Repaying a loan after some time.

Question:

Salaam

My Father passed away 4 years ago and after his death we had to clear off his liabilities. One of our father’s friends had invested a total sum of 21.6 Million with our father over the years. My father had not kept any clear record of the payments and investments and whether loss or profits were made on those investments.  

We agreed to pay him a total sum of 38.6 million out which 0.2 million was paid right away, leaving a balance of 38.4 million which was supposed to be paid within 6 months. But we signed two written agreements according to the wishes of Dad’s friend. One agreement mentioned the actual amount we owed him i.e 38.6 million and the other agreement which was to be shown to the elders of our joint family (who were going to pay this money to him and deduct it from our joint family share), we wrote 41.1 Million and we agreed that he would pay us back the excess amount (41.1-38.4=2.7 million) once he had received it from our elders. All this money was going to be paid to him in Pakistani Currency whereas most of the investments he had paid to dad were in US Dollars.

Because we did not have cash on us, we had to sell off our properties to come up with that sum. Since all our properties were shared with the joint family and we hadn’t separated yet, it took around 2.8 years to sell off the properties and pay him off. Meanwhile, the dollar rate went up around 10 points in that time period and he said that since he was going to transfer this money to Australia and he will make a loss on the originally agreed amount after converting it into dollars, he was paid 44.0 million as opposed to the originally agreed 38.6 million.

Furthermore, he asked for 1 million extra to cover his expenses for travelling to Pakistan from Australia for his loan.

I would like to know what Shariah says about this, whether the extra payments come under Riba?  

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

On the outset is should be understood that when dealing with inheritance issues, everything must be done with the consent of all the heirs. Hence the second amount you refer to, where 2.7 million would be returned to you must be with the approval of all the heirs involved. 

In principle, if the sum agreed to be paid off was in Pakistani Rupees, then the fluctuation or increase of the Dollar against the Rupee would not be taken into consideration.[1]

Hence, if the originally agreed sum was Rs38.6 million then that will be the amount payable even after the 2.8 years regardless of the increase of the dollar.

If you agreed to pay for his expenses for travelling to Pakistan to collect the loan, it would not be regarded as Riba. 

 

And Allah Ta’āla Knows Best

Mufti Arshad Ali

Darul Iftaa, Jaamia Madinatul Uloom (Trinidad)

www.fatwa-tt.com /www.jaamia.net

[1] الدر المختار وحاشية ابن عابدين (رد المحتار) (5/ 162)

 وإن استقرض دانق فلوس أو نصف درهم فلوس، ثم رخصت أو غلت لم يكن عليه إلا مثل عدد الذي أخذه، وكذلك لو قال أقرضني عشرة دراهم غلة بدينار، فأعطاه عشرة دراهم فعليه مثلها، ولا ينظر إلى غلاء الدراهم، ولا إلى رخصها

الدر المختار وحاشية ابن عابدين (رد المحتار) (5/ 163)

 عند أبي يوسف تجب قيمتها يوم القبض أيضا، وعليه الفتوى كما في البزازية والذخيرة والخلاصة

بدائع الصنائع في ترتيب الشرائع (5/ 242)

ثُمَّ اخْتَلَفَا فِي وَقْتِ اعْتِبَارِ الْقِيمَةِ عَلَى مَا ذَكَرْنَا، وَلَوْ لَمْ تَكْسُدْ، وَلَكِنَّهَا رَخُصَتْ أَوْ غَلَتْ فَعَلَيْهِ رَدُّ مِثْلِ مَا قَبَضَ بِلَا خِلَافٍ

الفتاوى الهندية – ط. دار الفكر (1/ 310)

 لم تَكْسُدْ ولم تَنْقَطِعْ وَلَكِنْ رَخُصَتْ أو غَلَتْ لَا يُعْتَبَرُ هذا إذَا كانت رَائِجَةً وَقْتَ الْعَقْدِ

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