ISSN 1992-5018

ISLAMABAD
LAW REVIEW
Quarterly Research Journal of Faculty of Shariah& Law,
International Islamic University, Islamabad
Volume 3, Number 1&2, Spring/Summer 2019
 ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 91

Council of Islamic Ideology on Transfer of

Property Act, 1882: A Critical Study

Naureen Akhtar

Abstract
This paper aims to investigate the role of a constitutional
Institution, Council of Islamic Ideology, in the process of
Islamization of laws in Pakistan through its various
reports on different statutory laws. To evaluate the
contribution of CII in the process of Islamization of Laws
in Pakistan, this study sought to conduct an analytical
study of 14th report of CII on Transfer of Property Act,
1882 from Sharīʻah and State law perspectives to
spotlight the research gaps in the work of CII. The paper
finds that the work of CII lacks in many respects, for
instance, sometimes the report lacks in understanding
the position of statute on point under discussion and
sometimes it lacks in elaborating the position of
Sharīʻah. Moreover, sometimes it lacks in making
recommendations which may address Sharīʻah issues in
enactments. This work focuses on the need of further
research regarding the reports of CII. At the end, this
work proposes a strategy for future endeavors to cover
up the flaws in the reports of CII. Furthermore, this
study suggests recommendations for Islamization of
TOP Act, 1882. The work submits that, this study is an
attempt to give some recommendations to make the role
of CII to be more effective that may respond to the
present day needs.

Key Words: Islamization, Council of Islamic Ideology,

Sharīʻah, Statute, the Transfer of Property Act, 1882.

1. Introduction

As the colony of the English Empire, Pakistan inherited many

English laws.1 One of such laws is the Transfer of Property Act,


Assistant Professor of Law University Gillani Law College
Bahauddin Zakariya University, Multan. The Author can be accessed at:
naureen.akhtar@bzu.edu.pk.
1https://www.dawn.com/news/840172/three-legal-systems,

accessed October 29, 2017.

92 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

1882 which was the first statutory law on certain important issues
related to property law. The laws made by the Britain had the
roots in Common Legal System.2 Article 2 of Constitution of
Pakistan, 1973 provides that Islam shall be the state religion of
Pakistan.3 In addition to Article 2, Article 227 of the COP, 1973
lays down another responsibility on the State of Pakistan to bring
all the existing laws within the conformity of the teachings of the
Holy Qur‟ān and the sunnah.4

Article 227 of the COP, 1973 provides two important

principles i.e. the State shall be responsible to bring all existing
laws in conformity with injunctions of Islam as enunciated in the
Holy Qur‟ān and sunnah and no law shall be enacted that is
repugnant to injunctions of Islam as laid down in the Holy Qur‟ān
and the sunnah. 5 In the pursuance of first responsibility, Federal
Shariat Court (FSC) was constituted under Chapter 3-A of Part VII
of the COP, 1973.6 FSC was entrusted with the task of examination
of existing laws in the light of injunctions of Islam as laid down in
the Holy Qur‟ān and the sunnah under Article 203-D (1) of the
COP, 1973. 7 In pursuance of second responsibility, the CII8 was
constituted under Article 228 of the COP, 1973. CII was entrusted
with the examination of existing laws in the light of teachings of
Islamic law under Article 230 (1) (c) of the COP, 1973.9

2 Ibid.
3 Manzoor Ahmad, The Constitution of the Islamic Republic of Pakistan,
1973 (Lahore: Kausar Law Books Publishers, 2011), 17.
4 Ibid., 653.
5 Ibid.
6 The provisions of Chapter 3-A of Part VII were inserted in the

Constitution of Pakistan, 1973 by Constitution (Amendment) Order, 1980

(President‟s Order. No. 1 of 1980).
7 Ahmad, 599, 604.
8 The Council of Islamic Ideology was initially proposed in the first

Constitution of Pakistan in 1956 with the name of “Islamic Commission.”

Article 198 (1)-(4) of the Constitution of Pakistan, 1956 deals with the
“Islamic Commission.” On August 1, 1962 the Council of Islamic
Ideology was established as Advisory Council of Islamic Ideology under
Article 199 of the Constitution of Pakistan, 1962. Advisory Council of
Islamic Ideology was re-designated as Council of Islamic Ideology under
Article 228 of the Constitution of Pakistan, 1973. This information is
accessed from http://cii.gov.pk/aboutcii/history.aspx.
9 Ahmad, 654.
 ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 93

This work is an attempt to analyze the main legislation on

transfer of property, i.e. TOP Act, 1882 which provides legal rules
on contracts of sale of immoveable, mortgage, lease, exchange, gift
and transfer of actionable claims, from Sharīʻah and statutory law
viewpoints. In this paper certain issues have been selected in each
transaction to indicate the extent to which the legal rules in
statutory law contain Sharīʻah objections and recommendations
have been made to make them Sharīʻah compliant. The following
discussion is a simplified presentation of the research on the topic.

2. Scheme of Transfer of Property Act, 1882

The TOP Act, 1882 can be divided into three parts for the sake
of convenience. The first part comprises of introductory
provisions of law. The second part consists of legal rules which
are applicable to various financial transactions regarding
moveable and immoveable properties, respectively, in general and
also contains some exceptions to these general rules. The third
part consists of statutory provisions on contracts of sale of
immoveable property, mortgage, lease, exchange, gift and transfer
of actionable claims.

3. Analytical Study of 14th Report of CII on Transfer of

Property Act, 1882

The prime purpose of this paper is to conduct the analytical

study of Annual Report 1983-1984 of The CII, Pakistan.10 17th
session of The CII was held on 17th to 27th July 1983 in Karachi, on
24th to 27th September 1983 in Islamabad, on 5th to 16th November
1983 in Islamabad and on 24th December 1983 to 2nd January 1984
in Karachi. A full board session was held in order to scrutinize the
law on transfer of property that is the TOP Act, 1882 of Pakistan.
That session was chaired by Justice Dr. Tanzil-ur-Rehman. Critical
Analysis of the law on the Transfer of Property was presented by
Chief Research Officer of the Council Hafiz Muhammad Latif
Saleem. In the light of these valuable comments, the council
prepared a report on the TOP Act, 1882. The Council analyzed
each and every clause of the Act and declared a number of clauses

10The Council of Islamic Ideology, Islamization of Laws, 14th Report on

Transfer of Property Act 1882.
94 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

un-Islamic. Some suggestions have been made by the Council in

order to make changes in the relevant law but the report also
exhibits shortcomings and failed to raise certain important other
objections from Sharīʻah perspective. Although, this report is the
most important source for this study and guides the researcher at
various points, yet there is a need of further research and making
suggestions so that the law can be Sharīʻah based and Sharīʻah
compliant.

Chapter II of The TOP Act, 1882 comprises of 49 sections in

total covering various important legal rules: for instance, legal
rules on void conditions, void transfers, vested and contingent
interests, transfer by ostensible owner, fraudulent transfer and
doctrine of lis-pendens. The 14th report of CII did not evaluate these
49 provisions of TOP Act, 1882 from Sharīʻah perspective. The
report only mentions that the applicability of these provisions is
very vast, covering diverse financial transactions on property
whether moveable or immoveable. Furthermore, the report
mentions that this is not a proper place to investigate the infinite
Sharīʻah objections over these provisions of law. Such an approach
to evaluate the statutory laws from Sharīʻah viewpoint is not up to
standard because the report lacks in Sharīʻah appraisal of major
part of the TOP Act, 1882.

In the proceeding parts of this paper, work of CII regarding

the third part of TOP Act, 1882 is analyzed in the light of Sharīʻah
and law. The loopholes in the report of CII are spotlighted
regarding the understanding of position of state law on various
issues. Moreover, the Sharīʻah objections are raised regarding a
variety of legal rules incorporated in TOP Act, 1882.

4. Contract of Sale of Property in Land

This portion of the paper is dedicated to analyze the legal

status of contract of sale and agreement to sell the property in
land. Section 54 of the TOP Act, 1882 defines contract of sale as:

“A transfer of ownership in exchange for a price paid

or promised or part paid and part promised…a
contract for the sale of immoveable property is a
contract that a sale of such property shall take place
 ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 95

on terms settled between the parties. It does not, of

itself, create any interest in or charge such
property.”11

The above mentioned definition provides with two

transactions i.e. contract of sale where ownership of immoveable
property is transferred absolutely, transferring all the rights in the
property, to the buyer by the seller for price. No rights are left in
the transferor after the conclusion of such a transaction. Contract
of sale of immoveable property is an executed contract.12 Contract
for sale refers to an agreement to sell. In a contract for sale or an
agreement to sell of immoveable property the parties to the
contract agrees that sale of such property will take place in future
but on agreed terms as settled between the parties at present. A
contract for sale or an agreement to sell is an executory contract.13
Therefore, it does not create any interest or right or title of person
regarding the property in question except that it gives him a right
to file a suit for specific performance of an agreement and in
addition he can also claim damages for breach of an agreement. 14
An agreement for sale of immoveable property is not required to
be registered compulsory in accordance with section 17 of
Registration Act 1908.15

From the perspective of Islamic law, an agreement to sell an

immoveable property purports future contract and future contract
is not permissible in Islamic law because it is well settled principle
of Islamic law that transaction cannot be affected at future date.16
Future contract is permissible only where the promise to perform

11 M. Mahmood, The Transfer of Property Act, 1882, 7th ed. (Lahore: Al-
Qanoon Publishers, 2013), 451; Shaukat Mahmood and Nadeem Shaukat,
Transfer of Property Act, 6th ed. (Lahore: Legal Research Center 2013), 319;
Muhammad Naseem Chaudhary, Commentary on The Transfer of Property
Act 1882 (Lahore: Civil & Criminal Law Publications, 2014), 444.
12 Ehtasham Mehmood, The Transfer of Property Act 1882 (Lahore:

Mansoor Book House. n.d), 99.

13 Chaudhary, 487.
14 Ibid., 405.
15 Mahmood and Shaukat, 27.
16 What Sharīʻah Experts Say Futures, Options and Swaps,

International Journal of Islamic Financial Services, Vol. 1, No. 1 (n.d): 1,

accessed January 10, 2017,
http://Islamic-finance.net/journals/journal1/art4.pdf.
96 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

is not binding and also do not linked with other things like down
payment or earnest money.17 If mutual promise is binding on both
parties, it is subject to the general prohibition against the sale of
debt for debt, and is therefore unlawful.18 By no stretch of
imagination, it can be inferred that Sharīʻah preferred spot
transactions instead of deferred ones and put strict limitations to
be observed in cases where counter values in a transaction are
deferred.19

The humble scribe submits and recommends that in order to

exclude an agreement to sell an immoveable property from
general prohibition of sale of debt for debt, section 54 of the TOP
Act, 1882 should be amended in a way that mutual promise in an
agreement to sell must not be linked with anything that suggests a
contract of sale like down payment. The 14th report of CII did not
point out this important and vital difference between the legal
statuses of contract of sale and an agreement to sell.

Moreover, the 14th report did not cite the Sharīʻah objection on
section 56 of TOP Act, 1882. The Sharīʻah issue in legal rule on
marshalling by subsequent purchaser can be addressed easily by
inserting a single phrase, that is, the consent of mortgagee is
mandatory to be obtained while selling the mortgaged property to
a subsequent purchaser. The 14th report of CII on TOP Act, 1882
only pinpoints that statutory law comprising of legal rules on
contract of sale of immoveable property are insufficient to cover
various financial transactions discussed by the manuals of fiqh
under the heading of bayʻ. Such an approach is not satisfactory.
Therefore, efforts should be made by the experts of Sharīʻah and
Law to provide a guideline and framework for the legislators
which could be helpful in bringing a law that is Sharīʻah
compatible on the contract of sale of property in land.

17Muhammad Tahir Mansoori, Sharīʻah Maxims Modern Applications

in Islamic Finance, 1st ed. (Islamabad: Sharīʻah Academy International
Islamic University, Islamabad, 2007), 167.
18 Ibid.
19 Abdur Rahmān b. Muhammad ʻIwaḍ Al-Jazā‟irī, Al-Fiqh ʻalā Al-

Madhāhib ‟l-‟Arbaʻah, (Cairo: Dār Al-Kutb al-ʻIlmīyyah, 2003), 2: 135.

 ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 97

5. Contract of Mortgage

The 14th report of CII on TOP Act, 1882 finds out the following
six issues, from the perspective of Islamic law, inherent in legal
rules embodied in sections 58-105 of TOP Act, 1882:

 The possession of mortgaged property by mortgagor to

the mortgagee is not an essential ingredient for the
validity of contract of mortgage.
 The mortgagee is allowed generally to get benefit from
the mortgaged property.
 The contract of mortgage on property can be made for
an indefinite period of time.
 The right of redemption cannot be exercised before the
date of maturity.
 Partial redemption by any of the owners in a joint
ownership is not allowed generally.
 Further encumbrance can be created on a mortgaged
property.

In the proceeding sections (5.1, 5.2, 5.3, 5.4 and 5.5) of this
work, I will conduct the Sharīʻah appraisal of different kinds of
mortgage as incorporated in section 58 of TPA, 1882.

5.1 Simple Mortgage

The essential ingredients of simple mortgage are that the

mortgagor himself undertakes the personal liability to pay the
mortgage money to the mortgagee. The possession of the
mortgaged property is not delivered to the mortgagee. The
mortgagee is not entrusted with the right of foreclosure. The
mortgagee is entrusted with the right of sale of mortgaged
property in case of failure of repayment of loan or debt on
specified and certain date when it becomes due. The transaction of
simple mortgage is effected through registered document. Two
distinct remedies are available with the mortgagee in case of
simple mortgage. One of these two is suit for money decree and
another is a suit for the sale of the mortgaged property. 20

20 Mahmood, 189.
98 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

TheSharīʻah analysis of simple mortgage reveals that simple

mortgage resembles with a contract of kafālah in a sense that it
involves personal guarantee. In a contract of kafālah personal
guarantee of principal debtor is granted to the creditor by third
person called surety whereas, in a contract of simple mortgage,
the mortgagor undertakes personal liability himself to pay the
mortgage-money to the mortgagee. Therefore, simple mortgage is
a combination of personal guarantee and guarantee in the form of
property apparently.21 The possession of the mortgaged property
is not delivered to the mortgagee in simple mortgage and delivery
of possession of property in a contract of rahn is an essential
ingredient for the making and conclusion of contract of rahn in
Islamic law. It is based on the saying of Allah Almighty in the
Holy Qur‟ān:

“And if you are on a journey, and you find not a

scribe then let there be pledge with possession. And
if in between you one entrusts the other, then let he
whom he trusted deliver his trust and fear Allah
Who is his Lord and conceal not evidence; and
whosoever would conceal evidence, then his heart is
sinful from inside, and Allah knows your deeds.”22

5.2 Mortgage by Conditional Sale

The essential ingredients of mortgage by conditional sale are

that the mortgagor is not personally liable in case of default for
the repayment of loan or debt. The mortgagor ostensibly sells the
mortgaged property to the mortgagee. The mortgagor is
ostensible seller and the mortgagee is ostensible buyer. The
ostensible sale will be converted into absolute sale on the default
of payment of loan or debt. If mortgage money is returned to the
mortgagee (creditor) by the mortgagor (debtor) then mortgagee
will resell the mortgaged property to the mortgagor at the
expiration of stipulated time period against the price being the
loan or debt advanced to him. The mortgagee is bound to resell
the mortgaged property to mortgagor when mortgagor paid the

21This analysis with respect to a contract of simple mortgage that it

is neither a contract of personal guarantee nor a contract of guarantee in
the form of property.
22 Al-Qur‟ān, 2: 283.
 ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 99

mortgaged money to the mortgagee. Suit for foreclosure is

available with the mortgagee in case of default in payment of
mortgaged money to the mortgagee by the mortgagor. The
transaction of mortgage by conditional sale is effected through
registered document. 23

The Sharīʻah analysis of mortgage by conditional sale reveals

that in mortgage by conditional sale two separate and distinct
transactions have been tied together that is not permissible in
Sharīʻah under the pretext of prohibition of Bayʻtain fil Bayʻah
wāḥidah.24 In mortgage by conditional sale it is stipulated in an
agreement that the mortgagee will be the owner of the mortgaged
property in case of default by the mortgagor in payment of
amount of mortgaged-money. In Islamic law, the murtahin does
not have a right to stipulate a condition that he should be the
owner of the asset in case of default. 25 Nevertheless, there is no
prohibition for the murtahin to purchase the mortgaged asset at
market value and take the portion of the value to which he is
entitled.26

5.3. Usufructory Mortgage

The essential ingredients of usufructory mortgage are that the

mortgagor delivers the possession of the mortgaged property to
the mortgagee. The mortgagee is entitled to retain the possession
of the mortgaged property until the payment of mortgaged
money. The mortgagee is also entitled to receive rents and profits
of the mortgaged property and the rents and profits may be
appropriated in lieu of interest or in lieu of principal or in lieu of
principal and interest both as agreed between the mortgagor and
mortgagee in mortgage deed. The mortgagor is entrusted with
right of redemption after the payment of due amount or the due
amount is discharged by appropriation of rents and profits
received in lieu principal and interest. The mortgagee is not

23 Mahmood, 190.
24 The writer developed this idea and compares mortgage by
conditional sale with bayʻtain fī ‟l-bayʻah.
25 Wahbah al- Zuhylī, al-Fiqh Al-ʼIslāmī wa ʼAdillatuhū, (Damishq: Dār

Al-Fikr. n.d), 6: 4209.

26 It was decided in 7 th session of Islamic Fiqh Academy which was

held in Jeddah, Saudi Arabia on 9 th to 14th May, 1992.

100 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

entrusted with the right of sale or foreclosure of the mortgaged

property. 27

The Sharīʻah analysis of usufructory mortgage reveals that in

usufructory mortgage contract of lease and contract of mortgage
have been merged together which is prohibited in Sharīʻah. In
usufructory mortgage two contracts have been concluded
between the mortgagor and mortgagee simultaneously: one is of
contract of lease; and other is of contract of mortgage. In Islamic
law, contract of rahn and contract of ijārah cannot be made
simultaneously with respect to the same property because
contract of ijārah is lāzim contract and therefore, binding while
contract of rahn is lāzim for rāhin and ghayr-lāzim for murtahin,
therefore, non-binding for murtahin. In such a case the contract of
rahn remains intact and contract of ijārah will be cancelled
automatically.28

5.4. English Mortgage

The essential ingredients of English mortgage are that the

mortgagor himself undertakes the personal liability to pay the
mortgage money to the mortgagee. The property is transferred
absolutely to the mortgagee by the mortgagor in English
mortgage. This absolute transfer is subject to the condition that
upon repayment of mortgage money by the mortgagor to the
mortgagee on the specified and certain date the mortgagee will
retransfer the mortgage property to the mortgagor. The
possession of mortgage property is delivered to the mortgagee by
the mortgagor. The mortgagee is entrusted with the right of sale
but not with the right of foreclosure. 29

The Sharīʻah-based analysis of English mortgage reveals that

absolute ownership is transferred to the mortgagee by the
mortgagor and that is in clear contradiction of definition of

27 Mahmood, 127-128; Vepa P. Sarathi, Law of Transfer of Property

(Lucknow: Eastern Book Company, 2000 .), 195-196.
28 Muhammad Burhan Arbouna, “The Combination of Contracts in

Sharīʻah: A Possible Mechanism for product Development in Islamic

Banking and Finance”, Thunderbird International Business Review, Vol. 49,
No. 3 (May-June, 2007): 355.
29 Mahmood, 130; Sarathi, 200.
ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 101

mortgage where an interest is only transferred in specific

immoveable property for the purpose of securing the payment of
loan or debt. Absolute ownership is transferred in case of sale and
not in case of mortgage. Besides this, the proviso is also attached
that the mortgagee will retransfer the mortgage property to the
mortgagor upon the payment of mortgage money. Here it is
similar to buy back transaction (bayʻ al-wafā‟) which is not allowed
in Sharīʻah. Therefore, if English mortgage is considered to be sale
even then it is in violation of the rules of Islamic law for the
transaction of sale. 30

5.5. Mortgage by Deposit of Title-deeds

Mortgage by deposit of title deed is also called as Equitable

Mortgage. In Mortgage by deposit of Title deeds the mortgagor
deposited the title deeds of his property to be mortgaged to the
mortgagee with an intention to form the security for the loan or
debt. 31

The mortgage by deposit of title deeds seems to be Sharīʻah

compliant because it covers the delivery of possession of
mortgaged property in the form of title deeds which amounts to
constructive possession and constructive possession is admitted
by Islamic law. The report declared this type to be un-Islamic.
Hence, the report finding in this regard is not acceptable. The
argument of this work is that CII, in its 14th report, did not analyze
the definition and kinds of mortgage from Sharīʻah viewpoint.
Thus, the Council did not raise Sharīʻah objections in section 58 of
the Transfer of Property Act, 1882. Had the report succeed in
providing the model of mortgage financing in compliance of the
rules of Islamic law, the report would have been more and more
beneficial and advantageous.

30 The writer developed this idea and compares English mortgage

with bayʻ ‟l-wafā.
31 Mahmood, 131; Sarathi, 204.
102 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

6. Contract of Lease

The significant and notable contribution of this report is the

Sharīʻah analysis of legal rules incorporated in section 105 to 117
on a contract of lease of property in land.

6.1 Sharīʻah Issues in Definition of Contract of Lease

Section 105 of the TOP Act, 1882 defines the contract of lease
as:

“A lease of immoveable property is a transfer of

a right to enjoy such property, made for a
certain time, express or implied, or in
perpetuity, in consideration of a price paid or
promised, or of money, a share of crops, service
or any other thing of value, to be rendered
periodically or on specified occasions to the
transferor by the transferee, who accepts the
transfer on such terms.”32

Sharīʻah analysis of definition of contract of lease as

incorporated in section 105 of the TOP Act, 1882 reveals that there
are some important objections from the perspective of Islamic law.
The very first issue which can be raised is that contract of lease
allowed the payment of amount as consideration in the form of a
share of crop and in this sense it resembles with the contract of
muzārʻah and not with the contract of ijārah. Second objection on
definition of contract of lease from the perspective of Islamic law
is that the contract of lease can be made in perpetuity and Islamic
law on contract of ijārah can only be made for a specific or known
time period and it cannot be made for an indefinite period of time.
Third vital objection on definition of contract of lease is that the
consideration paid in a contract of lease can be premium or rent or
both. The price paid in the form of premium is not justified from
Sharīʻah point of view. The payment of price in the form of
premium must be defined clearly and must be clearly stated by

Mehmood, 757; Mahmood and Shaukat, 733; Chaudhary, 793;

32

Mahmood, 224; Sarathi, 306; Nafeer Ahmed Malik, The Transfer of

Property Act, 1882 (Lahore: Punjab Law Book House, 2012), 251-252.
ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 103

the law and such a payment of price as premium is required to be

paid in lieu of security deposit or advance payment.33

6.2 Determination of Lease on the Happening of any Event

Section 111 of the TOP Act, 1882 clause (b) and (c) provides
that a contract of lease of immoveable property elapses by the
happening of an event where determination of contract of lease is
dependent upon the happening of an event. The words used in
section are „happening of any event‟ that shows that it covers
happening of both certain and an uncertain event. 34 From the
perspective of Islamic law, determination of contract of ijārah can
be made conditional upon the happening of some certain event
such as determination of contract of ijārah on the arrival of month
of Ramadan or on the arrival of Eid etc. Determination of contract
of ijārah cannot be made conditional on the happening of an
uncertain event.

6.3 Option to Determine the Contract of Lease

Section 110 of the TOP Act, 1882 provides that where there is
express provision in a contract of lease that it can be terminated
before the expiration of stipulated time period and the lease
agreement does not provide that with whom the lessor or the
lessee such right to terminate is vested then in such a situation the
lessee and not the lessor shall have a right to do so. 35 In Islamic
law the contract of ijārah is a lāzim contract therefore, both the
lessor and lessee should have equal right in such a satiation to
repudiate the contract of lease.

6.4 Payment of rent in Arrear Along with Interest

Section 114 of the TOP Act, 1882 provides that on payment of

rent in arrear along with the interest and cost of the suit by lessee
to the lessor the leased property will be delivered to the lessee as
if the forfeiture had not occurred. This section is allowing the

33 CII, 151.
34 Mehmood, 241.
35 Ibid., 245.
104 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

payment of amount of money as interest by the lessee to the lessor

that is not allowed by Sharīʻah.36

6.5 Original Lease and Under-Lease

The legal rules on contract of lease enunciated in the TOP Act,

1882 provide the right to the lessee to under-lease the leased
property under section 115.37 This rule is not clear about obtaining
of consent of the lessor of original lease by the lessee to lease the
leased property further on the basis of under-lease. Obtaining the
consent of original lessor by lessee to sub-lease must be made
obligatory by introducing amendment in section 115 of the TOP
Act, 1882.

6.6 Exemption of Leases for Agricultural purposes

Section 117 of the TOP Act, 1882 provides that the provisions
of Chapter V of TOP Act, 1882 are not applicable to leases for
agricultural purposes.38 This section is clearly contradicting with
other sections such as 105, 106 and 108 where the law is providing
legal rules regarding leases of agricultural land.

7. Contract of Exchange

In its report, CII declares that the definition of contract of

exchange is Sharīʻah complaint and the Council stated that ʻaqd al-
muqāyaḍah is the counterpart of the contract in question in Islamic
law. Unfortunately, the report did not identify the contradiction
present in the law and also did not identify the gaps or loopholes.
In this section of article, gaps and loopholes in statutory law on
contract of exchange as enunciated in the TOP Act, 1882 from the
Sharīʻah perspective have been identified.

This argument is based on the general prohibition of ribā in

36

Sharīʻah.
37 Mehmood, 246.
38 Ibid., 248.
ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 105

7.1 Definition of Contract of Exchange and issues from the

Sharīʻah perspective

Section 118 of the TOP Act, 1882 provides with the definition
of contract of exchange. Contract of exchange is defined as, “when
two persons mutually transfer the ownership of one thing for the
ownership of another, neither thing nor both things being money
only, the transaction is called an exchange”.39 This definition of
contract of exchange resembles with the contract of muqāyaḍah in
Islamic law. Mutual exchange of ownership of one property with
the ownership of another property and neither of two or one of
these two is money is called as contract of muqāyaḍah.40 Contract of
exchange of things or muqāyaḍah is different from the contract of
sale or bayʻ as in former mutual exchange of ownership of things
takes place while in a contract of sale there is an exchange of a
thing for price.41

The law on contract of exchange can be enriched and can also

be made Sharīʻah compliant by introducing conditions required to
be met for a valid contract of muqāyaḍah. The requisites for a valid
contract of muqāyaḍah include that both the things must be
exchanged mutually and possessed immediately during session of
meeting of the parties to the contract.42 The things exchanged in a
contract of muqāyaḍah must not be among the things, the mutual
exchange of which is prohibited because of presence of ribā ‟l-faḍl43
and the prohibition of ribā ‟l-faḍl is established on the authority of
ḥadīth narrated by ʻUbādah b. Ṣāmit who said:

“The Messenger of Allah (PBUH) said; Gold for gold,

silver for silver, wheat for wheat, barley for barley,
dates for dates, salt for salt, like for like, in equal
weights, from hand to hand. If those species differ,

39 Chaudhary, 963.
40 Mullā Khusraw Muhammad b. Farāmurz b. ʻAlī, al-Durar Al-
Ḥukkām Sharḥ Ghurar Al-Aḥkām, (Beirut: Dār Iḥyāʼ al-Kutub al-
ʻArabīyyah, n.d), 2: 142.
41 Ibid.
42 ʻAlī b. Abī Bakr b. Abdul Jalīl al-Marghinānī, Al-Hidāyah Sharḥ

Bidāyat al-Mubtadī, (Beirut: Dār Ahyāʼ al-Turāth al-ʻArabī, n.d), 5: 109;

Mulla Khusraw, al-Durar Al-Ḥukkām, 1: 348.
43 Al-Marghinānī, 5: 109.
106 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

then sell as you like as long as it is from hand to

hand.”44

The mutual exchange of both things must take place at the

spot or on immediate basis and must not be deferred.45

7.2 Right of Party deprived of thing received in Exchange

Section 119 of TOP Act, 1882 provides the legal rule that if any
party to a contract of exchange is deprived of the thing received
by him under a contract of exchange by reason of defect in the title
of the other person then such other person is liable to him for the
loss caused to him and such a person is entitled with an option for
the return of the thing transferred without consideration.46 The
first part of this section where the party is liable to make the loss
good if other party will suffer from loss owing to his defect in title
is Sharīʻah compliant. The last part of this section is bearing issue
from the Sharīʻah perspective where the person is given an option
to return the thing transferred without consideration in above
mentioned situation. Such a person has also transferred the thing
to other person and that was actually in consideration of the thing
transferred to him by other person. He must exercise the given
option of return of the thing transferred to him and must also
demand another thing in replacement of a defected thing or he
must demand money in consideration of a thing transferred to
other person. Section 114 needs amendment in its second part.

7.3 Rights and Liabilities of Parties

Section 120 of the TOP Act, 1882 provides that in a contract of

exchange the parties to the contract acquires the rights and
liabilities of a seller as to what which he gives and has acquired
the rights and liabilities of buyer as to what he takes.47 This section

Muslim b. al-Ḥijjāj al-Qushayrī, al-Ṣaḥīḥ, Kitāb al-Musāqāt, Bāb al-

44

Ṣarf, Ḥadīth No. 1587.

45 Zain Al-Dī Bin Ibrāhīm Bin Muhammad Ibn Nujaim, Al-Baḥar Al-

Rāʼiq Sharḥ Kanz Al-Daqāʼiq, (Beirut: Dār Al-Kutb Al-Islāmī, n.d), 5: 282.
46 Chaudhary, 973.
47 Ibid., 976.
ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 107

is Sharīʻah compliant and does not violate any injunction of the

Holy Qurʼān and Sunnah.

7.4 Exchange of Money

Section 121 of the Transfer of Property Act, 1882 provides with

a legal rule that, “on an exchange of money, each party thereby
warrants the genuineness of the money given by it”.48 Section 121
is in contradiction with section 118 because section 118 excludes
the exchange of money from the definition of „exchange‟ and
indicates that definition only covers mutual exchange of
commodity with a commodity. In Islamic law distinct legal rules
are applicable on contracts of muqāyaḍah and ṣarf. Contract of ṣarf
in Islamic law means the mutual exchange of money or
currencies.49 Currency exchange contract or bayʻ ‟l-ṣarf is practiced
and permitted by the Holy Prophet (PBUH) but certain conditions
are required to be fulfilled for a valid currency exchange contract
or bayʻ ‟l-ṣarf. These conditions include that both the parties to the
contract must possess the exchanged currency before physical
parting or before the session of meeting ends to avoid ribā ‟l-
nasīʼah.50 Furthermore, equality of quantities is required where
currency of the same genus is exchanged i.e. gold for gold or
silver for silver.51 The currency exchange contract is binding;

48 Ibid.
49 Mansūr b. Yūnus Bin Ṣalāḥ al-Dīn b. Ḥasan b. Idrīs al-Buhūtī, Sharḥ
Muntahī Al-Irādāt (Beirut: ʻĀlim Al-Kutb, n.d), 2: 73; Shamim Roshan
Ara, “Buyuʻ Fāsida”, Minhāj, vol. 8, No. 4 (Lahore: Research Cell, Dyal
Singh Trust Library, 1990), 142; ʻAlā al-Dīn Abū Bakr b. Masʻūd b.
Aḥmad al-Kāsānī, Badāʼiʻ Al-Ṣanāʼiʻ fī Tartīb al-Sharāʼiʻ, (Beirut: Dār Al-
Kutb Al-ʻArabī, 1974), 5: 215; Abū Muhammad Mawffaq al-Dīn
ʻAbdullah b. Aḥmad b. Muhammad b. Qudāmah, Al-Mughnī, (Cairo:
Maktabah Al-Qāhira, 1968), 4: 41.
50 Muhammad b. Yūnus b. Salāḥ Al-Dīn b. Ḥassan Bin Idrīs al-Buhūṭī,

Kashshāf al-Qināʻ ʻan Matn ‟l-‟Iqnāʻ, (Beirut: Dār Al-Kutb Al-ʻIlmīyyah,

n.d), 3: 266; Al-Kāsānī, Badāʼiʻ Al-Ṣanāʼiʻ 5: 215; Ibn Qudāmah, al-Mughnī,
4: 41; Ministry of Awqaf and Islamic Affairs, Kuwait, Al-Mawsū„ah al-
Fiqhīyyah al-Kuwaitiyyah, (Kuwait: Ministry of Awqaf and Islamic Affairs,
1983), 26: 350.
51 Abū Al-Qāsim Muhammad b. Aḥmad b. Jazzī, Al-Qawānīn Al-

Fiqhīyyah (Fās: Maṭbaʻāt Al-Nahḍah, n.d), 166; Ibn Qudāmah, al-Mughnī,

4: 39; Ministry of Awqaf and Islamic Affairs, Al-Mauwsūah Al-Fiqhīyyah,
26: 355.
108 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

therefore it must not contain any option.52 It must be devoid of

options. The trading of currencies must take place immediately
and should avoid deferment.53

The legal rules on mutual exchange of money have been

incorporated in Sharīʻah Standard No. 1 issued by Accounting and
Auditing Organization for Islamic Financial Institutions. It is
permissible to exchange money with money provided that it is
done in compliance with the Sharīʻah rules that both the parties to
the contract must take possession of the counter values before the
parting of the parties to the contract or before the dissolution of
the session. The counter values of the same currency must be of
equal amount. The contract shall not contain any conditional or
deferment clause regarding the delivery of one or both counter
values.54 Currency exchange contract shall not take place on the
forward or future markets.55 Reciprocal possession in a contract of
ṣaraf is the delivery and acceptance of delivery within the session
of the contract on the spot basis.56

8. Contract of Gift

The legal rules on contract of gift are incorporated in the TOP

Act, 1882 in sections 122 to 129. In this section of article at hand,
gaps or loopholes have been identified in the 14th report of CII
which conduct the scrutiny of prevalent law on contract of gift
from Sharīʻah perspective. The report of CII did not draw the
attention of legislators to the point that overall the provisions of
law dealing with contract of gift of property whether moveable or
immoveable are in accordance with Sharīʻah rulings on contract of
hibah.

The report rightly pointed out that the statutory law on

contract of gift lacks in dealing with the following issues; like

52 Al-Buhūtī, 2: 73; Ibn Jazzī, 166; Al-Mauwsū„ah al-Fiqhīyyah, 26: 354.

53 Al-Kāsānī, 5: 219; Ibn Jazzī, , Al-Mauwsū„ah al-Fiqhīyyah, 26: 354-
355.
Sharīʻah Standards for Islamic Financial Institutions, Accounting
54

and Auditing Organization for Islamic Financial Institutions, Standard

No. 1, “Trading in Currencies”, Article 2/1, 5.
55 Ibid.
56 AAOIFI, Standard No. 18, “Possession (Qabḍ), Article 3/7, 330.
ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 109

issue of the validity of contract of gift made in contemplation of

death, legal status of ʻumrā and ruqbā, hibah tafḍīlī, legal status of
contract of hibah in favor of siblings, children, parents and spouse.
It also lacks in providing the legal rule in case the gifted property
is a joint property. Furthermore, the report recommends that
sections from 163 to 180 from 3rd Volume of book titled, Majmūʻah
qawānīn e Islam by Tanzīl ur Rehmān with reference to contract of
gift must be promulgated as an integral part of the statutory law.

9. Transfer of Actionable Claims

The legal rules on Transfer of Actionable Claims are

incorporated in sections 130 to 137 of the Transfer of Property Act,
1882. Council of Islamic Ideology, in its 14th report on the Transfer
of Property Act, 1882, did not evaluate the provisions of this
chapter in detail and only made a declaratory statement that
transfer of actionable claims amounts to contract of agency for
collection of debts. The analysis of Council of Islamic Ideology in
its report is not sufficient and needs further work. This section of
the article is designed to conduct Sharīʻah analysis of definition of
transfers of actionable claims so that the flaws in the report can be
highlighted. Section 130 (1) of the TOP Act, 1882 defines Transfer
of Actionable Claims as:

“The transfer of an actionable claim whether with or

without consideration shall be effected only by the
execution of an instrument in writing signed by the
transferor or his duly authorized agent, shall be
complete and effectual upon the execution of such
instrument, and thereupon all the rights and
remedies of the transferor, whether by way of
damages or otherwise, shall vest in the transferee,
whether such notice of the transfer as in hereinafter
provided be given or not.”57

Section 130 of the TOP Act, 1882 does not provide clearly that
what is meant by „transfer of actionable claim‟. In fact the section

57Mehmood, 945; Mahmood and Shaukat, 987; Chaudhary, 1020; S.

Badar-ul-Hassan, The Transfer of Property Act 1882 (Lahore: Irfan Law
Book House, 1st ed. n.d.), 537; Malik, 308-309; Mahmood, 256.
110 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

reveals only that how the transaction of transfer of actionable

claim can be made effective and complete and insists upon the
execution of an instrument in writing signed by the transferor.
Section 130 states that on execution of an instrument in writing
duly signed by the transferor all the rights and remedies of the
transferor shall vest in the transferee. The transferee of an
actionable claim is entitled to institute a suit or proceeding on his
own name and can do so without seeking the consent of transferor
to do so and without making him a party. The transfer of an
actionable claim can be made with or without consideration.
Section 130 also contains two illustrations. Illustration no 1: A
owes money to B, who transfers the debt to C. B then demands the
debt from A, who pays, B. The payment is valid and C cannot sue
A for the debt. Illustration No. 2: A effects a policy on own life
with an insurance company and assigns it to a bank for securing
the payment of an existing or future debts. If A dies, the bank is
entitled to receive the amount of the policy and can sue on it
without the concurrence of A‟s executor. The CII, in its 14th report,
only declares that transfer of actionable claim involves the transfer
of a claim to a debt or unsecured money by creditor to a third
person and it resembles with the assignment of a right.58 This
analysis of CII is lacking in various aspects that the analysis
conducted by CII did not identify the gaps in the law.

The above quoted two illustrations show that „Transfer of

actionable claim‟ means transfer of payable right or receivable
debt. The first illustration indicates a transaction in which the
claim to a debt is transferred from a creditor to a third person who
is not the debtor of a transferor, it does not amount to ḥawālah and
is called as agency contract for collection of a debt. Apparently the
transaction seems to be within the parameters of Sharīʻah but it
must contain that the consent of debtor, creditor and third person
must be obtained and is mandatory.59 The second illustration
indicates the assignment of a claim to a debt from one creditor to
another creditor. In Islamic law, ḥawālah ‟l-ḥaqq appears to be

CII, 154.
58

The Council of Islamic Ideology did not analyze these provisions

59

of law in the light of Sharīʻah in its 14th report. This work, however,
analyzed these provisions of law in the light of Sharīʻah and discused the
law along with its counterpart concepts in Sharīʻah.
ISLAM. L. REVIEW. [VOL. 3: 1& 2, SPRING/SUMMER, 2019] 111

counterpart of the transaction indicated in second illustration. In

order to make the transaction valid as quoted in second
illustration, the conditions required to be met are those which are
mentioned in a contract of ḥawālah generally. Transfer of debt or
assignment of a debt whereby liability of one debtor is transferred
to another debtor is called as ḥawālah ‟l-dayn. 60 Transfer of a
liability from one debtor to another debtor and transfer of a right
or claim from one creditor to another creditor can be made only
while complying with the rules of contract of ḥawālah. 61

Section 130 of the TPA Act, 1882 needs amendments in various

aspects. The definition needs improvement so that it covers the
transaction itself and not only the modus operandi of it. The section
must be amended to contain clearly the conditions or the
requisites required to make the transfer of actionable claim to be
valid form Sharīʻah viewpoint.

10. Conclusion and Recommendations

In a nutshell, it can be concluded, from the above detailed

analysis of CII 14th report on TOP Act, 1882 that the report
succeeds at few places where it spotlights issues from the Sharīʻah
perspective, for instance, in a contract of mortgage and lease on
property in land. Whereas, the present paper finds that the work
of CII lacks in many respects, for instance, sometimes the report
lacks in understanding the position of statute on point under
discussion, like in case of transfer of actionable claims and
sometimes it lacks in elaborating the position of Sharīʻah like in
case of contract of exchange. Moreover, sometimes it lacks in
making recommendations which may address Sharīʻah issues in
enactments. Furthermore, this study suggests recommendations
for Islamization of TOP Act, 1882. This paper is an attempt to give
some recommendations to make the role of CII more effective in
responding to the present day needs. At the end, this work
proposes a strategy of taking on board the experts on statutory
law so that position of statutory law on point can be made clearly
and later on Sharīʻah analysis may be conducted and
recommendations must be made to make the statutory law

60 Ibid.
61 Al-Jazā‟irī, 3, 250.
112 A CRITICAL ANALYSIS OF THE 14 TH REPORT OF CII

Sharīʻah-based and Sharīʻah compliant. In future endeavors made

in bringing the existing laws to be in compliance of Sharīʻah must
not only declare some provisions of law to be un-Islamic and
rather focus on suggesting reforms in the law.

***********