Respected Mufti Sahib,
I (Ayaz Taimuri) have invested Rupees Five Lac in a Business investment of Sales and Purchase of Computerized Embroidery Machines, with my Brother-in-Law (Raheel Sabahat) on the following Business Investment terms & conditions in writing on a Stamp paper on 1st Day of May, 2012 duly attested by Notary Public.
On the execution of this investment agreement, Mr. Raheel Sabahta (Investee) only one deal of embroidery sale and adjusted his profit Rs. 17,000/- in my total investment of Rs. 483.000/- which makes total Rs. 500,000/- and called the TOTAL INVESTMENT of this agreement.
After his adjustment, and according to Mr. Raheel Sabahat (Investee) has no deal of Embroidery Sale and purchase till to-date.
Kindly note, The Net Profits of the partnership shall be divided between the partners as mentioned below and the Net Losses shall be borne by the (INVESTEE) Raheel Sabaht only.
Kindly also note, I have not received till to-date any kind of Profit in my Account against this investment agreement from 1st May, 2012 till to-date.
I have been regularly receiving Rs. 3,000/- per months from the Investee (Raheel Sabahat) on the agreed terms and this amount mutually agreed me and Raheel Sabahat shall be adjusted against my profit amounts ONLY and not adjusted my Total Investment amount and till to-date I have received Rs. 57,000/- from INVESTEE Raheel Sabahat and clearly mentioned in this agreement that in case of no profit in my account at the time of termination/expiry of this investment agreement then this monthly payment amounts is borne by Raheel Sabahat (Investee) as terms of Net losses.
I wish to discontinue/terminate the Agreement, according to the Clause 2 of the Agreement mentioned below.
Keeping in mind the above terms and conditions which was mutually agreed and duly singed both of us., kindly read my Investment Agreement each and every clause very carefully and issue your FATWA in Islamic Point of View about Rs. 57,000/- amount (Rs. 3,000/= X 19 Months) which I have received from Raheel Sabahat (INVESTEE), that this amount is HALAL for me and my Family or SOOD.
Your kind reply/Fatwa will be very much appreciated.
Aaap ka Bhai,
TERMS AND CONDITIONS
Both the parties involved in this contract are partners in investment where Ayaz Taimuri (Investor) invests in the business of the Raheel Sabahat (Investee), on the following terms and conditions hereinafter appearing:-
1) PAYMENT DETAILS:
The Investor (Ayaz Taimuri) has invested on the terms as mentioned in clause iii under Profit Participation to the Investee (Raheel Sabahat) Business a sum of Rs. 483,000/- (Rupees Four Lac Eighty Three Thousand Only) vide Cheque No. 0302248 dated 17th May, 2012 drawn in Meezan Bank, PNSC Branch, Karachi for Rs. 83,000/- (Rupees Eighty Three Thousand Only) as well as Cash amount of Rs. 400,000/- (Rupees Four Lac Only), the receipt whereof is hereby admitted and acknowledged.
2) PERIOD OF AGREEMENT:
This Agreement shall remain into effect for 24 months, commencing from 1st May, 2012 and renewable for a further term, at the option of the INVESTOR (Ayaz Taimuri)). However, the Investment Agreement can be terminated by the INVESTOR at any time during the Investment term or any renewed term by giving Two Month’s notice to the INVESTEE (Raheel Sabahat). And in case of termination notice, the Investee (Raheel Sabahat) will continue pay the Monthly Fixed Amount of Rs. 3,000/-
Any change towards the duration of this agreement should be done with a new agreement and automatically this Agreement is invalid.
3) REPAYMENT OF INVESTMENT PERCENTAGE SHARE OF PROFIT:
In consideration of the Investor making that financial contribution “Monetary” The Investee (Mr. Raheel Sabahat) shall pay or cause to be paid to the Investor (Ayaz Taimuri) the following:-
a) REPAYMENT OF INVESTMENT:
Shall in any case the INVESTOR (Ayaz Taimuri) want to reimburse the investment amount or terminate the Agreement the INVESTEE (Raheel Sabahat) will pay back the invested amount Rs. 500,000 (Rupees Five Hundred Thousand Only) together with Profits if any within the period as specified above.
INVESTOR (Ayaz Taimuri) has legally right to terminate this Business Investment agreement at any time giving Only Two Months Notice and in that case if Investor (Ayaz Taimuri) has no profit balance in their income account, the Monthly Fixed Amount of Rs. 3,000/- paid by the Investee (Raheel Sabahat) to the Investor (Ayaz Taimuri) from the executive of this agreement till the termination/expiry of this agreement shall be borne by the Investee (Raheel Sabahat) as Net Losses and clearly mentioned in clause b (i), (ii) and (iii).
b) PROFIT PARTICIPATION
The Investor (Ayaz Taimuri) has invested Rs. 500,000/- (Rupees Five Hundred Thousand Only) on the Investee (Raheel Sabahat) Business, the Investee (Raheel Sabahat) do hereby agree to pay the following to the INVESTOR (Ayaz Taimuri):-
(i) That on the execution of this agreement, the Investee (Raheel Sabahat) shall be paid Rs. 3,000/- (Rupees Three Thousand Only) to the Investor (Ayaz Taimuri regularly by the 10th of each due month. The monthly fixed amount shall be deducted by the Investee (Raheel Sabahat) from the INVESTOR (AYAZ TAIMURI) PROFIT SHARE ONLY at the time of closing of the Accounts i.e. after every six month.
(ii) The Net Profits of the partnership shall be divided between the partners as mentioned below and the Net Losses shall be borne by the INVESTEE (Raheel Sabahat) only. A separate income account shall be maintained for each partner. Partnership profits shall be charged or credited to the separate income account of each partner.
AYAZ TAIMURI (INVESTOR)…………….. 25% of the Net Profit
RAHEEL SABAHAT (INVESTEE) …………. 75% of the Net Profit/Loss
(iii) Investee (Raheel Sabahat) has agreed to bear Rs. 17,000/- and subsequently this amount will be accumulated with the Investor (Ayaz Taimuri) amount of Rs. 483,000/-, which makes total Rs. 500,000/- and called the TOTAL INVESTMENT of this agreement, which will be paid by the Investee (Raheel Sabahat) to the Investor (Ayaz Taimuri) at the time of Terminate/Expiry of this Investment Agreement.
Wa Alaikumus Salam Wa Rahmatullah,
The basic clause of your agreement violate a basic principle of partnership. It is stated in your question that the loss will solely be born by the investor alone while the loss must also be shared by all parties as is the profit. The ratio of loss and profit can be mutually agreed upon by all parties but the loss ratio must not exceed the investment ratio of a partner.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America