Resolution No.(55): “Ruling on Receiving a Financial Compensation against Procrastination in Payment“
Date: 22/8/1422 AH corresponding to 7/11/2001 AD.
Question:
The Municipality of Irbid took possession of a plot from the lands of Irbid in 1987, owned by the Orphans` Fund Development Foundation for a price estimated at that time with (82215) JDs. (51215) JDs of that sum were paid to the Foundation and (31000) JDs remained due on the Municipality until 31/12/1999, when the Foundation filed a suit to collect the remaining amount. Later on, a court order was issued whereby the municipality was forced to pay off the price of the land (31000) JDs in addition to the statutory interests estimated at (32355) JDs and (600) fils, and so the Municipality did settle all the due sums during January 2000. However, the Orphans` Fund deposited the interests in the above plot`s bank account temporarily.
Please clarify the Sharia ruling as regards disposing of these interests, taking into consideration that article(4) of the Orphans` Foundation`s law No.(20) for the year 1972 states: “The Foundation aims at developing orphans` funds by investing them in legitimate businesses that don`t violate the rules of Islamic Sharia “?
Answer: All success is due to Allah.
The procrastination on the part of Irbid`s Municipality in paying the remaining sum of the land`s price is considered a violation to the funds of the orphans and an act of injustice against them for the Prophet (PBUH) said in this regard: “Procrastination (delay) in paying debts by a wealthy man is injustice. So, if your debt is transferred from your debtor to a rich debtor, you should agree. “ {Al-Bukhari}. In addition, the Messenger of Allah said: "if one who can afford it delay repayment, his honor and punishment become permissible." {Muslim}.
Therefore, the Municipality`s procrastination hindered the development of the orphans` funds through legitimate businesses decreed by the law-giver for the Prophet (PBUH) said in this regard {what means}: “One who becomes the guardian of an orphan, who owns property, must trade on his behalf and not leave it (saved and unused) until it is all eaten up by Zakah (which is paid yearly).” {Related by At-Tirmidhi and Ad-Daraqutni with a weak chain of narrators...}.
Therefore, the Board is of the view that a suitable compensation must be estimated in light of the harm done to the orphans` funds during the delay period, and to be paid in accordance with the average of the profits distributed on the orphans deposits during that period.
For example, if the average was 5%, then the amount due to the orphans is this average multiplied by the number of delayed years. These profits are permissible from the view point of Islamic Sharia and aren`t considered from the usurious interests because they are a compensation against the harm done to the orphans` funds resulting from delay in payment on the part of the debtor, which impeded developing and investing them in legitimate businesses.
The extra amount of profit that remains after giving the orphans their due shares is unlawful money (according to many scholars), and must be given to the poor and for charity. The Board also deems that this extra money must be deposited in the reserve account stated in clause (G), article (14) of the Orphans` Fund Development Foundation, and reads as follows: “The Board may dedicate more than 25% of the reserve earnings of the Islamic institutions or give cash assistance to underage orphans and needy Muslim students.” And Allah Knows Best.
Iftaa` Board
Chairman of the Iftaa` Board, Chief Justice, Izz Al-Deen Al-Tamimi
Dr. Mohammad Abu Yahia
Dr. Abdulsalam Al-Abbadi
Dr. Yousef Gheezaan
Dr. Wasif Al-Bakhri
Dr. Abdulaziz Al-Khayaat
Sheikh Saeid Hijjawi
Sheikh Na`eim Mojahid
Sheikh Mahmoud Shwayyaat