ISLAMABAD, June 19: Justice Munir A. Sheikh, senior member of the Supreme Court Shariat Appellate Bench hearing review petition seeking reversal of Riba judgment, observed on Wednesday that the Pakistani society was not ready for the Islamic systems as the level of honesty in the country was low.

He made the observation when the federal government counsel argued that under the Islamic mode of banking, the investors would get nothing if the other partner made a statement that no profit had been earned, Justice Munir A. Sheikh agreed that the level of honesty in our society was low and the apprehension that the investor would get nothing was not misplaced.

Resuming his arguments on Wednesday, the federal government counsel, Dr Riazul Hasan Gillani, stated the impression that the Riba judgment was a step towards Islamization was erroneous, and the so-called Islamic banking modes were nothing but obsolete, inefficient banking instruments, which enjoyed no support from the Holy Quran and the Sunnah.

The counsel contended that what the Holy Quran and Sunnah prohibited was the element of exploitation (Zulm), and the so-called Islamic modes contained this element in abundance, much more than the conventional banking.

Dr Riazul Hasan Gillani stated that all these modes which were inefficient, were being portrayed as Islamic modes of financing in spite of the fact that the Holy Quran and Sunnah did not support any such instrument.

Arguing that savings schemes were not un-Islamic, the counsel stated that these were investment and not Qarz to the needy. The government did not come to the depositor and compel them to deposit their money, he added.

Under the Supreme Court judgment all savings schemes were un-Islamic and had to be transformed to Shariah compliant banking instruments.

Justice Munir A. Sheikh, observed that national savings schemes were voluntarily and there was no compulsion on the investors to deposit their savings in such schemes.

Justice Qazi Mohammad Farooq observed that the rate of return was not fixed and the government kept changing it. Recently the rate of return was lowered, Justice Qazi Farooq observed.

Dr Gillani said the banking instruments like Musharika, Modarabah, Morabaha, Ijara, Bai Muajal, and Bae Bilwafa, were ordinary banking instruments and had no support from the holy Quran and the Sunnah.

The so-called Islamic banking, he said, was a complete failure. He cited the example of Malaysia where the government had been patronizing it for the last 19 years as a parallel banking.

According to the figures of Malaysia’s central bank, he said, only about eight per cent of the financial sector had so far been covered by the Islamic banks.

He said that modern banking was more close to Islamic concept which prohibited exploitation. The counsel said to him conventional banking was 90 per cent Islamic whereas the so-called Islamic banking was only ten per cent Islamic.

He said such instruments which were prohibited in Islam could not be made Islamic under the garb of Arabic words. He said these were devices to turn “haram” into “halal” through indirect means.

Taking the Islamic modes of banking one by one, the counsel stated that he had no objection to Musharika instrument under which the financier and the client entered into an equity sharing contract to jointly fund a project.

He said Modarabah is trust financing where the financier bears the sole responsibility for the provision of investment funds and acts as a sleeping partner.

He said under this mode the sole responsibility lay with the active partner who might declare, at the completion of the business that there was no profit. No remedy was available to the sleeping partner who invested the money, he added.

Morabaha is a specific type of purchase and resale in which the cost and resale price is expressly determined in advance. Under this mode a car whose market price is Rs10 lakh is handed to a person with the express term that he would pay Rs12 lakh after two years. The counsel that these were all devices (heelas) to achieve indirectly what was prohibited directly.

Dr Syed Gillani completed his arguments on Wednesday, leaving the stage for Jamat-i-Islami lawyers to defend the Supreme Court judgment.

Advocate Mukhtar Farani representing Zahid Iqbal, another petitioner in the case, in his arguments said that the Supreme Court judgment had mixed up the variables and non variables.

He said that the court exceeded its jurisdiction by fixing a deadline for the implementation of the judgment. He said that Supreme Court had to decide whether it was in conformity with Islamic injunctions or not.