I entered into a
mudarabah contract with a friend.

He purchased a vehicle
which required repairs.

While repairing he
realized that the vehicle's paperwork was not in order.

So he decided to
return the vehicle to orignal owner.

Before the orignal
owner could return the money,he (mudarib) told me that he will replace the
vehicle with another(which he purchased with his personal money) and will give
me a profit after the second vehicle is sold.

Is the above in order
or not?

Answer: 

Mudarabah is a type of partnership where one partner injects the capital whilst the other partner contributes by means of his labour and expertise and consequently both the Rabb-ul-Maal and Mudaarib become worthy of sharing the profits according to the percentages agreed upon by both partners.

If the partnership hasn’t yet accrued any profits but happens to suffer a loss (without there being any transgression from the side of the Mudaarib) then such losses will be solely for the Rabb-ul-Maal’s account whilst the Mudaarib will be free from any liability.

In the queried scenario, the vehicle purchased on the basis of Mudaarabah was not worthy of being sold further due to inadequate paperwork, hence it being returned to the seller. It is only when the Mudaarib receives a refund from the seller that he may continue trading further for the Mudaarabah partnership with the proviso that the Mudaarabah was not restricted or confined to any particular time frame or any clauses which could restrict the Mudaarib from transacting further.

If the Mudaarib happens to replace the said vehicle with his own funds and subsequently manages to sell the vehicle and acquire profits then this transaction will not form part of Mudaarabah partnership which both parties entered into or enacted. This deal will be considered as the Mudaarib’s personal transaction which he carried out from his side and will therefore be solely liable for any losses if incurred and entitled to all profits accrued.

In conclusion, the Mudaarib purchasing another vehicle in lieu of the initial vehicle that was purchased for the Mudaarabah partnership; and then deeming it to be part of the existing Mudharabah contract, will not be correct.

And Allah Ta'aala knows best!

ANSWERED BY: Mufti Mohammed Desai

CHECKED AND APPROVED BY:  Mufti Muhammed Saeed Motara Saheb D.B 

Date: 08 Rabi-ul-Awwal 1440 English Date: 16 November 2018