Pak. Govt. asks SC to suspend verdict on interest-free economy

By B. Muralidhar Reddy

ISLAMABAD, JUNE 12. The military Government in Pakistan has urged the Supreme Court to suspend the judgment on implementation of an ``interest-free'' economy by July 1, 2001, on the plea that ushering in of what is known as ``riba-free economy'' could lead to grave consequences in the absence of adequate preparations.

The Attorney-General of Pakistan, Mr. Aziz A. Munshi, made the plea before the Appellate Bench of the Supreme Court on Monday when a case filed by a nationalised bank seeking suspension of the judgment came up for hearing.

The bench, however, chose not to hear the case at the present juncture on the plea that the Shariat Bench was not properly constituted. When the complainant made a case for fixing the next hearing at an early date, the court said it was the duty of the Government to fill the vacant post of a judge from among the ulemma.

Interestingly, in his brief presentation before the court, the Attorney General said that if the judgment was not suspended, there might arise the need for invocation of the ``doctrine of state necessity''. It was under this law that the apex court had validated the October 1999 military coup and empowered Gen. Musharraf to govern for three years. The Musharraf Government is in a fix over the issue of implementation of the verdict on riba- free economy. Actually, it has little option on the subject. It faces a dilemma not only on account of the court verdict but also because of the growing pressure from the powerful religious lobby campaigning for introduction of Islamic laws in all spheres of society.

In recent weeks and months, there have been threats galore by extremist religious groups to lay siege to the capital if their demand for Islamisation was not accepted. However, the harsh economic ground realities have forced the Army to tread cautiously. Either way, it is a no-win situation.

The military Government is required to switch over to the new form of banking and trading system as per the December 1999 judgment of the Shariat Appellate Bench of the Supreme Court. The court in its verdict had directed the Government to switch over to the interest-free economy regime by July 1, 2001.

There have been statements galore, from the mandarins of the military regime, particularly the Religious Affairs Minister, Mr. Mahmood Ahmad, promising faithful implementation of the judgment within the deadline period.

No doubt, the Government, as per the directive of the apex court, has constituted a number of high-level committees to recommend ways and means to switch over with minimum possible adverse impact on the economy. All reports suggest that all the Government committees and commissions, constituted for the purpose, put together have made no progress. The issue is so complex and complicated that there is total confusion about the way forward.

The 10-year restriction ended in 1991 and in response to a clutch of petitions from religious organisations the Shariat Court in 1992 declared that accepting interest in any form was un-Islamic. The issue then went to Pakistan's highest appellate court and in 1999 it upheld the Shariat Court verdict outlawing interest in any form and called by whatever name. The court laid down elaborate guidelines for a completely interest-free economy by June 2001.

With one stroke of pen the apex court declared as un- Islamic all transactions that included mark-up, murabaha, bai' muajjal (deferred sale) and so-called interest free modes in so far as elements of riba (usury and interest) have crept into them. ``Any amount, big or small, over and above the principal in a loan or barter transaction, whether obtained for consumption or for commercial or productive activity, is prohibited by the Holy Quaran'', the Shariat Appellate Bench held unanimously.

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