Islamic Rulings on Trade
Mufti Abu Muhammad Ali Asghar Attari Madani
1. Insurance Money of the Deceased
Q: What do the scholars of Islam say about the following matter: one of our relatives passed away, and he had taken out an insurance policy. 4 million rupees were paid out under his policy. Will the money be distributed amongst the inheritors, or does it only belong to the inheritor who was nominated by the deceased to make the insurance claim?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: The money received from an insurance company is of two types: the amount deposited by the policyholder and the additional sum given by the insurance company. The latter is interest. According to Islamic law, this money deemed interest should be given to the poor without the intention of gaining reward. The amount deposited by the deceased will be distributed amongst all the inheritors according to Islamic inheritance law.
When an insurance policy designates an individual as the beneficiary, it is important to understand that their role is not that of an owner but a trustee with the sole responsibility of claiming the insurance payout and distributing it appropriately among the inheritors according to Islamic inheritance laws. If the reason of choosing someone is not to make him the owner, then the nominated person will not own the sum of money. Instead, it will be distributed amongst the inheritors according to the shares stipulated by Islamic law.
Ownership of a possession does not transfer to another person unless it has been authorised by the owner himself. Just as it is stated in Radd al-Muḥtār:
ان ملك الانسان لاينقل الى الغير بدون تمليكه
A possession does not enter the ownership of someone else without the transferring of ownership.[1]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
2. The Possession of the Buyer entering the Possession of the Driver
Q: What do the scholars of Islam say about the following matter: after purchasing goods, the buyer asks the seller to arrange for the goods to be loaded onto a car, and the buyer also takes responsibility to pay for the car. When the delivery company takes possession of the goods, will this be regarded as the buyer taking possession?
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: If the seller arranges for the goods to be loaded onto a car upon the request of the buyer, the company taking possession of the buyer’s goods is like the buyer taking possession of the goods. In this scenario, the company is taking hold of the goods as a representative [wakil] of the buyer. The representative taking possession here is considered to be the client taking possession. The reason why the delivery driver is considered a representative of the buyer is because he is the buyer’s employee and working for him, which is why he will seek payment from the buyer too.
It is mentioned in Fatāwā ʿĀlamgīri:
اذا قال المشتری للبائع ابعث الی ابنی، و استاجر البائع رجلا یحملہ الی ابنہ، فھذا لیس بقبض والاجر علی البائع الا ان یقول: استاجر علیّ من یحملہ، فقبض الاجیر یکون قبض المشتری ان صدقه انه استأجر و دفع اِليه
If the buyer told the seller to send the goods to his son, and the seller hired a person to send the goods to the buyer’s son, this is not a form of taking possession. The seller will pay the employee’s wages. However, if the buyer tells the seller to hire someone on his behalf to deliver the goods, the employee taking possession will be regarded as the buyer taking possession. This is the case if he affirms that the man was made an employee before he was sent with the goods.[2]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
3. Ruling of Previous Zakat if Debt is Written Off
Q: What do the scholars of Islam say about the following matter: in 2017, Zayd gave Bakr and Khalid a loan of £100,000 each, which was to be repaid in three years. However, three years passed and they were unable to repay the loan. Six years have passed, and Bakr is still unable to repay the loan and is considered poor according to Islamic law. Khalid is wealthy now and can pay it back, but Zayd has waived their debts. Zayd did not pay zakat on that money during those six years. Is it necessary for Zayd to pay zakat on that money for the previous six years? Note that Zayd has possessed wealth beyond the threshold of nisab and has paid zakat on his other wealth for many years.
اَلْجَوَابُ بِعَوْنِ الْمَلِکِ الْوَھَّابِ اَللّٰھُمَّ ھِدَایَۃَ الْحَقِّ وَالصَّوَابِ
A: The money that Zayd gave to Bakr and Khalid does not have to be returned. However, it was necessary upon them to repay the loan for six years, and Zayd did not pay zakat on this amount during that time. Now that the debts are forgiven, what is the ruling regarding the zakat for the previous six years?
In this scenario, it is not necessary for Zayd to pay zakat on any of the money he gave to Bakr. Forgiving the debt of a poor debtor renders the wealth destroyed, and it is not necessary to pay zakat upon the wealth that is destroyed after zakat becomes obligatory. However, it is necessary for Zayd to pay zakat for the previous six years on the money he gave to Khalid. If the debtor is rich, forgiving his debt is to destroy your own wealth and, from one aspect, it is to spend your wealth. The wealth that is spent after zakat becomes obligatory does not nullify the zakat that is owed for the previous years.
The erudite Hanafi jurist, Muftī Amjad ꜤAlī al-AꜤẓamī رَحْمَةُ الـلّٰـهِ عَلَيْه writes:
After the passing of one ˹lunar˺ year, if the one who possesses wealth beyond the nisab threshold destroys his own wealth, the obligation of zakat does not become void. For example, if an animal dies because it was not given food and water, zakat must still be paid for it. Likewise, if a wealthy man borrowed money from him, and he forgave the debt after a year, this is a form of destroying wealth. Therefore, he must pay zakat, but if he forgives a poor debtor, he does not have to pay zakat.[3]
وَاللہُ اَعْلَمُ عَزَّوَجَلَّ وَ رَسُوْلُہٗ اَعْلَم صلَّی اللہ علیہ واٰلہٖ وسلَّم
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