Contribution of Mufti Taqi Usmani in identifying rulings of the sale contract applied in syari'ah compliant financing comparative study with collective ijhtihad

Abstract

Shari’ah supervision in Islamic banking is provided through efforts of collective ijtihad made by renowned Shari'ah scholars and jurists around the world. Mufti Muhammad Taqi Usmani (b. 1943) is a globally recognized scholar who contributed to the development of Islamic banking through his various writings in three languages, his participation in the proceedings of Shari’a supervisory boards and suggesting amendment of banking laws, contract act and sale of goods act, and presenting a suggestion of a Shari'ah compliant sale of goods act. There are evidences which show that, despite his presence in the collective ijtihād, he took a different view or stand to the matters related to Islamic commercial transaction. This sort of Shari'ah heterogeneity has direct implication on the banking industry, and even hinder the process of Shari'ah harmonization. The study aims to present the contribution of Mufti Taqi in highlighting rulings of the sale contract (which represents almost 70% of financing application) besides his approach of dealing with transactional issues and contract operationalization. The study follows qualitative method with case study pattern to focus mainly on the contributions of a single jurists. The study applies descriptive and comparative research. The study refers to all the available writings of Mufti Taqi up to 2018 which are in Arabic, English and Urdu. The study divides contribution of Mufti Taqi into 5 chapters: formation of the contract and the contracting parties, subject of sale and the sale price, conditions and rescission option, sale contracts in Islamic bank, financing applied in Islamic, the findings and then conclusion. The study found that, by comparing 814 rulings (in the form of Shari'ah pronouncement (fatwā) or resolution) made by 24 different collective ijtihad bodies (e.g., Shari’ah supervisory boards or fiqh academies) against the writings of Mufti Taqi on the sale contract, there are 44 instances of Shari’ah heterogeneity which have commercial, financial, legal or risk implication. In 36% instances, the view taken by Mufti Taqi has more favourable implication against the view taken by collective ijtihad. The study found that Mufti Taqi takes into consideration hajah (needs), 'urf (customary practices) and socio-ethical standards while concluding an opinion on the sale. It was found that Mufti Taqi contributed to the concept of contract operationalization by defining concepts related to performance and status of the contract, highlighting cases of quasi contracts, rulings of disbursement to charity and special legal procedures (e.g., taking oath). The study offers few recommendations like conducting impact analysis of the Shari'ah heterogeneity, removing any cases of difference of opinion among the same body, issuance of standards or guidelines on the general rulings of the sale contract, relooking at translation of some SharīꜤah terminology and conducting similar studies on the contribution of Mufti Taqi in the Ijara, Musharaka and Muḍāraba contracts.