Social funds

Q: We have a special fund for the benefit of its subscribers, but it involves complicated conditions. Such conditions are as follows: The subscriber has to pay one thousand and two hundred Riyals by the end of each year, at a rate of one hundred Riyals per month. Should there be any delay in payment, the subscriber will have to pay a hundred Riyals as a penalty in addition to the delayed sum for six months. (If a subscriber declines to pay) they will be considered to have withdrawn from the fund. Also, they will not be entitled to any sum of money, and their balance in the fund will be confiscated (Part No. 11; Page No. 225) in the interest of the other members of the fund. Should they desire to reactivate their membership, they will have to pay the delayed sum in double, together with any discrepancies that might have taken place during their withdrawal period or when stopping the payment. It is to be noted that some subscribers have sufficient incomes, while some others receive small salaries not exceeding one thousand and five hundred Riyals [per month], and some others are unemployed. This makes the latter delay payment and consequently, which results in their being considered to have withdrawn, with their balances being confiscated for the benefit of other fund members.Provide us with a fatwa in this concern, may Allah reward you, noting that I have sought to come to an understanding with the secretary of the fund but to no effect. The responsible people insist on carrying out the penalty clause. I hope that you issue an official fatwa on this penalty clause and the confiscation of the subscriber's rights in this fund. May Allah safeguard you.

A: Reviewing the referred to agreement, it is found that it contains financial penalties double that which the subscriber pays in the first place or deprives them of their dues in the fund, etc. Such penalties are unlawful, because they are against the consent of the subscribers and because it causes hatred and quarrels among the subscribers as is noted. So, such an agreement must be given up.May Allah grant us success. May peace and blessings be upon our Prophet Muhammad, his family and his Companions.