doubled and multiplied; but fear God; that ye may (really) prosper. There is a consensus of Mufassirin that this Ayah was revealed soon after Ghazwah-e-Uhud in Madina. Justice Mufti Muhammad Taqi Usmani[52] while explaining tafseer of this ayah referred to Tafsir al-Kabir of Imam Razi as follows: [53] Dr. Israr Ahmed[54] has explained this ayat of Surah Aal-e-Imran as follows: [55] Allama Syed Safdar Hussain Najfi[56] has explained this aspect of stepwise / gradual prohibition of 'Riba' at length as under: [57] There is a consensus among the scholar that the last and final hukam which unequivocally/. expressly and categorically prohibited 'Riba' was revealed in the following ayah of Surah Al-Baqarah: [58] [59]

275. Those who devour usury will not stand except as stands one whom the Evil One by his touch hath driven to madness. That is because they say: Trade is like usury but God hath permitted trade and forbidden usury. Those who after receiving direction from their Lord desist shall be pardoned for the past; their case is for God (to judge); but those who repeat (the offence) are companions of the fire: they will abide therein (forever).

276. God will deprive usury of all blessing but will give increase for deeds of charity: for He loveth not creatures ungrateful and wicked.

277. Those who believe and do deeds of righteousness and establish regular prayers and regular charity will have their reward with their Lord: on them shall be no fear nor shall they grieve.

278. O ye who believe! fear God and give up what remains of your demand for usury if ye are indeed believers.

279. If ye do it not take notice of war from God and his Apostle: but if ye turn back ye shall have your capital sums; deal not unjustly and ye shall not be dealt with unjustly. There is also another consensus among the scholars that this was the final hukm of Allah which was revealed upon Prophet Muhammad before he left this world. These ayah contain the final and absolute prohibition of 'Riba'. Ibn-e-Kathir[60] while explaining this fact wrote that: [61] Jalal uddin as-Suyuti[62] has narrated this fact with reference to many muhaddithin in his tafsir as: [63] Qazi Sanaullah Panipati[64] writes in his tafsir as: [65] Syed Mawdudi[66] explain this ayah as the last and final hukam of Allah regarding absolute prohibition of 'Riba' as: [67] Some aspect of the ayah is explained by Maluana Abdul Rehman Kailani [68] as: [69] Maulana Ameen Ahsan Islahi[70] said: [71] A definite increase that a lender receives from its debtor only on its principal amount in return of a respite. The term has been popular in both Jahiliyyah (before Islam) and Islam according to the above meaning. Abu Ahmad Bin Ali al-Razi[72] said: [73] The concept of Riba among the Arabs and those who were using it was. to borrow dirhams and dinars, as a loan for a specifies period of time, after that period the payable amount should be increased (due to late payment). The increase was decided by mutual consent. Islmail Haqi[74] said: [75] "In Shari'ah, 'Riba'. means to take extra things for free on items of the scale able and weight-able items. This is Imam Abu Hanifa and his follower.s view point. It applys in:

1. Gold,

2. Silver,

3. Wheat,

4. Barley,

5. Dates, and

6. Salt. Abdul Majid Darya Abadi[76] said: [77] The term 'Riba' in Shari'ah refers to the excess of the original debt or the excess of the unpaid wealth, whether it is large or small. The Arabs used the word for the extra money that the lender received from his debtor in response of the respite. Its translation in Urdu is Sood and everyone understands the meaning of Sood. Sayyid Qutb[78] said: [79] The summary of 'Riba' is that in addition to returning the loan amount, the usurer also receives a little more. Jalal ud Din as-Suyuti and Jalal ud Din Mahalli[80] said: [81] The term usury refers to the excessed amount that a borrower receives from his debtor at a fixed rate in addition to the basic amount. This is called interest in our language. Malauna Aashiq Elahi[82] said: [83] The loan that brings even a little bit more is interest. Muhammad Abduhu Alfalah[84] said: [85] In Shari'ah, the increase which is taken on the original amount/Capital (ras-ul-mal) with a special increased rate is called 'Riba'. Javed Ahmad Ghamdi[86] said: [87] This refers to the specific increase that a lender receives from the debtor on his Capital amount on only reason that it has allowed him to use that amount for a certain period of the time. Allama Qurtabi[88] said: [89] Maulana Idrees Kandhlawi[90] said: [91] 'Riba'in Shariat term is the name of the financial excess for which, there is no wealth or any other thing/ goods inexchange return. Maluana Muhammad Ubda Ferozpuri[92] said: [93] Syed Abu al-Aala Maududi[94] said: [95] Arabs used the term 'Riba' to refer the excess money that a creditor receives from his debtor in addition to the Capital at a fixed rate. This is called interest in our language. Mufti Ahmed Yar Khan Naeemi[96] said: [97] The term 'Riba'in Shari'ah refers to the unpaid excess in a weighed and Same commodity. Imam al- Jassa[98] has given a comprehensive definition of 'Riba' as: [99] The loan which is returnable by the borrower after certain fixed period with some determined increase. This definition is apparently based on the wordings of a hadith narrated by Hazrat Ali ()[100] Any loan that brings increase with it is 'Riba'. In addition to that a similar definition of 'Riba' is also narrated by a Sahabi () of Prophet Hazrat Fadala Bib Abeed (): [101] All kind of loans that draws profit with it are one kind of 'Riba' out of the different kinds of 'Riba'.

42. According to above mentioned definitions of 'Riba' any amount taken or given in a loan transaction in excess to the actual loan amount is 'Riba'. The definition mentioned hereinabove based on the Hadith compiled by as-Suyuti clearly indicates that the increased amount upon a loan transaction has to be pre-determined or has to be mentioned as a condition for grant of loan or granting of extra time at the end of agreed period to return the loan. Similarly, in the other Hadith the same meaning of pre-determination of the excess amount that has to be settled as precondition for granting any loan is depicted by the word Jarra . To make this clear Abu Bakr al-Jassas Razi used the word Al-Mashroot in the definition of 'Riba'. Above mentioned are the examples in which the legal definition of the term 'Riba' is explained by different jurists in the light of Qur'an and Sunnah. The first and the foremost type of 'Riba' is called 'Riba' as al-Nasih which is the most famous and well known type of 'Riba'. Since this type of 'Riba' is prohibited in Qur'an; therefore, it is also called 'Riba al-Qur'an' . In addition to that this type of 'Riba' was known and practiced by the Arab tribes before the dawn of Islam in the period of ignorance . Therefore, this kind of 'Riba' is also called 'Riba al-Jahiliya' . Since this type of 'Riba' is associated with or the transaction involving loan, therefore, it is also called 'Riba al-Qard' . Some jurists have called it as 'Riba Jali' being obvious in form.

43. Another type of transaction known as 'Riba al-fadl' is also prohibited which was explained by Prophet himself. The 'Riba al-fadl' is also called 'Riba-ul-Sunnah' because its prohibition is based on ahadith-e-Nabawi and Sunnah of the Prophet . Basically 'Riba' al-fadl is referred to that specific increase which occurred in relation to exchange of exactly similar types of goods. Riba al-fadl is related to trade and at that time not only in Arabia but all over the world barter trade was in practice, therefore, in the classic books of Islamic Jurisprudence example of barter trade exists to explain the prohibition of Riba al-fadl. As explained earlier Riba al-Fadl is related to trade of goods, but it is not directly related to banking and financial transaction. However some principles can be drawn, while doing trade or drafting trade contracts which are being used in banking, on the basis of the Ahadith explaining the prohibition of Riba al-fadl. Following are the relevant Ahadith which provide the basis of the prohibition of 'Riba al-Sunnah' or 'Riba al-fadl'. Those six things which are referred in ahadith are known as 'amwal-e-Rabwiya'

44. The prohibition of 'Riba al-fadl' is in fact a precautionary measures introduced by Islam to implement the complete prohibition of 'Riba' in any manner and all its forms. So according to Ibn Qayyim, the prohibition of 'Riba al-fadl' is in fact taken under the concept of 'Sadd-uz-Zarai' to maintain prohibition of 'Riba' al-Naseah or 'Riba' Al-Qur'an'.[102] [103] At some instances upon certain invalid business transaction the word 'Riba' is also used for them in some ahadith. Abu Bakar al-Jassas did explain this factor: [104]

45. According to the majority of the Jurists, 'Riba' of surplus or 'Riba al-fadhl' comes into existence in a sale transaction that involves the exchange of one of the 'Ribawi commodities, i.e., the commodities which are mentioned in the ahadith of the Prophet (such as dates, wheat, and salt etc.) for the same type of commodity but different amount or weight. 'Riba al-fadl' arises from the exchange between two items of the same type, but in unequal amounts. The addition on one side of the transaction has to be in physical quantity rather than in value, it is irrelevant if that increase or addition is initially stipulated in the contract or not. The basis of 'Riba al Fadl' or 'Riba al-Hadith' is based on following ahadith of the Prophet

1. The Prophet said: [105] Narrated 'Ubadah bin as-Samit (): Allah's Messenger said: Gold is to be paid for with gold, silver with silver, wheat with wheat, barley with barley, dates with dates, and salt with salt, same quantity for same quantity and equal for equal, hand to hand (i.e. payment being made on the spot). If these classes differ, sell as you wish as long as payment is made on the spot. [Reported by Muslim]

2. Narrated Abu Sa'id al-Khudri (): The Prophet , said: [106] Gold is to be paid for by gold, silver by silver, wheat by wheat, barley by barley, dates by dates, salt by salt, like by like, payment being made hand to hand. He who made an addition to it, or asked for an addition, in fact dealt in usury. The receiver and the giver are equally guilty.

3. From Abu Sa'id and Abu Hurayrah (): [107] Allah's Messenger appointed a man over Khaibar and he brought him dates of a very fine quality. He asked him whether all the dates of Khaibar were like that, and he replied, I swear by God that they are certainly not, Messenger of God. We take a sa of this kind for two, and two for three. So he said, Do not do so. Sell the lot for dirhams, then buy the very fine dates for 'dirhams'. He said that it was the same when things were sold by weight. In addition to the prohibition of Riba and Ribawi activities as much as possible this Hadith also explain the two other basic requirements which Islam was to promote in the economic sector, one is the just circulation of money in the society and avoidance of imbalance in the economic activities or economic exploitation. Islam wants to eliminate completely the economic exploitation in all forms.

4. From Abu Saiid al-Khudri (): [108] Once Bilal brought Barni (i.e. a kind of dates) to the Prophet and the Prophet asked him, From where have you brought these? Bilal replied, I had some inferior type of dates and exchanged two Sa of it for one Sa of Barni dates in order to give it to the Prophet; to eat." Thereupon the Prophet said, Beware! Beware! This is definitely Riba (usury)! This is definitely Riba (usury)! Don't do so, but if you want to buy (a superior kind of dates) sell the inferior dates for money and then buy the superior kind of dates with that money.

5. Narrated Fadalah ibn 'Ubayd al-Ansari (): [109] that at the battle of Khaibar he had bought a necklace in which there were gold and gems for twelve dinars, and after considering them separately he found that it was worth more than twelve dinars, so he mentioned that to the Prophet who said, It must not be sold till the contents are considered separately. [Muslim narrated it.] This Hadith also explains one of the principles of Islam that in all economic activities Islam wants to eliminate any possibility of ambiguity or uncertainty.

6. Abu Umamah said: [110] The Prophet said: Whoever intercedes for his brother and that one gives him a gift for that (intercession) which he accepts, he has engaged in one of the most terrible types of Riba (undeserving increase in something). [Reported by Ahmad and Abu Dawud]

7. From 'Abdallah ibn Abi Awfa (): [111] The Prophet said: Deceiving a mustarsal [an unknowing entrant into the market] is 'Riba'.

8. It is narrated by 'Abdallah bin Abu Aufa [112] A man displayed some goods in the market and took a false oath that he had been offered so much for them though he was not offered that amount Then the following Divine Verse was revealed: Verily! Those who purchase a little gain at the cost of Allah's covenant and their oaths Will get painful punishment. (3:77) Ibn Abu `Aufa added, Such person as described above is a treacherous Riba eater (i.e. eater of usury). [113] The Prophet said: A najish [one who serves as an agent to bid up the price in an auction] is a cursed taker of 'Riba'. 'The Urdu Encyclopedia of Islam' explained all these aspects in its own style in a precise manner as: [114] After having knowledge of all the directions of the Prophet which constitute.the strict ruling of Shari'ah for prohibition of 'Riba' in all forms and under any circumstance Caliph Hazrat Umer () made a very important statement which is a source of guidance for us. This statement of Hazrat Umer () is reported by many source as: [115] Nasr bin 'Ali al-Jahdami related to us: Khalid bin al-Harith related to us: Sa'id bin Abi 'Arubah Mihran related to us from Qatadah from Sa'id bin al-Musayyab from 'Umar bin al-Khattab who said: Indeed, the last of what was revealed is 'ayah al-Riba'; the Messenger of Allah was taken in death before he explained it. So shun (what is clearly) 'Riba' as well as (what is in) doubt (fa da'u al-'Riba' wa al-'Riba'h). [Emphasis added] According to another tradition, 2nd Caliph Hazrat Umer () gave the same statement in Khutba as: 'Umar said[116]: O people! I do not know if (sometimes) we may order you to do things that are not permissible for you or may prohibit for your things that are permissible for you. Indeed, the last of what was revealed in the Qur'an is the 'ayah al-Riba. and indeed the Messenger did not explain it before he died (for lack of time). So move away from what creates doubt in you to what does not. [Emphasis added]

46. After going through all the verses of the Qur'an, ahadith, saying of Companions/ Sahabah () of the Prophet , the opinion of the Muslim Jurists, muhaddithin, lexicographers and mufassirin especially the opinion of Hazrat Umer (). We hold that 'Riba' should be defined inclusively not exclusively. It means that in the light of the Verses of the Qur'an, saying of the Prophet and the practice of Sehabah Karam (), any transaction which has the slightest doubt of being included in any type or category of 'Riba' must be included in the definition of 'Riba'. There is a consensus among the Jurists that the 'Riba' is completely and absolutely prohibited according to the Injunctions of Islam as laid down in the Qur'an and Sunnah of the Prophet . In addition to this in the light of all the verses related to the prohibition of Qur'an, ahadith of the Prophet narrating 'Riba', explanations of all the jurists, scholars and mufassirin of Qur'an related to 'Riba' we have concluded that: i. According to the Injunctions of Islam, 'Riba' exists in a loan or a financial transaction in which increase in principal amount of the lender of the money occurs. ii. That increase in a transaction occurs according to the wishes of loan lending party (lender) at a predetermined rate or without any predetermined rate. (It is irrelevant whether the increased amount upon a loan is fixed at the initiation of the loan contract or charged after the lapses of certain stipulated time period). iii. The transaction occurs in the absence of any exchange of a counter-value or recompense or Iwid . iv. Riba is prohibited absolutely in all of its forms and manifestations.

47. Shari'ah strictly prohibit all types of 'Riba' therefore any kind of socio-economic, legal or religious change in the borrower or the lender of a loan transaction involving 'Riba' does not change the nature of prohibition. 'Riba' is equally forbidden for the poor and the rich and even for the Muslims and the Non-Muslims in an Islamic State. Similarly, nature of its prohibition does not change with the change in the purpose of taking loan; which mean that the loan taken on 'Riba' for commercial, productive of industrial purpose is as prohibited as the charging of 'Riba' upon a loan which is taken to fulfill personal need. Likewise, change in the ratio of percentage at which 'Riba' is charged on a loan in a transaction does not change legal effect of prohibition of 'Riba' in a transaction. This means that no limit of percentage can be fixed for the purpose that up till that limit charging of interest upon a loan is legal or permissible and more than that is forbidden or prohibited. Similarly, change in legal status of any party involved in a 'Riba' transaction, for example if one of the parties or both the parties in a transaction are legal persons, does not change the legal or Sharai' effect of the 'Riba' transaction it will remain prohibited. Determination Point-III Whether the term 'Riba' is confined to compound interest only, hence in the light of Islamic injunctions only charging of compound interest on loans is prohibited and not the charging of simple interest.

48. Para-6 of the remand order contains the contentions raised by the counsel representing UBL, the petitioner that Riba is confined to charging of compound interest on a loan. We have made this point of determination to examine this contention between this point was raised by some respondents before us also.

49. The counsel of UBL made an argument before the Shari'at Appellate Bench that actually the hukam for the prohibition of Riba is in verse 130 of Surah Aal-e-Imran which does not prohibit what is reasonable and fair, it reads as follow; Allah says: [117] [118] O you who have believed, do not consume usury, doubled and multiplied, but fear Allah that you may be successful. [119] This Ayah means that all which is prohibited is only the 'doubled and multiplied interest'. He stressed upon a phrase used in the verse and said it means that only doubled and multiplied interest comes under the definition of the prohibited Riba it does not include charging of simple interest.

50. We have gone through more than 100 tafasir of the Qur'an written in different time period of history in different Islamic centers of the world by scholars of different background and followers of different schools of Islamic jurisprudence. We have made this set of tafasir to examine this particular as well as other issues involved in this judgment. This has been done in order to cover a wide spectrum of opinion to help in understanding the opinion of the majority of Muslim scholars in accordance with the Injunctions of Islam as laid down in Qur'an and Sunnah. We have found not a single one of the mufassir out of 105 mufassirin, which we consulted who is of the view, which were mentioned by the counsel of UBL that the ayah 130 of Surah Aal-e-Imran only prohibits double and multiplied interest and it does not prohibit simple interest in a transaction.

51. The counsel of the UBL referred to the meaning of this ayah only without relying on any reference, however, since this point was raised by the learned counsel of UBL and was noted by the honorable Shariat Appellate Bench of the Supreme Court; therefore, for deeper appreciation of the issue we consulted this set of exegeses (tafasir), as this was the desire of the Shariat Appellate Bench of the Supreme Court when it remanded the case with the direction of re-determination of the issue afresh. The exegeses (tafasir) that were consulted (written in Arabic[120], Urdu[121] and Persian[122] to note the tafsir of verse 130 of Surah Ale-e-Imran and found that none of them is of the view which was forwarded by the counsel of UBL in his arguments. Although none of the mufassir out of these 105 endorse the view which was taken by counsel of UBL; however, some of the explanation of the mufassirin which we consulted are worth noting like: 1) Al-Jassas[123] has written while explaining the tafsir of ayah 30 of Surah Aal-e-Imran as: [124] 2) Ibne-Ashur[125] has explained as: [126] 3) Imam Razi[127] has explained it in the following fashion: [128] 4) Imam Malik[129] also explained as under: [130] [131] 5) Justice Mufti Muhammad Taqi Usmani[132] has referred Imam Razi explaining the meaning of this ayah as: [133] 6) Maulana Ashraf Ali Thanwi[134] explains this ayah as: [135] 7) Allama Ghulam Rasool Saeedi[136] about this ayah said: [137] 8) Dr. Luqman Salfi[138] wrote : [139] 9) Sayyid Qutb[140] has also discussed the point of view raised by the counsel of UBL very precisely because in Egypt there were some scholars who wanted to legitimize Riba or charging of interest in one pretext or other. He writes in his tafsir of this ayah as: [141] 10) Maulana Ghulamullah Khan[142] explained the meanings of this ayah relying on a Hadith as: [143] 11) Maulana Idrees Kandhlawi[144] has explained the Ayat in much detail and has given other such examples too where similar style of narration is adopted by the Quran to make a message more strong and clear. [145] 12) Qazi Sanaullah Panipati[146] writes : [147] 13) Sheikh Muhammad Hussain Najafi[148] states: [149]

52. After going through a voluminous scholarly work of the Muslim scholars of every era and of every background we are of the considered view 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. It is evident from the phraseology or expression of the Qur'an itself that here only .doubled or multiplied interest' is not meant or intended but it also includes even the smallest percentage of interest in it. Riba or interest is absolutely prohibited and forbidden. Determination Point-IV: Whether the prohibition of Riba in Islam changes with the change in the percentage of interest charged upon a loan and is there any difference between usury and interest?

53. In the twentieth century soon after the introduction of banking business in the Muslim majority countries, attempts have been made to legitimize Riba completely or at least partly by creating some exceptions in the absolute prohibition of Riba. One such attempt has been made by the Attorney General for Pakistan when he forwarded the arguments that 'banking interest' is not the Riba which is prohibited in Islam. Perhaps this is the only question which was raised by the Attorney General for Pakistan through which he tries to legitimize banking interest and get banking interest out of the definition of the term Riba. Although he did not give any additional arguments in support of his point but kept on repeating it. The crux of his attempt to legitimize banking interest was based on the arguments that banking interest is something different from Riba hence it is not haram or prohibited. According to him, Riba is called usury and interest is not usury hence it is not Riba. He remained silent on the queries as to how and why is it different, he could not give any answer.

54. The first and the foremost response made by the petitioners to the approach taken by the Attorney General for Pakistan was that the reality of anything does not change by merely changing its name. Similarly the legal effect and legal implication of any order does not change by changing the name of any process.

55. To understand the relation of these two words i.e usury and interest we have to explore and understand their historic links especially in the period of European history which is generally known as post Christian era or the period of Renaissance. Taking usury is a sin and is forbidden in Christianity. The word usury in that sense is used in many Verses of the Holy Bible. In total there are 17 Verses about Usury from 11 Books of the Holy Bible like in Exodus 22:25 as "If thou lend money to [any of] my people [that is] poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury." In Leviticus 25:36 as "Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee." In Leviticus 25:37 as "Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase." In Deuteronomy 23:19 as "Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of anything that is lent upon usury" Similarly in Deuteronomy 23:20, Nehemiah 5:7, Nehemiah 5:10, Psalms 15:5, Proverbs 28:8, Isaiah 24:2, Jeremiah 15:10, Ezekiel 18:8, Ezekiel 18:13, Ezekiel 18:17, Ezekiel 22:12, Matthew 25:27, Luke 19:

23. All these verses condemn the act of taking usury as a major sin in Christianity. With the advent of the 16th century, however, some efforts were made to legitimize some percentage of usury. This fact is explained by Britannica while defining the term usury as: usury, in modern law, the practice of charging an illegal rate of interest for the loan of money. In Old English law, the taking of any compensation whatsoever was termed usury. With the expansion of trade in the 13th century, however, the demand for credit increased, necessitating a modification in the definition of the term. Usury then was applied to exorbitant or unconscionable interest rates. In 1545 England fixed a legal maximum interest, and any amount in excess of the maximum was usury. The practice of setting a legal maximum on interest rates later was followed by most states of the United States and most other Western nations. The term usury as used in the Holy Bible is explained by Harper's Bible Dictionary as "usury, lending at interest; later, at an exorbitant rate. The laws of Israel forbade lending to a needy Hebrew, with expectation that principal plus interest would be returned, in the form of money, food, or anything else. There was no compulsion about lending at interest to foreigners or strangers, for such transactions involved risk." Since the Torah allowed lending at interest to non-Jews. Pope Leo X, on May 4, 1515 in Lateran Council-V Session-X, officially promulgated, for the first time in the history of the Roman Catholic Church, the lawfulness of interest-bearing loans, for charitable purposes. [Usury in Christendom the Mortal Sin that was and Now is Not, Michael Hoffman, P-260 and The Oxford Companion to the Bible, P-463, 1993 Ed. Bruce M. Metzger and Michael D. Coogan]. After that gradually many commercial and political centers of Europe started making law to circumvent or by-pass usury. They started setting by law a certain limit of usury as "legal" and called it .interest. whereas; higher than that limit was counted as usury according to them. The lending was done between individuals or small groups of people in the beginning. As banking institutions grew in popularity, communities began to develop regulations governing how much interest should be paid. During the reign of King Henry VIII England in 1545, Parliament approved a law allowing interest rates of up to 10%, with anything beyond that being usury. This was the starting point from where relatively less amount of usury in the name of interest was legitimized by law. The colonies in the United States followed suit, passing their own usury laws based on the English model. Even after the colonies gained independence from England, this practice persisted. Most states have usury laws in effect, which establish a limit on how much interest a lender may charge.

56. In Europe, the first time, in 1540, an imperial order allowing interest payments of up to 12% on commercial loans in the Habsburg Netherlands was issued. In 1545, Henry VIII's Parliament passed a law allowing interest payments of up to 10% (on all loans) in England.

57. Professor Khursheed Ahmed very aptly concluded this aspect of economic history of usury in his book (Elimination of Riba from the Economy p.39-40). He said "Historically interest and usury always treated as one and the same thing. It was only in the post-Christian, post-Renaissance period of European history that the term interest was used as a substitute for usury to wriggle out of the religious and moral prohibition.

58. On the very outset this was done in the Christian world by dividing the prohibited usury into two categories i.e. one was labeled as usurious interest and other was labeled non-usurious interest. As a consequence, charging of interest at higher rate than a certain arbitrarily fixed rate was labeled as usury; whereas charging of less interest than the fixed rate was simply called interest. Resultantly, a certain arbitrarily set rate of interest on a loan was permanently labeled as "interest" which was declared legal hence permissible; whereas charging of interest at a rate higher than the highest permissible rate of interest was labeled as "usury" which was declared as prohibited hence illegal. Here, a passage from the Jewish Encyclopedia[150] is worth noting which says: Usury: In modern language this term denotes a rate of interest greater than that which the law or public opinion permits; but the Biblical law, in all dealings among Israelites, forbids all "increase" of the debt by reason of lapse of time or forbearance, be the rate of interest high or low, while it does not impose any limit in dealings between Israelites and Gentiles. Hence in discussing Jewish law the words "interest" and "usury" may be used indiscriminately. The historic aspect of the coining of the term interest is further confirmed by Catholic Encyclopedia while explaining the history of usury and interest as: Economists generally uphold the theoretical lawfulness of interest on loans. For a long time civil law was in agreement with canon law; but as early as the sixteenth century, Germany allowed interest at 5 percent; in France, on the contrary, interest on loans was forbidden until the Decree of 2 and 3 October, 1789. Contemporary laws always consider the loan for consumption as gratuitous in principle, but allow a stipulation for the payment of interest to be added. In modern legislation two questions remain to be decided: whether it is desirable to establish a maximum legal rate; and by what means usurious exactions may be prevented. [151] This historic back ground of legitimizing banking interest and making it an exception to the absolute prohibition of usury and how this approach is utilized in the modern legal framework is explained by Arkensas Encyclopedia as: As early as the ninth century in England, the taking of interest was frowned upon. Later, Parliament specifically authorized the practice in the reign of Henry VIII, but that enactment was short lived. Gradually, in many jurisdictions, the absolute prohibition gave way to a balancing between reasonable interest charges and unreasonable charges that is, usury. Broadly speaking, extensions of credit at rates exceeding some standard set by the state have been termed usurious and the result usury. [152] The Hebrew word for "usury" is "neshek," meaning literally "a bite," from its painfulness to the debtor; while in Lev. xxv. 36, 37 "increase" is the rendering of the Hebrew "marbit" or "tarbit" which denotes the gain on the creditor's side, and which in the later Hebrew becomes "ribbit."[153]

59. The word 'Riba' is defined in Encyclopedia of Islam as: .The word 'Riba' literally means increase, it is a technical term, usury is interest, and in general an unjustified increase of capital for which no compensation is given. Derivatives from the same root are used in other Semitic languages to describe interest. Etymology of word usury: usury (n.) c. 1300, "practice of lending money at interest," later, at excessive rates of interest, from Medieval Latin usuria, alteration of Latin usura "payment for the use of money, interest," literally "a usage, use, enjoyment," from usus, from stem of uti (see use (v.)). From mid-15c. as "premium paid for the use of money, interest," especially "exorbitant interest."[154]

60. The same word, 'Rabbit' is translated as in Urdu translation of the Holy Bible and the word is used in Arabic translation of the Holy Bible. This further clarifies that there is no difference in all these words, they are either synonymous of each other like usury and interest or translation of one word from one language into other. Like 'usury' or 'interest' are translated as in Urdu and in Arabic in different versions of the Holy Bible. . If we match the translation of one verse 22: 25 of Bible of book of Exodus in which Word usury is used we will find that: In old or classical English version of Bible the word of Usury is used as: 25 If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury. [155] In Arabic Version of the Bible same word is translated as as: [156] In Urdu translation of Bible same word is translated as as And if we consult same verse of Bible in in Modern English the word Interest is used as: "If you lend money to any of my people who are in need, do not charge interest as a money lender would. ( Exodus 22:25)[157] Which means there is no difference in the words usury and interest. The term of 'interest' was coined to legitimize certain percentage of usury. Currently Attorney General for Pakistan tried to forward the same arguments that the term interest is different from the term usury hence usury is Riba which is prohibited while interest is not Riba so it is not prohibited. These arguments of the Attorney General for Pakistan in this regard are flawed and hold no weightage in them hence rejected. Interest and usury are two synonyms used to translate the meaning of the term Riba.

61. Usury and the interest are used interchangeably even in Bible. Technically they both are one and the same thing. In the English version of the Holy Bible the word 'usury' is used at many places in the same meanings as already stated earlier. One such example is the Book of Exodus (22:25), where it is mentioned as: "If thou lend money to any of my people that is poor by thee, thou shalt not be to him as an usurer, neither shalt thou lay upon him usury: [Ref: 'King James Version", [Emphasis added].

62. At the same time the same word is normally translated as 'interest' in different versions of the Holy Bible, for example the same verse [Exodus 22:25] is in another English version of Bible, it is translated as : "If you should lend money to my people, to the afflicted alongside you, you must not become like a usurer to him. You must not lay interest upon him". (New World Translation of the Holy Scriptures, Emphasis added). The same word is translated as in Urdu translation of the Holy Bible and word is used in Arabic translation of the Holy Bible. This further clarifies that there is no difference in all these words, they are either synonymous of each other like usury and interest or translation of one word from one language into another.

63. 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 the large quantity of a thing is prohibited, a very small quantity of it is also equally prohibited. This basic principle of Islamic jurisprudence is based on the following Hadith of the Prophet (SAW): The Prophet (SAW) said: if a large amount of anything causes intoxication, a small amount of it is prohibited.' While deciding this point of determination: "Whether the prohibition of Riba in Islam changes with the change in the percentage of interest charged upon a loan and is there any difference between usury and interest."

64. Since it is proven fact that historically such efforts were made in the Christian world during the sixteenth century, to dilute the impact of strict prohibition of usury as is stated in the Holy Bible. Likewise, similar attempts were initiated in the Islamic world at the advent of twentieth century to create some kind of exception for the banking interest from the definition of Riba. To get the right answer of this question it is important to understand the definition of these two terms i.e Riba and interest. While concluding some of the previously mentioned points of determination we have defined the term Riba very elaborately in the light of the Injunctions of Islam. We have also elaborated the reasons that why the definition of term Riba should be formulated all-inclusively instead of all-exclusively. Moreover all other points have also been discussed which were raised by the respondents to create a legitimate exception of the comprehensive term Riba.

65. We are of the view that according to the Islamic principles of jurisprudence there is no difference between Riba 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 the legal effect of it. If we consider that these are two different things then it will mean that charging of an interest upon a loan which is legal by virtue of law is permissible and allowed whereas more than that specific limit is prohibited and illegal. For Example charging of 8% of interest upon a loan is legal and it is not "usury" hence it is not a sin; however charging of 8.5% of interest upon a loan is forbidden and is illegal as well as a great sin. Similarly the argument that charging of 8% of interest upon a loan is called as "interest" and more than that is called "usury" and one is legal and other is not. The principle of Islamic law is very much clear and there is unanimity among the Muslim Jurists that where a large quantity of anything is prohibited then the smallest quantity of the same is equally prohibited. Similarly by changing the name of anything on the basis of its quantity does not change the governing principle regarding that thing. Interest no matter how it is defined is usury for all practical purposes and from every angle hence according to Islamic injunctions these are merely two different synonyms used for Riba hence their presence in any transaction is prohibited.

66. According to Islamic injunctions anything which is prohibited is prohibited absolutely, even the minute quantity of it is prohibited, we cannot make it legal by associating it with a different synonym of the same word as happened in the case of usage of terms usury and interest in the West generally. 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, but the presence of certain factors in a specific transaction make it forbidden or prohibited. In the light of Injunctions of Islam, we cannot say that certain percentage of usury called as interest is legal and more than that is illegal and prohibited or taking interest on private loans from needy and the poor is forbidden, whereas it is permissible on industrial or commercial loans. It cannot be said according to Holy Quran and Sunnah that uptill certain percentage interest upon transaction is permissible and more than that it is not permissible, for example, less than 5% of interest is permissible and more than 5% of interest is forbidden and known as 'usury' or 'Riba'.

67. Hence we are of the considered view that usury and interest are synonyms of the English language used to translate the meaning of the term Riba and there is no difference in them. If we call Riba as usury or we call it interest it does not make any difference, it is prohibited according to Islamic Injunctions in the light of Holy Quran and Sunnah. The prohibition of Riba is absolute. Moreover, according to the Injunctions of Islam the effect of prohibition of Riba does not change with the rate at which interest is charged upon a loan. Determination Point-V: 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.

68. The counsel of UBL also argued before the Shariat Appellate Bench of the Supreme Court in Review Petition and some of the respondents also argued before us that the status of a person who takes loan of millions of rupees is different from a poor and needy person. So according to them the prohibition of taking interest upon a loan is a kind of concession or relaxation for the poor people and not for the industrialists or for a businessman who is taking loan for commercial purposes. On these grounds they argued that taking 'Riba' upon a loan from a poor person is forbidden while it is permissible if it is taken by a businessman for commercial purposes. According to the proponents of this idea, it rather is equivalent to business when it is taken from a businessman upon a commercial loan. These arguments are incorrect from the historical perspective because the society of Arabs where the Holy Quran was revealed, was a trading society and taking and lending loans for commercial purposes was a common practice, this is a historic fact. Maulana Abdur Rehman Kailani has very elaboratively written on this aspect of Arabic society which existed at the time of Nabi Kareem . He has written a book ()wherein he highlighted the historic fact regarding trading activities of that society at that particular time in addition he highlighted the same in his exegesis. The relevant portion is being reproduced below: [158]

69. The hukm which was revealed for the prohibition of 'Riba' is absolute. It does not differentiate between the rich and the poor loan borrower. According to Injunctions of Islam, .usury' is associated with the ways and mode of transaction not with the quantity or type of interest. The nature of prohibition of Riba does not change with any change in the form or status of the borrower or the lender. This type of arguments that Riba is prohibited for Sarfi loan or upon those loan which are taken for personal needs and it is not prohibited if it is taken for commercial or productive needs are based on two types of reasoning. i. Firstly; that the reason behind prohibition of Riba is the existence of Zulm or exploitation of the borrowers in such transaction. Person who takes loan on interest to fulfill his personal needs is exploited by the lender therefore the Quran prohibited only this exploitative practice. This type of Interest is also known as 'Sarfi Sood' or personal loan. According to this theory; charging of riba or interest upon a loan is permissible from a person who takes loan for commercial or productive purposes this type of interest is also known as 'Tijarti Sood' . ii. Secondly, it is also argued that there did not exist the concept of commercial loan, or productive loan in the Arab society at that time when those verses were revealed. It was a tribal society and there was no concept of commercial loan prevalent among them. Hence the interest which is prohibited in the Qur'an is only the interest on personal loan.

70. In early twentieth century some Muslim scholars felt that banking is unavoidable in the realm of commerce and industry, not just on a national but also on worldwide level. This drove them to claim that only usury is haram (illegal), but not commercial interest, because making commercial interest haram would obstruct their path to industrialization and economic advancement in insurmountable ways. They only included usury in the name of Riba since it is explicitly banned in the Qura'n and Sunnah, and they excluded commercial interest from ambit of Riba. As a result, it was determined that the ban of Riba was limited to usury, whereas interest on commercial loan was permissible. In sub-continent Sir Syed Ahmed Khan[159] was the first proponent of this concept. He stated: [160] This approach is against the basic principle of Islamic Injunctions. When Islam prohibits anything it prohibits not only one specific form of something which is currently widespread, but it prohibits all forms of that thing that may emerge in the future. The fact that the state or form has changed has no bearing on the judgment.

71. The claim that commercial interest did not exist in the days of the Prophet is completely wrong. Following are some examples from the scholarly research done by many scholars while interpreting and explaining the Verses of Riba in their tafasir. They all explain that the Arabian society at that time was a trading society and charging of interest on commercial loan was very much in vogue in Arabia at that time rather the existence of interest on commercial loan was one of the reasons for revelation of some of these verses of the Qur'an. Justice Pir Muhammad Karam Shah[161] has explained this aspect pointing out the famous example of trade practices of Arab tribes and people as: [162] Maulana Ghulam Rasool Saeedi[163] quoted a very famous tradition with reference to Saddi that Arab tribes used to indulge in commercial interest very commonly. He narrated it as: [164] Some mufasirin have stated in their tafasir that these verses were revealed primarily to prohibit the commercial loan as Ibne Kathir[165] wrote: [166] Allama Nishapuri[167] narrated it as: [168] Maulana Syed Mohammed Madni Jilani Ashrafi[169] highlighted that diction used in the Qur'an is clearly meant for prohibition of commercial loan in this particular verse he writes: [170]

72. Two of famous scholars who are also linked in relation of teacher and student i.e. Maulana Ameen Ahsan Islahi[171] and Javed Ahmed Ghamidi[172] very categorically stated in their respective tafsir that the change in the purpose of taking loan on interest does not have any implication on the illegality of charging interest or Riba. Similarly, any change in the socio-economic status of the borrower or for that matter of the lender does not have any effect on the legal status of Riba or interest it remains prohibited under any circumstances. They say: [173] Javed Ahmed Ghamidi[174] writes: [175]

73. Those who are in favor of this concept that only usurious interest is prohibited and interest on commercial loan is not. The reason for the prohibition of Riba (Interest) is that if a borrower suffers a loss, he is still required to pay an excess amount over the principal, which is essentially an exploitation of his need, whereas the lender receives an increase on his surplus capital without exerting any effort, which is unjust. However, this component is absent in commercial interest according to them. They also stressed on the point that in case of usurious loan, consent of the borrower is missing with regard to the rate of interest. Commercial interest is acceptable since both parties have mutual consent, whereas Riba is forbidden solely because one party acts exploitatively. One party gets the excess and other gets the loss only because he has no other alternative. Maluana Abdul Rehman Kailani[176] has explained all these aspects very clearly in his tafsir as: [177]

74. Imam Tabri referred to some tradition in support of the fact that the practice of taking interest on commercial loans was common in Arabia. Not only did individuals take such commercial loans on interest but some tribes indulged in this exploitative practice so much so that according to some traditions the expansion of this evil practice was the reason for the revelation of these verses of the elimination of Riba. [178]

75. In Tafseer Rooh al-Bayan many other traditions are referred to prove the point that interest on commercial loans was a common practice in Arabia. So the argument that such type of practice was not known to them, hence making it legal and permissible is a fundamentally flawed argument and factually wrong. Allama Binouri[179] writes: [180] Abduhu al-Fallah[181] has given some further reference of Imam ash-Shawkani[182], Imam at-Tabri[183] and Allama as-Suyuti[184] to disprove the claim that the Arab society did not know the commerce and trade hence they did not know the concept of interest on commercial loans he wrote: [185]

76. As Sir Syed Ahmed Khan was the first one to put this point of view that the Quran prohibit the usurious loan only which is usually borrowed by the poor and needy to fulfill his personal needs and at the same time the loan which is taken by the wealthy people for commercial use is not forbidden. The same approach was adopted by Sayyid Rashid Rida[186] who was the Shaikh al-Azhar in Egypt. His reference was also relied upon by the respondent in the Review Petition. The State Bank of Pakistan relied upon the same argument which was argued before us. On our inquiring of the primary source of their opinion they failed to substantiate their argument regarding our query. An important point to be noted here is that neither Sir Syed Ahmed Khan nor Rashid al-Raza relied on any source upon which they based their respective opinions, nor did they interpret any such source in their favor. On the contrary both scholars admittedly expressed this as their personal opinion. For this reason, some of the mufassirin even criticize Allama Rashid al-Raza in their tafsir, one such example is of Allama Mohsin Ali Najafi[187] who writes as: [188]

77. After going through all these books and relevant sources, we are of the view that any such personal opinion of any person has no legal binding, irrespective of whether that opinion was given by anybody from the sub-continent or from Egypt, especially when that opinion is in opposition to the overwhelming scholarly opinion of the Muslim world from every era and from every corner of the world. In addition to that it is also a relevant fact in our consideration that such an opinion was normally given when the majority of Muslim states were under colonial rule and they had no concept of Islamic Banking. Hence those scholars were living under specific socio-economic and political conditions where it was almost impossible for them to imagine the concept of Islamic Finance at the national level let alone at an international level. Hence they obviously ignored and rather erred in making an opinion which was against the principles of Islamic Jurisprudence and even against the Injunctions of Islam. In Islam a rule does not change with the change in appearance of that thing upon which it is applicable. For example, Liquor is prohibited in Islam so it will remain prohibited in Islam irrespective of the fact that the style of its brewing, manufacturing and packing are totally different from the era when it was declared prohibited. Similarly, the quantity in which it is used or the manner in which it is used or the name or brand to which it is called does not have any impact on the basic ruling of Islam about it, that it is prohibited under all conditions and all its manifestations and forms. Same is the case of Riba or interest be it on personal loan or on commercial loan it is haram and prohibited. By giving consent no illegal act can be made legal like fornication, gambling or selling wine etc. under Islamic Jurisprudence.

78. Now coming to the point of determination, whether only the charging of interest upon consumption loans is prohibited and the charging of interest upon commercial or productive loans is not prohibited in Islam. For all the reasons discussed herein above we have decided this point of determination as, that the prohibition of Riba is absolute, irrespective of the fact as to whatever purpose the loan is taken on interest. The purpose of taking loan does not change the status of prohibition of Riba. Determination Point-VI: Whether the Islamic Banking model is practical or not and is the Islamic Banking a kind of heela. ?

79. While arguing the review petition, the petitioners forwarded two nebulous types of arguments: Firstly, Islamic Banking is not practical, and Secondly, whatever is being done in the name of the Islamic Banking is just a heela i.e. devices to avoid what is otherwise Riba.

80. In para-10, of the review order the argument of a counsel Dr. Syed Riaz ul Hasan Gilani, ASC representing the Federation were reproduced wherein he stressed upon the fact vehemently that the alternate banking Islamic Banking and financial system i.e. Islamic Financial system as proposed in the impugned judgment under review was not at all workable and the Government has found it incapable of being implemented. The para-11 of the Review Order, contains the arguments of Mr. Gilani that all the Islamic banking system suggested in the judgment under review is a misnomer and according to him except Musharika other modes of finance are nothing but heela , i.e. devices to avoid what is otherwise Riba which are in fact more harsh and oppressive having the element of Zulm and are worst in consequences as compared to the various forms of interest prevalent in the present day banking system which have wrongly been termed as Riba al-Nasi'ah in the judgment under review. According to him the judgment under review omitted to take into consideration the fact that the alternate system is not a consensus oriented system and had been bitterly opposed by many eminent jurists.

81. As we have already taken notice of the fact that the ground reality regarding Islamic Banking is completely changed from the time when the review petition was being heard and now. Therefore; to get the actual data we asked relevant and specific questions from the State Bank of Pakistan to explain the steps so far taken by the State Bank of Pakistan regarding promotion of Islamic banking in Pakistan. Answers to these questions, helped us in assessing the actual state of affairs of Islamic Banking in Pakistan. Whether the model of Islamic Banking and Islamic Finance are actually applicable in Pakistan or not.

82. The question we asked from the State Bank of Pakistan and its answer are as follows: What steps have so far been taken by the State Bank of Pakistan and Government of Pakistan through Ministry of Finance to promote Islamic Banking in Pakistan? Following are some of the key initiatives taken by the State Bank of Pakistan (SBP) for the promotion of Islamic banking industry in Pakistan: b. Licensing: SBP has allowed three types of Islamic banking institutions to operate in the country i.e.: (i) Full-fledged Islamic banks; (ii) Islamic banking subsidiary of conventional banks; and (iii) Standalone Islamic banking branches (IBBs) of conventional banks. c. Rationalization of Minimum Capital Requirements (MCR) for Islamic Banking Subsidiaries With the objective of encouraging banks to move towards a subsidiary based model, SBP has revised the initial Minimum Capital Requirement (MCR) for establishment of Islamic banking subsidiary from Rs 10 billion to Rs 6 billion in October 2014. d. Shari'ah Supervisory and Compliance Framework A multi-tiered Shari'ah supervisory and compliance framework is in place for Islamic Banking Institutions. e. Essentials and model agreements of Islamic modes of financing The State Bank of Pakistan introduced essentials and model agreements of Islamic modes of financing including Musharaka , Mudaraba Murabaha , Musawama , Leasing , Salam and Istisna for the banks conducting Islamic banking business in Pakistan. f. Islamic Microfinance Operations: For encouraging Islamic microfinance, SBP has also allowed establishment of full-fledged Islamic microfinance banks, Islamic microfinance divisions of conventional microfinance banks, Islamic microfinance services by full-fledged Islamic banks and Islamic microfinance services by conventional banks. g. Revised instructions on Islamic Banking Windows Operations Keeping in view the significant potential of Islamic Banking Windows (IBWs) in enhancing the share and outreach of Shari'ah compliant financial services and increase in financial inclusion, SBP has issued revised instructions for banks to expand the scope of operations of IBWs. h. Guidelines for Conversion of a Conventional Bank into an Islamic Bank In order to promote Islamic banking and facilitate the process of conversion of an existing conventional bank into an Islamic bank, SBP issued detailed guidelines in 2017. i. Liquidity Management Solutions for Islamic Banking Industry Considering the importance of liquidity management for Islamic banking industry, State Bank of Pakistan (SBP) is working on providing multiple liquidity management solutions for the industry. j. Exemption from KIBOR as Benchmark Rate for Participatory and Vikalah Modes Based Products To encourage participatory based modes of financing by Islamic banking institutions on asset side, SBP has allowed that the financing provided on the basis of participatory (Musharaka and Mudaraba and Vikalah/agency modes by the Islamic banking institutions shall be exempted from the requirement of using KIBOR as benchmark rate. k. Adoption of International Shari ah and Prudential Standards: SBP has remained a key member of international standard setting bodies like AAOIFI[189] and IFSB[190]. Various standards issued by these international standard setting bodies have been adopted after customizing the same in accordance with the local market. l. Issuance of Five Year Strategic Plans for Islamic Banking Industry of Pakistan: SBP, in consultation with all key stakeholders, has issued three five year Strategic Plans for Islamic banking industry of Pakistan; first strategic plan was for the period (2007-12), second one was for (2014-18) while the third strategic plan is for the period 2021-25. m. Instructions for Profit and Loss Distribution and Pool Management for Islamic Banking Institutions (IBIs): SBP has issued detailed instructions for Profit and Loss Distribution and Pool Management in IBIs to improve transparency and disclosures and bring standardization in IBIs' profit and loss distribution policies and practices. n. Islamic Refinance Schemes: Various refinance schemes on the Islamic principles have been launched by SBP. These mainly include Islamic Export Refinance Scheme (IERS), Islamic Long Term Financing Facility (ILTFF), Islamic Financing Facility for Renewable Energy (IFRE), Islamic Financing Facility for Storage of Agricultural Produce (IFFSAP) and Islamic Refinance Facility for Modernization of SMEs (IRFMS). o. Capacity Building and Awareness Creation Initiatives: SBP is actively engaged in capacity building of the industry through various training programs to enhance industry's human resource capacity. Moreover, targeted seminars, conferences, and workshops across the country are also conducted to increase awareness about Islamic banking and finance. p. Other Initiatives: i. SBP issues a quarterly publication on developments in Islamic banking and finance. ii. In order to ensure adequate supply of trained human resource to the industry as well as to act as an incubator for research on contemporary issues, SBP in collaboration with key stakeholders has helped in establishing three Centers of Excellence (under DFID[191] funding) at leading business schools including: Institute of Business Administration (IBA), Karachi, Lahore University of Management Science (LUMS), Lahore and Institute of Management Sciences (IM Sciences), Peshawar. iii. On recommendations of SBP, tax neutrality has been provided to Islamic financial institutions and their customers by the Government of Pakistan through Finance Act 2017. iv. To promote Islamic finance in the country, SBP is collaborating with SECP, the capital market regulator. SECP has created a dedicated Islamic Finance Department and has started taking initiatives for building necessary infrastructure for development of Islamic capital market. v. In recognition of its efforts, SBP has been voted as the best central bank in promoting Islamic finance four times (2015, 2017,2018 and 2020) by a poll conducted by Islamic Finance News (IFN), RED Money Group Malaysia. Moreover, Global Islamic Finance Awards (GIFA) has also awarded SBP as Best Central Bank of the Year 2020 .

83. After explaining the efforts of the State Bank of Pakistan regarding the promotion of interest free banking in Pakistan, the Counsel of State Bank of Pakistan argued that the State Bank is pursuing the goal mentioned in Article 38(f) of the Constitution regarding the elimination of Riba as early as possible from the country. The Counsel for the State Bank of Pakistan stated that presently under the prevalent legal and regulatory framework available in Pakistan for Islamic Banking or Riba free Banking if someone wants to do his business completely Riba free it is hundred percent possible. He also made it a point that at state level things are moving in the right direction, but there are certain challenges in complete implementation of Riba Free Banking. At the end of his arguments, he stressed that there are certain challenges faced by the Islamic banking industry due to limited availability of Sharia-compliant investment avenues etc.

84. The Review Order contains a reference of an affidavit dated 06.06.2002 which was filed by the Ministry of Finance before the Shariat Appellate Bench. It was referred in para-33 of the judgment of the Shariat Appellate Bench of the Supreme Court and same was re-referred in Remand Order's para-7, which reads as follows: "That Government of Pakistan has made best possible efforts under Article 190 and Article 203D(3)(a) of the Constitution of the Islamic Republic of Pakistan, 1973 to find ways and means to implement the directives contained in paragraphs (7), (8) and (9) of the Order dated 23-12-1999 of Hon'ble Supreme Court of Pakistan (Shariat Appellate Bench) but has found that implementation of the said directives is not practical or feasible and if attempted will pose high degree of risk to the economic stability and security of Pakistan". [Emphasis added]

85. The statistics of today are quite opposite to the apprehensive statement contained in the above-referred affidavit. According to Islamic Banking Quarterly Bulletin (Apr-June, 2021) of SBP, Pakistan's assets of Islamic Banking Industry (IBI) worth Pakistani Rupees 4,797 Billion (approximately US Dollars 30.45 billion) as in June, 2021. The Year on Year (YoY) growth of Islamic Banking assets was recorded at 32% by end June 30, 2021. The share of Pakistan's Islamic Banking to Total Banking Industry is 17%.

86. It is witnessed that 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 Pakistan is also unfounded. Not the slightest of evidence was produced by the deponent of the affidavit along with the affidavit nor any such arguments were forwarded by any of the respondent even before us.

87. In addition, the State Bank of Pakistan is 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 IFSB[192]. AAOIFI[193] have successfully developed 100 Shari'ah standards in the area of Accounting, Auditing, Ethics and Governance for Islamic economic finance. Out of these 100 Shari'ah Standards of Audit and Accounting and Islamic Banking, 16 Shari'ah Standards have been adopted by the State Bank of Pakistan in order to standardize Islamic Banking practices and Accounting and Auditing mechanisms in Pakistan.

88. The following are the Shari'ah Standards adopted by the State Bank of Pakistan: i. Default in payment by a debtor : AAOIFI[194] Standard number 03 deals with Default in payment by a debtor and it was adopted by the State Bank of Pakistan (SBP) on July 01, 2010 via Islamic Banking Department (IBD) Circular No. 01 of 2010. ii. Murabaha to the purchase order. It is AAOIFI[195] Shari'ah Standard number 08 and it was adopted by the State Bank of Pakistan on July 01, 2010 via IBD Circular No. 01 of 2010. iii. Lease : It is AAOIFI[196] Shariah Standard number 09 and it was adopted by the State Bank of Pakistan on July 01, 2010 via IBD Circular No. 01 of 2010. iv. Mudaraba : It is AAOIFI[197] Shariah Standard number 13 and it was adopted by the State Bank of Pakistan on July 01, 2010 via IBD Circular No. 01 of 2010. v. It is AAOIFI[198] Shari'ah Standard number 12 and it was adopted by the State Bank of Pakistan on July 01, 2013 via IBD Circular No. 01 of 2013. vi. Investment Sukuk It is AAOIFI[199] Shari'ah Standard number 17 and it was adopted by the State Bank of Pakistan on July 15, 2013 via IBD Circular No. 03 of 2013. vii. Debit/Charge Card and Credit Card It is AAOIFI[200] Shari'ah Standard number 02 and it was adopted by the State Bank of Pakistan on March 01, 2019 via IBD Circular No. 01 of 2019. viii. Guarantees It is AAOIFI[201] Shariah Standard number 05 and it was adopted by the State Bank of Pakistan on March 01, 2019 via IBD Circular No. 01 of 2019. ix. Documentary Credit It is AAOIFI[202] Shariah Standard number 14 and it was adopted by the State Bank of Pakistan on March 01, 2019 via IBD Circular No. 01 of 2019. x. Possession It is AAOIFI[203] Shariah Standard number 18 and it was adopted by the State Bank of Pakistan on March 01, 2019 via IBD Circular No. 01 of 2019. xi. Syndicated Financing It is AAOIFI[204] Shariah Standard number 24 and it was adopted by the State Bank of Pakistan on March 01, 2019 via IBD Circular No. 01 of 2019. xii. Online Financial Dealings It is AAOIFI[205] Shariah Standard number 38 and it was adopted by the State Bank of Pakistan on March 01, 2019 via IBD Circular No. 01 of 2019. xiii. Loan It is AAOIFI[206] Shariah Standard number 19 and it was adopted by the State Bank of Pakistan on January 03, 2020 via IBD Circular No. 01 of 2020. xiv. Agency and the Act of an Un-Commissioned Agent It is AAOIFI[207] Shariah Standard number 23 and it was adopted by the State Bank of Pakistan on January 03, 2020 via IBD Circular No. 01 of 2020. xv. Banking Services in Islamic Banks It is AAOIFI[208] Shariah Standard number 28 and it was adopted by the State Bank of Pakistan on January 03, 2020 via IBD Circular No. 01 of 2020. xvi. Unilateral and Bilateral Promise It is AAOIFI[209] Shari'ah Standard number 49 and it was adopted by the State Bank of Pakistan on September 02, 2020 via IBD Circular No. 03 of 2020.

89. After reviewing the response of the State Bank of Pakistan which is also owned by the Attorney General for Pakistan on behalf of the Federation, we are of the view that Islamic Banking or Interest Free Banking is a reality. It is not only very much practical but also feasible, not only in Pakistan but across all over the world. Islamic Banking is very much a practical reality of Pakistan hence any apprehension raised by the Federation before the Shariat Appellate Bench back then at the time when the Review Petition was being argued in the Shariat Appellate Bench lost ground if they had any.

90. The argument of referring the activities undertaken in the name of Islamic Banking as heela is completely unfounded, baseless and unsubstantiated. The products of Islamic Banking are issued by the State Banks are reviewed and approved from Shari'ah Board of the State Bank in the light of Islamic Injunctions. The accounting standard referred to above adopted by the State Bank of Pakistan are made and issued by a highly reputed Bahrain based International body of well recognized Islamic scholars of the world. The institution is called AAOIFI. In addition to that these Standards were also endorsed by the Council of Islamic Ideology. In the light of all these evidence we are of the view that naming the Islamic Banking as a whole as heela is an unfounded and baseless argument. However, while arguing the petition before us one of the petitioners and a jurist-consult did advance a point that a few products of the Islamic Banking are seldom objected that they are not strictly in accordance with the Islamic principles of finance or banking. In such cases according to them the Shari'ah Board of the State Bank for Pakistan remain continuously involved in taking affirmative actions and corrective measures whenever required. After hearing argument about any such apprehensions products used in Islamic Banking which are not strictly Shari'ah-compliant; for that eventuality we are of the view that every citizen is at liberty to challenge the legality of any such product which is being practiced and acted upon in the name of Islamic Banking. If any citizen thinks that any product of Islamic Banking is not in accordance with the injunctions of Islam and the name of Islam is only being used as heela then he can invoke the jurisdiction of the Federal Shariat Court any time, till date no such petition is pending before this court challenging any specific product of Islamic Banking. We are of considered view that Islamic Banking model is not only practical but feasible also not only in Pakistan but all across the world. Determination Point-VII: What is the status of Islamic banking worldwide especially in the Islamic world and in Pakistan?

91. The economic and monetary sectors are ever changing and evolving at national as well as at international level. Considering the changes undergone at international level, vis-a-vis., interest free on Islamic banking and keeping the direction of the Hon'ble Shariat Appellate Bench of the Supreme Court in mind of taking thorough and elaborate research regarding financial systems, which are prevalent in the contemporary Muslim countries of the world, we consider it very relevant and appropriate to examine some national and international factors of Islamic banking, which are very much connected and relevant to the matters in issue in these cases for the re-determination of the case.

92. What is the status of Islamic banking in contemporary Muslim countries and also worldwide? The answer to this question in the light of actual data helped us in understanding the problems and prospects attached to the matter in issue. This ultimately assisted us in reaching a practical and equitable conclusion of the case. To get the relevant answer in the light of actual statistics and real data, we have formulated few questions and circulated them amongst the parties to get their answers from every aspect. The questions were specifically given to the State Bank of Pakistan as well as to the Federal Government of Pakistan. We, inter alia, asked the following questions, which are relevant to know the current status of Islamic banking the world over: i) How many contemporary Islamic countries are dealing in Islamic Banking, Islamic Financial System and how these systems are being operated generally? ii) How many International banks and financial institutions are indulged in Islamic banking/Islamic Financing in different forms to provide Riba free services for their customers? iii) What is the response of International Financial Institutions like World Bank, IMF, Asian Development Bank, IDB etc., towards Islamic Banking purely from economic point of view? Do they provide financing on Islamic principles? iv) Is there any example in the world that the international financial transactions of a sovereign state with the International Financial Institutions is somehow linked with Islamic banking transactions?

93. The answers of the State Bank to these questions are as follows:

1. How many contemporary Islamic countries are dealing in Islamic Banking, Islamic Financial System and how these systems are being operated generally? In terms of jurisdictions, Islamic finance is present in almost 90 countries across the globe, with about 50 Muslim countries[210]. In a majority of Muslim countries, Islamic banking system is operating in parallel to the conventional banking system.

2. How many International banks and financial institutions are indulged in Islamic banking/Islamic Financing in different forms to provide Riba free services for their customers? The Islamic financing industry comprised of a total of 1,526 Islamic financial institutions offering Shariah compliant products and services in different sectors like banking, capital market, takaful, etc. (ICD-REFINITIV Islamic Finance Development Report 2020[211])

3. What is the response of International Financial Institutions like World Bank, IMF, Asian Development Bank, IDB etc., towards Islamic Banking purely from economic point of view? Do they provide financing on Islamic principles? During the last few years, International Financial Institutions like the World Bank (WB), Asian Development Bank (ADB), Islamic Development Bank (IsDB) have extended financing by using a variety of Shariah compliant mechanism for infrastructure, capital market, financial market related projects in various jurisdictions. Some examples are as under[212]:

1. IsDB and WB signed in October 2015 a Deep Dive Initiative (DDI), a strategic partnership framework aimed at scaling-up development assistance in common member countries. In 2016, combined financing reached USD 2.4 billion (USD 910 million from IsDB and USD 1.5 billion from WB) for eight projects in agriculture (Cameroon, Sahel), agriculture and infrastructure (Indonesia), energy (Palestine, Pakistan), and water (Kyrgyzstan and Mali).

2. IsDB has also worked with the ADB to establish a Shariah compliant equity fund under the name of Islamic Infrastructure Fund (IIF), with the goal of .facilitation of mobilization of public and private sector equity funds and attracting foreign investment" in the twelve common member states (Afghanistan, Azerbaijan, Bangladesh, Indonesia, Kazakhstan, Kyrgyz Republic, Malaysia, Maldives, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan).

3. IsDB Group also provided funding through its members: International Islamic Trade Finance Cooperation (ITFC), Islamic Solidarity Fund for Development, Islamic Cooperation for the Development of the Private Sector (ICD). Between October 2015 and December 20161 ICD delivered USD 824 million for private sector development, financing 38 projects in 23 countries.

4. Is there any example in the world that the international financial transactions of a sovereign state with the International Financial Institutions is somehow linked with Islamic banking transactions? Most of the transactions of the sovereign state with international financial institutions are based on conventional modes of financing. However, in some cases finance is provided for certain project by International financial Institutions like Islamic Development Bank through Shariah compliant modes. One such project is an infrastructure-related project in Pakistan that was co-financed by Islamic Development Bank and focused on reconstruction of the Kashmir region, which was at the epicenter of a devastating 2005 earthquake. Working with Earthquake Reconstruction and Rehabilitation Authority (ERRA), an authority established by the Pakistani government, Islamic Development Bank first provided USD 80 million in soft loans for the purpose of construction of 30,800 homes in various parts of the region. During the second phase of the project, which commenced in 2007, Istisna financing worth USD 127 million was provided for construction of further 57,500 homes. Under the third phase, USD 93 million was invested in constructing roads, bridges, and health facilities, and in electricity generation[213].

94. Similarly, the scene at international level regarding Islamic Banking is encouraging. According to the Islamic Finance Development Report 2020 published by the Islamic Corporation for the Development of Private Sector (ICD). The Islamic Banking Assets of Iran are worth 641 billion US Dollars with 41 functional Islamic Banks, which is highest in the world followed by Saudi Arabia USD 477 billion, having 16 Islamic Banks and Malaysia USD 297 billion with 36 Islamic Banks. Together the top three countries viz. Iran, Saudi Arabia and Malaysia comprise 63% of the total Global Islamic Banking Assets as in 2019. Other countries among top ten with respect to Islamic Banking Assets are UAE (USD194 billion, 24 Islamic Banks), Kuwait (USD 125 billion, 7 Islamic Banks), Qatar (USD 123 billion, 6 Islamic Banks), Bahrain (USD 87 billion, 33 Islamic Banks), Turkey (USD 49 billion, 6 Islamic Banks), Bangladesh (USD 41 billion, 25 Islamic Banks) and Indonesia (USD 38 billion, 32 Islamic Banks). This is a strong international evidence in favour of Islamic Banking that there remains no reason to apprehend in adopting Islamic Banking in Pakistan. The share of Islamic Banking Assets of Bahrain is 111% of its GDP which is highest Islamic Banking Assets to GDP ratio in the world followed by Iran (79%), Kuwait (37%), Qatar (31%) and UAE (24%).

95. The share of Islamic Banking to Total Banking of Iran and Sudan is 100%, i.e., all banks in these countries are Islamic Banks, followed by Saudi Arabia (63%), Brunei (57%) and Kuwait (49%).

96. When these petitions were filed, the ground reality of Islamic Banking was totally different from today. Presently, the concept and practice of Islamic Banking is not only available in the countries, which are member states of OIC, but many International Banks owned by western economies have started embracing and introducing Islamic Banking progressively. Some of the western banks that have established dedicated Islamic banking subsidiaries or have substantial dealings in the field include, Citibank, Bank of America, Commerzbank, Deutche Bank, Merrill Lynch, ABN AMRO, BNP Paribas, Pictet and Cie, UBS, Standard Chartered, Barclays, HSBC, Royal Bank of Canada, American Ex-press, Goldman Sachs, Kleinwort Benson, ANZ Grindlays and Flemings. In addition to that a growing number of western investment companies are now offering Islamic investment products to the investors worldwide.

97. Traditionally, the IMF has focused on conventional banking systems and has never supported the use of Islamic banking systems. Since its increased engagement with Middle East and North African (MENA) countries, the IMF considers Islamic banking to be progressively important. Having previously warned against the complexities of the Shariah rules, IMF now wants to consistently apply Islamic banking rules in its functions and encourage their application in the global financial markets. The World Bank and the IMF view the growth of Islamic banking as an effort to encourage inclusion, stability and strength of the financial markets so that newer and resilient funding sources can be created. [Ref: The role of Islamic Finance in enhancing financial inclusion in Organization of Islamic Cooperation (OIC) countries, Policy Research Working Paper 5920; can Islamic Banking increase financial inclusion? IMF working paper WP/15/31 2005; IMF working paper cooperation and Islamic Banking: we can learn from each other 2013 WP/13/184].

98. There are a total of 520 Islamic banks in the world out of which 301 are full fledge Islamic banks and 219 are just windows. The total numbers of Islamic banks by type are as follows; 418 commercial, 58 investment, 25 whole sale and 19 specialized. [Ref: ICD-REFINITIV, Islamic Finance Development Report 2020 Progressing Adversity].

99. There are currently 12 countries that are systemically important to the Islamic Financial Services Board (IFSB) and the IMF in terms of Islamic banking systems. These countries include: Iran, Sudan, Saudi Arabia, Qatar, Brunei, Jordan, Djibouti, Bangladesh, UAE, Malaysia, Bahrain and Kuwait. These countries have at least 15% of their total financial banking assets in Islamic Banking. Islamic financial assets are mostly concentrated in the banking sector because it has systematic importance. However, currently Islamic banks account for only 1% of global banking sector which equals $1.6 trillion. This 1.6 trillion represents 15% of the total banking sector in 14 Islamic countries of which Iran and Sudan are the only ones with the entire banking system in compliance of Islamic law. The market share in most of these countries has increased over the period of time further deepening Islamic finance principles. This however, is not only limited to countries that have few Islamic banks despite a booming Muslim population. Countries in Africa, such as Algeria, Egypt, Mauritania, Mauritius, Nigeria, Senegal, Tanzania and Tunisia. The Middle East and central Asian countries are as follows: Afghanistan, Iraq, Kazakhstan, Lebanon, Pakistan and Oman. Indonesia and Singapore lie in South East Asia. The last report of the IFSB in 2018, which tracks down 36 countries, has shown that Islamic banks have increased their market share in 19 countries while in seven they have remained constant. The largest jurisdiction for Islamic banking is in Iran which accounts for 34.4% of global Islamic banking industry. It is followed by Saudi Arabia at 20.6%, UAE 9.6%, Malaysia 9.1%, Kuwait 6%, Qatar 6%, Pakistan 1.2%, Sudan 1.5%, Bahrain 1.7%, Indonesia 1.8%, Bangladesh 1.9%, Turkey 2.6% and Brunei 0.5% [According to Islamic Financial Services Industry Stability Report 2018 and IMF working papers, ibid].

100. Mr. Ahmed Ali Siddique a Banker and Expert of Islamic Banking from IBA gave us a detailed presentation on the status of Islamic Banking in Pakistan to demonstrate that Islamic Banking is exponentially expanding in Pakistan on the basis of empirical data. The crux of his presentation is as follows: Islamic banking is gaining regular market share in many countries especially Iran and Sudan. Furthermore, both of these countries have achieved 100% market share for Islamic banking as per Islamic Finance Services Board (IFSB) report 2020[214]. In the same realm, Pakistan is approaching fast towards adopting Islamic financial tools. The following Islamic banks are actively working towards Islamic banking in Pakistan: Meezan Bank Bank Islami Pakistan Dubai Islamic Pakistan limited Al Barakah Bank MCB Islamic Bank 101.In Pakistan AAOIFI standards are being adapted through SBP and ICAPS committee. Till date more than 125 standards have been published by the global Islamic financing standards authority. The standards are as follows: 61 shariah standards, 40 accounting standards, 14 governance standards, 7 auditing standards and 3 codes of ethics. Out of these Pakistan has implemented 16 codes. At SBP a number of regulations and guidelines have been issued for Islamic banking institutions and a robust framework is present that can help speed up the conversion process towards Islamic financial system[215]. 16 AAOIFI shariah standards have been adopted. One SBP shariah standard has been issued, Comprehensive framework for Islamic banking institutions was issued in 2018 and last but not least, shariah compliant Islamic alternative to discount window and Islamic Open Market Operations (OMO) introduced in December 2021.[216] During the period 2002-2021, four conventional banks were successfully converted to Islamic banking operations: Societe generale, HSBC Pakistan and KASB Pakistan. Moreover, Faisal bank has successfully converted 95% of its operations to Islamic banking till date and is in the process of full conversion. In Pakistan around five banks are complete Islamic banks while 17 banks are operating at least one Islamic conventional branch. Coming towards the branch network of Islamic banks participants are around 3583, asset base of Islamic bank in Pakistan is 479 billion Rupees[217]. Furthermore the deposit base of Islamic bank in Pakistan is 3822 billion Rupees. The growth rate Year on Year (YoY) of asset base is around 32%. Currently, the share of Islamic bank in Pakistan in the overall banking system stands at 18.7%. Mr. Siddique along with other banking and Finance experts shared the following data with us regarding success of Sukuk and their usage in government borrowings. According to these experts Sukuk has emerged as an internationally accepted Shariah Compliant alternative to Government borrowing.

102. According to International Islamic Finance Market (IIFM) Sukuk Report 2021, during the period from 2001 to Dec 2020 approx 11,053 Sukuk were issued Globally with a worth of over USD 1.42 Trillion. These Sukuk are issued by a total of 36 countries, comprising not just Muslim majority countries like Malaysia, Turkey, Bahrain, UAE, Oman, Indonesia and Pakistan but also include Western countries like USA, UK, Japan, Germany etc. A large number of these Sukuk are issued by Government to generate Shariah Compliant funding.

103. According to these experts successful efforts were made at Ministry of Finance with the help of Government of Pakistan in developing alternative mechanism for raising Shariah Compliant financing for public debt instead of Interest based options. For example in September 2008, local currency GoP Ijarah Sukuk program was started with the issuance of first Government Ijarah Sukuk (GIS 1). During the period from 2008 March 2022, the government has issued Sukuk based on Ijarah worth PKR 2,521 bn. The option is present at Ministry of Finance and it is needed that this option be used regularly for conversion of public debt into Shariah complaint mode.

104. We have examined the above mentioned facts provided by the experts and we have concluded that now in Pakistan a comprehensive framework exists for Sukuk and regular issuance of Sukuk can be used to convert the financial system to Shariah compliant and interest free mode at the Government Level. A gradual target can be set by Govt to convert the entire borrowing to Islamic modes in next few years and stop issuance of interest-based instruments. Therefore, to eliminate Riba completely we direct that all Public Sector entities to start dealing only in Interest-free Shariah-compliant modes which are approved by the State Bank of Pakistan. Determination Point-VIII Whether the interest or Riba becomes permissible if the transaction are undertaken or made in the name of business

105. The counsel of UBL also argued that the present day banking is a business and the word used in verse 2:275 of Surah Baqarh includes sale, business, trade, investment, bargaining, etc., therefore, the present banking business is also covered by term . Since the Shariat Appellate Bench noted these arguments in the remand order while remanding the case, we have made it a point of determination to decide while doing the re-determination of the case.

106. Although these were the very first arguments used, raised and advanced by the Mushrekeen of Makkah that practice of charging interest on a loan is also a business, therefore, nothing is wrong in it. But Quran categorically and clearly separated the two. The verse 275 of Surah Baqrah reads as follows:

107. Those who eat Riba (usury) will not stand (on the Day of Resurrection) except like the standing of a person beaten by Shaitan (Satan) leading him to insanity. That is because they say: "Trading is only like Riba (usury)," whereas Allah has permitted trading and forbidden Riba (usury) . So whosoever receives an admonition from his Lord and stops eating Riba (usury) shall not be punished for the past; his case is for Allah (to judge); but whoever returns [ to Riba (usury) ], such are the dwellers of the Fire - they will abide therein." The opening sentence of the verse contains the argument of those people who indulged or involved in taking Riba. They used to equate Riba with trade or business (Bay). Same arguments were forwarded by the counsel of a bank after almost fifteen hundred years. The answer to this argument is unequivocally stated in the Holy Quran as: