Question:-
One person invested his wealth with another person on a Mudhaarabah basis, on condition that whatever profit is accrued will be split equally between both parties. However, a condition was attached that the investor (Rabb-ul-Maal) will also have to work together with the investment agent (Mudhaarib.) Will the Mudhaarabah agreement be valid or not in this instance? If the agreement is not valid, then what is the manner of correcting it?
Answer:-
A Mudhaarabah partnership is such a partnership where one party engages in work and the other party provides the finance. In the queried scenario, the Mudhaarabah agreement will be considered as Faasid and Baatil (null and void.) The transaction will be invalid because of attaching the said condition, that the investor (Rabb-ul-Maal) is required to work for the investment.
It is also not permitted to hire the investor to work for the partnership as an employee that will be remunerated, as such an action causes the partnership to become corrupt.
References:- Sharhul Majallah Page.331 Vol4 – Maaddaah no.141; Fataawa Hindiyyah Pg.286 Vol.4 Fataawa Darul Uloom Zakariyya Pg.733 Vol.5
However, if the investor voluntarily assists the investment agent then there is no harm in doing so, as Takhliya (total freedom and independence) is found in this instance between the Mudhaarib and Rabb-ul-Maal.
References:- Hidaayah Pg.268 Vol.3; Fataawa Darul Uloom Zakariyya Pg.732 Vol.5
ALLAH TA’ALA KNOWS BEST!
ANSWERED BY:-
Mufti Mohammed Desai
Date:- 28 Rabi-ul-Awwal 1443 / 04 November 2021
