ISLAMABAD, June 22: The Supreme Court (SC) on Saturday reserved its judgment on the review petition filed by the United Bank Limited, seeking reversal of Riba judgment.

The federal government had supported the UBL’s review petition with a statement that implementation of the judgment was not possible without risking the country’s economy.

“Why don’t you accept the challenge of convincing people to adopt Islamic banking when the government is willing to allow it along with ordinary banking?” Justice Munir A. Sheikh asked Jamaat-i-Islami counsel who argued in favour of conversion of the present system to the Islamic mode of banking as suggested by the SC.

Advocate Ismail Qureshi, representing Jamaat-i-Islami, replied: “Haq (Truth) and Batil (Evil) cannot co-exist.” The Supreme Court should not modify the earlier judgment, he said.

He said Pakistan was created as an ideological state and Islamization process should not be impeded on any pretext.

Supreme Court’s Shariat Appellate Bench comprised Chief Justice Sheikh Riaz Ahmad, Justice Munir A. Sheikh, Justice Qazi Mohammad Farooq, Justice Dr Khalid Mehmood and Justice Dr Rashid Ahmad.

Attorney General Makdoom Ali Khan argued that the court could review any of its judgment if it was proved that judgment was based on an erroneous assumption.

He said the Federal Shariat Court and Shariat Appellate Bench had not clarified its position with regard to Article 30(2) of the Constitution, which barred the courts to decide about the validity of any principle of policy.

He said the framers of all three constitutions of Pakistan had distinguished Riba from interest, and always used interest and Riba separately.

The AG stated that the FSC had no jurisdiction to give judgment on the existence of Article 38(F). If there was conflict in two provisions of the Constitution, the original provision would prevail, he contended.

The Supreme Court’s judgment, he said, had propounded an economic theory in which it failed to distinguish between the debtors of pre-Islamic times and of modern time. The debtors in modern times were middle or lower middle class depositors, and the borrowers were industrialists and businessmen. In earlier times, the debtors were the rich and borrowers were the poor and needy persons.

He said the Supreme Court had also failed to distinguish between savings and investment. The principal law officer of the country said extension of loan on zero rate of return was not possible and if it was done, there would be too many borrowers and less capital to offer them.

The AG stated that banks were trustees of depositors’ money; they could not act, as required by the SC judgment, to be charitable bodies.

He said the SC had recommended partnership system in a society where nobody ever declared any profit on their business. He said assertion of the Supreme Court that bank did not share risk in business had been belied by the fact that Rs278 billion were stuck-up, which constituted 25 percent of the advanced money.

Earlier, Jamaat’s counsel had stated that all forms of Riba was ‘Haram’ and there was no such thing as ‘Makrooh Riba’. He also referred to the OIC resolution urging the member countries to introduce interest-free bank.

Justice Munir A. Sheikh observed that the federal government had also suggested that it would establish parallel banking system.

The government itself, the counsel stated, had asked the court to provide guidelines which it obliged, and now it was mandatory for the government to implement it. He said the statement of the government that implementation of the judgment was not possible was “shameful and dangerous”.

The counsel claimed that the IMF was of the view that interest-free banking was a viable option. Two world wars were the results of interest-based capitalist system, he added.

Advocate Khizar Hayat, another counsel of the Jamaat, stated that Riba judgment was not covered by the Muslim personal law, and the court had the jurisdiction to decide it. The SC judgment had covered all the aspects, and it must not be reviewed, he said.

The court asked him about the period when currency was first introduced in any Islamic state, but he failed to answer it.

Engineer Saleemullah, member of the Jamiat Ulem-i-Pakistan (Niazi Group), urged the immediate dismissal of the petition.

Mr Saleemullah also said it was wrong that the Holy Quran did not provide any definition of Riba. He said Riba was “Haram” and “Bai” was “Halal”.

He said there was no difference of opinion among different schools of thought, and it was an established principle that if there was any, the juristic opinion of Imam Abu Hanifa would prevail.

He stated that the Parliament was not competent to conduct Ijma as it was the domain of Muftis.

He, dealing with the practical aspects of Riba, said the statement of the government that if present system was converted to Islamic mode of banking, the economy would collapse, was misplaced. Present situation of Pakistan’s economy was the direct result of interest-based borrowing, he commented.

He said that from 1947 to 1971 Pakistan had never borrowed, and there was no deficit financing. He said the country’s five rupees were equivalent to one US dollar in that period. The rupee-dollar parity of 5-1 had been sustained for 25 years, he added.

Mr Saleemullah argued that the western economies were running on two percent interest rate. Lower interest rate helped these countries to control ever rising inflation.

The United Stated, he said, had operated its economy on two percent interest from 1942 to 1958, and Jews of the world, through international lending agencies, had earned $2,000 billion from the third world countries.

He said Pakistan’s total capital volume was only Rs3,000 billion out of which Rs1,000 billion constituted interest. If the economy was converted to Shariat compliant instrument suggested by the court, the government would save Rs1,000 billion. The government was paying Rs2.5 billion in the form of interest, he added.