DR. MAHMOOD-UR-RAHMAN FAISAL, CHAIRMAN, TEHRIK INQILAB, ISLAM, RAWALPINDI Versus SECRETARY, M/O JUSTICE AND PARLIAMENTARY AFFAIRS, GOVERNMENT OF PAKISTAN, ISLAMABAD

FIDA MUHAMMAD KHAN, J. ‑‑‑ This Shariat Petition challenges Regulation No.14 of the Pakistan Insurance Corporation Employees Provident Fund Regulations,1954, on the ground that, in view of verses of Surah Al- Baqara Nos.188 and 275, it is repugnant to the Injunctions of Islam.

2. The impugned regulation (as amended) reads as under:‑‑

"Interest. ‑‑Interest and dividends received from or accrued on investment or bank account of the Fund shall be deemed to be the income of the Fund.

The net income of the Fund in each year shall be ascertained as the 31st day of December. Having regard to the amount of such net income the Administrators of the Fund shall determine a rate of interest, and the interest so determined shall be rounded off to the nearest rupee and credited on the 31st day of December to each member's account in respect of every amount credited to the member in his amount for the period from the date on which such amounts were credited to the said 31st December. In case of any member dying or his services being terminated before the net income of the Fund for the year in which he dies or his services are terminated is determined, the Administrators shall determine the amount which shall be credited to such member's account as interest for such year or portion thereof and the amount so credited shall be accepted as correct for all the purposes of these Regulations:"

3. This petition was admitted to regular hearing on the 11th December, 1990 and after hearing the petitioner and the learned counsel for the parties, the judgment was reserved on 9th June, 1991.

4. The fact that interest‑bearing transactions are prohibited in Islam is so obvious that there could be no two opinions in this respect. However, in case of provident fund the issue is somewhat different in nature and substance. The Government or for that matter its various departments and Organisations run under its instructions, deduct a certain fixed amount from the salaries of their employees each month. The amount thus deducted is invested by the concerned Organisation/Department in certain approved securities or in any other manner according to its own planned programme. The employee concerned has no say ‑‑ neither in its deduction which is compulsory nor in its investment which is even not known to him. The said Government Organisation/Department keeps on adding a certain amount as interest to the employee's account on yearly/half‑yearly basis and hands over the total amount ‑‑ the principal alongwith the interest ‑‑ to the employee at the time of retirement or release from service.

5. The concerned regulations on the subject are as under:‑‑

Membership eligibility. ‑‑(1) (i) Every permanent employee of the Corporation in superior service, and every permanent employee in subordinate service, who is in receipt of a pay of Rs.25 or more, per mensem, shall subscribe to the Fund.

(ii) In the absence of a provision in the contract of service to participate in the Fund, a permanent employee may join the Fund on a voluntary basis, but he shall not be eligible for the Corporation's contribution to the Fund irrespective of the fact that he may already be contributing to some other provident fund.

(iii) For the purpose of this section permanent employee includes an officer or staff on contract for not less than three years subject to his participation in the Fund on such terms as may be agreed to in such contract.

(2) Subject to terms of his contract or appointment a Managing Director of the Corporation who is employed for a period of not less than three years shall be deemed to be a permanent Officer of the Corporation for the purpose of these Regulations.

(3) An employee appointed on probation to a post in which, if confirmed, becomes a permanent employee, shall be deemed to be a permanent employee for the purposes of these Regulations from the date of his first appointment.

(4) A temporary employee (other than an employee who is already contributing to some other provident fund) and any other person in receipt of other than casual remuneration from the Corporation may with the written permission of the Administrators, subscribe to the Fund."

6. The question whether the excess thus granted to the employee as interest is permissible or not‑according to Islamic Injunctions was considered in depth by several prominent scholars of the sub‑continent and keeping in view the fact that the employee is not a party to the transactions and in fact has to accept the monthly deduction of provident fund from his monthly salary whether he likes it or not, does not subscribe to the interest‑bearing transactions in any manner. The Government department/organisation which also awards the monthly salary to the employee returns to him the amount compulsorily deducted alongwith the interest thereof at the time of his retirement. Thus the total amount in fact becomes a kind of bonus from the Government organisation/Department concerned and as such its receipt by the employee concerned is not against the Injunctions of Islam.

7. The relevant extracts from a booklet entitled () "by the grand Mufti of Pakistan Mufti Mohammad Shafi is reproduced as under:‑‑

This Fatwa had also the blessings of a highly prominent scholar Maulana Ashraf Ali Thanvi.

8. This view primarily presented in the pre‑partition days relates to a totally different situation because it was adopted in reply to a question raised by an individual in his personal case. 'The question before the honourable scholar at that time did not concern consideration of a provision of law relating to interest being in force in an Islamic State. Therefore, that Fatwa was based on a highly technical position in which an individual/employee of the Government was involved out of compulsion. But the issue under active consideration before us relates to a regulation that authorises investment of the fund on interest by the Islamic Government and as such the matter is in an altogether different perspective. There can be no two opinions about the fact that an Islamic Government is duly bound to implement and enforce Islamic law in all spheres of life and root out interest in all its forms wherever it is found as it is prohibited in Islam and no Muslim worth the name in the real sense of the word can ever agree to give or take interest in any condition. Our main judgment on interest contains the necessary discussion and reasons for holding this opinion which need not be repeated herein. Since the impugned regulation pertains to the interest received from investment of the fund in interest‑bearing securities, therefore, notwithstanding the above Fatawa which as stated above relates to a basically distinguishable situation, we are of the considered opinion that the provision relating to interest is against the teachings of Islam.

9. Consequently for the reasons stated above we hold that the impugned regulation to the extent that it relates to interest is repugnant to the Holy Our'an and Sunnah and unless it is brought in conformity with the Injunctions of Islam by 30th June, 1992, it shall cease to be effective.

M.BA./694/FSC

Order accordingly.