One heir runs family business without consent of remaining heirs
Question:-
An estate has not been settled for a few years now.
The deceased had left behind a few sons and daughters. However, one son ran the business, which was a part of the estate and had not been divided amongst the heirs yet.
He ran the business to the ground, and the business is now at a loss despite the business being fully stocked when the owner passed away. For example, the business had stock worth R1000.00 but now it has no stock, and instead has accrued debts of R500. The property which the business is situated on also belongs to the estate.
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Will his transactions in the running of the business be considered to be as though he was acting on behalf of the estate, thus, all profits will go to the estate, and all losses will be paid for by the estate?
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Or, will this heir be personally liable to pay the estate the value of the business, or the value of its stock?
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Does the son who took control of the business have to pay rent to the estate for utilizing the property?
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Are there any other rulings applicable to this scenario which we need to know of?
Answer:-
1. On the demise of a person the estate should be dissolved as quickly as possible, and the shares of the inheritors distributed amongst the heirs in accordance to the Shari’ee law of succession. Unfortunately, many estates are prolonged and not dissolved immediately, hence resulting in innumerable complications and disputes.
However, it seems from the manner in which your question has been posed to us, that a particular heir (without the consent of the remaining heirs, and without entering into a formal partnership with them) ran the business independently (from his side) until the business finally resulted in a loss. The texts of the Fuqaha indicate that if any of the heirs transact in the shares of the remaining heirs (without their consent) and thereby incurs a loss, then the transactor will be liable for the loss incurred. Similarly, the text of Fataawa Hindiyyah indicates that, if any heir independently transacts using the funds of the heirs in a joint estate and accrues profits, then the profits will be purely for the transactor.
However, some of the current day scholars such as Mufti Taqi Uthmaani Saheb Daamat Barkaatuhum, are of the view that the independent transactor will only be entitled to his share of profits in the running business and the remainder of the profits will be for the rest of the heirs (in accordance to their portions of inheritance in the estate). He explains that it is not Halaal for the transactor to keep the total profits for himself, as he utilized the funds of other heirs without their consent (hence, the profits will be considered as impure wealth which must be given out in Sadaqah). Similarly, Hadrat Mufti Saheb also states that, if the value of the business increases to twice its amount (from the point of demise of the owner), as a result of the efforts put in by the one heir, then the business should be distributed according to the current value (which is double its value in our example) amongst the heirs. [Re:- Contemporary Fataawa of Mufti Taqi Uthmani Saheb D.B]
لا يجوز لاحد ان يتصرف في ملك غيره بلا اذنه او وكالته او ولاية عليه وان فعل كان ضامنا (شرح المجلة رستم باز ص61 ج1 – رقم المادّة 96)
لو تصرف أحد الورثة في التركة المشتركة وربح فالربح للمتصرف وحده، كذا في الفتاوى الغياثية. (الفتاوي الهندية – كتاب الشركة ص346 ج2)
(73 0 1) وَإِذَا بَذَرَ أَحَدُهُمْ حُبُوبَ نَفْسِهِ أَوْ حُبُوبَ غَيْرِهِ بِدُونِ إذْنِ صَاحِبِهِ وَبَذَرَ الْحُبُوبَ الْمُشْتَرَكَةَ فِي الْأَرَاضِيِ الْمَوْرُوثَةِ بِلَا إذْنِ الْمُشَارِكِ فَتَكُونُ الْحَاصِلَاتُ لَهُ خَاصَّةً وَلَا تَكُونُ مُشْتَرَكَةً بَيْنَهُمْ بِمُجَرَّدِ حُصُولِ الزَّرْعِ فِي الْأَرَاضِيِ الْمُشْتَرَكَةِ. اُنْظُرْ الْمَادَّةَ (246 1) . (درر الحكام في شرح المجلة الاحكام ص51 ج3)
لو اجتمع اخوة يعملون في تركة ابيهم ونما المال فهو بينهم ولو اختلفوا في العمل والراي (شامي ص325 ج4 / ص 502 ج6)
ومن غصب ألفا فاشترى بها جارية فباعها بألفين، ثم اشترى بالألفين جارية فباعها بثلاثة آلاف درهم فإنه يتصدق بجميع الربح، وهذا عندهما. وأصله: أن الغاصب أو المودع إذا تصرف في المغصوب أو الوديعة وربح لا يطيب له الربح عندهما (البنياية شرح الهداية ص200 ج11)
In conclusion, the transactions of the heir (that acted independently) cannot be considered as transacting on behalf of the remaining heirs, since the remaining heirs had not consented and approved of it. He will therefore be liable if he incurs a loss in the business.
2. If the fixture and fittings are still available then such fixtures and fittings will belong to the heirs in accordance to their portions of inheritance. These may be sold and the funds distributed amongst the heirs, or the heirs may distribute the fixtures and fittings amongst themselves. The heir that acted independently will be liable to replace the stock that was sold, or pay the market value of the goods (on the day he took possession of the business) if similar stock is no longer available in the market. Similarly, if any items were destroyed whilst running the business, then he will be liable to pay the market value of such items (as explained above) if the same item cannot be replaced.
ومن غصب أرضا أو حيوانا فتلف عنده ضمن قيمته يوم غصبه لا يوم تلف—-. ومن غصب شيئا من المثليات والموزونات فتلف عنده وجب عليه رد مثله ولا تلزمه قيمته يوم غصبه. (البنياية شرح الهداية ص184 ج11)
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A rental becomes payable when there is a rental agreement between the landlord and the tenant. If, in this instance, there was no agreement between the heirs and this particular heir, he cannot be held liable to pay any past rentals.
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The main aspects pertaining to the inheritance of the business has been covered above.
ALLAH TA’ALA KNOWS BEST!
ANSWERED BY:
Mufti Mohammed Desai
Date: 24 Rajab 1443 / 26 February 2022