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Cash Waqfs in India

We have seen in the earlier lessons, how an Indian jurist-scholar A. Al-Ma’mun Suhrawardy had visited Istanbul to study Ottoman jurisprudence concerning cash waqfs. His Article, which was published in the Journal of the Royal Asiatic Society of Bengal in the year 1911, appears to have been most influential. For, the Mussalman Waqf Validating Act of 1913 has sanctioned these waqfs and put an end to the conflict previously prevailing.

In most cases in India, a combination of Imam Shafii’s and Hanafi Imam Muhammad al-Shaybani’s principles is followed and the waqf of movables is held to be valid subject to custom. In general, a property, which satisfies the following conditions, can be endowed:


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  1. The property must be tangible property (mal)

  2. The property must be capable of being used without being consumed (Shafi’i position).

According to Suhrawardy, movables include cash, money shares in companies, securities, stock, etc. The objections of some of the Hanafi scholars notwithstanding, it came to be recognised that the waqf of everything would be valid providing there is custom in any particular locality. Concerning the validity of the waqf of movables in India, there was a conflict before the passing of the Waqf Validating Act of 1913. Indeed, the High Courts of Madras, Bombay, and Calcutta had ruled against the waqf of movables, declaring them void. The Privy Council had left the question undecided. The situation was clarified by the Waqf Validating Act of 1913, which permitted a waqf of “any property” including the movables i.e.; shares in joint stock companies, notes and even cash.

The progress towards this stage took the following route: in Abu Sayid v Baker Ali case <(1901) ILR 24 A11 190> it was said that a waqf even of coins or shares in a joint stock company was not invalid. Thus, this 1901 case and the others from 1907-1909 were in conflict. The situation was clarified and finalised by the Mussalman Waqf Validating Act of 1913. Section 2i of this act is very wide and includes every kind of property mentioned above.

Section 3 of the Central Waqf Act of 1954 also confirms the foundation of a waqf by any type of property whether movable or immovable. It has been held judicially that even the government promissory notes can be endowed. Finally, in the Mirza Yakub v Mirza Rasul Baig case, the waqf of cash money was held as valid and in the Abdulhamid v Fateh Muhammad case it was held in Lahore, Pakistan that a waqf of cash will be valid provided the fund was not intended to be consumed.

After the passing of the Mussalman Waqf Validating Act of 1913, Indian courts declared waqf of any property valid. In the majority of cases the courts have treated endowments of movable property, government promissory notes and shares in joint-stock companies and cash as valid. But as late as 1947, in the Ghulam Mohiuddin v Hafiz Abdulrashid case the Allahabad High Court took a different view and held that the waqf of money decree is not valid. But it was further decreed that if there was a custom to the contrary, then such a waqf would be valid (Qureshi, 1990: 76). Thus, the Allahabad court preferred to adopt the strict Hanafi reasoning and reach the same result. For, obviously, establishment of cash waqfs was the prevailing custom in India, as all the other cases mentioned above would indicate.

The following case should illustrate how a Shiite cash waqf operates in India. Muhammad Ali Shah, a Nawab Ruler, built in Lucknow, the Husainabad, an imambarah in the 1850s. An imambarah is a Shiite building erected as a meeting place of the devoted to the rememberence of the events that took place in Karbala. The Husainabad endowment had a yearly income of Rs.157,606. The Rs. 48,000 of that sum was cash. Thus we are talking about a hybrid real estate/cash waqf. This Rs. 48,000 was the interest on a loan, which the English had extracted from Muhammad Ali Shah and then converted into East India Company stock.

This annual revenue was spent for no less than 12 different charitable purposes. The bulk of the funds were earmarked for the maintenance of the buildings (monsoon ruined all buildings, only the stone buildings could survive). The salaries of the endowment’s staff were another major source of expenditure. The staff consisted of religious functionaries as well as the cleaners, the watchmen, etc. Shiite ceremonies commemorating the events in Karbala and the provision of food in these elaborate ceremonies constituted another major expense item.

The Muharram ceremonies are still financed by the endowment. Since the Nawabs supported about 70,000 people, the number of pensioners is quite large (Kozlowski, 1985: 28-30). The numbers of these beneficiaries and the rupee’s decline has led to a massive reduction in the amounts distributed. The poor “nawabzadahs” who come along every month to collect their stipends remind us of one of the dangers facing cash waqfs that unless the corpus as well as the returns it generates are systematically reinvested, changing economic conditions will diminish the income of an endowment.

According to the Central Waqf Act of 1954, any person who wishes to establish a new cash or real estate waqf is obliged to register it with the State Waqf Board. There are registration fees to be paid and the waqf deed must be provided. If the deed has been lost, approximate information is provided. The Board demands to know the following from each newly registered waqf:

  1. Number and date of registration

  2. Name and address of the waqf

  3. Particulars of waqf properties a. Immovables:

    i) Location ii) Area
    iii) Value
    iv) Details of superstructure if any b. Movables
    v) Description of the movables; whether government securities or bonds, etc. vi) Face value
    vii) Other details
  4. Particulars of annuity and grants received from other sources or the government

  5. Estimated income and expenditure

Another case, CWT v. Trustees of H.E.H. Nizam’s Family Trust is interesting from several perspectives. This case pertained to a huge cash waqf established by the late Nizam with a capital of rupees nine crores. The corpus was divided into 175 equal units. Out of which income;

  1. 5 units was allocated to a reserve fund,

  2. 3.5 units to a Family Trust Expenses Fund,

  3. 166.5 units were allocated among the relatives.

Each beneficiary was entitled to only the income of the units allocated to him during his or her lifetime. The reason why this waqf ended up being a court case is that the Income Tax Authority demanded that the mutawalli pay income tax. The conflict between the income tax collector and the beneficiaries lasted for many years and the case was finally brought to the Supreme Court. We will refer to the complicated problem of the Indian waqfs’ tax responsibilities below.

 

Source: Murat Cizakca, A History of Philanthropic Foundations: The Islamic World From the Seventh Century to the Present. Republished with permission.