DEFINITIONAr-Rahn, ormortgage or collateral, is defined in the Islamic jurisprudence as possessions offered as security for a debt so that the debt will be taken from it in case the debtor failed to pay back the due money. Rahn also termed as pawning, mortgage, collateral, charge, lien and pledge. Rahn literally means to detain a thing. Legally, it is the detention of a corporeal property on account of a claim such as a debt which may be satisfied out of that property.

ELEMENTS/PILLARS OF AR-RAHN

1. RAHIN (PLEDGER)A person who gives rahn / the debtor2. MURTAHIN (PLEDGEE)A person who takes rahn / the creditor3. MARHUN (PLEDGED ASSET)Pledged asset, a property to be pledged4. MARHUN BIHThe liability of Rahn 5. SIGHAHIjab (Offer) and Qabul (Acceptance)

LEGITIMACY OF RAHNThe legitimacy of rahn is established form a number of texts from Quran and Sunnah

From Quran: If you are on journey and cannot find a person to write (your debt), then pledge in hand (shall suffice)

From Sunnah: Hadrat Aishah narrated that Prophet (s.a.w.s ) bought some food stuff on credit from a Jew for a limited time period and mortgaged him armour for it.

LEGAL STATUS OF THE PLEDGED PROPERTY

According to the viewpoint of the majority of Muslim jurists the pledged property assumes the status of trust in the hand of pledge. Thus if it is destroyed or lost without negligence, fault or wrongful action on his part he will not be held liable. According to Hanfis the pledge after taking the possession of the property becomes responsible in case of its being destroyed in his hands. According to Shafi the pledge is a trust in the hands of the pledge. Thus, if it is destroyed in his possession still he does not forfeit his due because it is recorded in the tradition that no pledge shall be distrained for dent and the pledge shall be liable for all risks.

CONDITIONS OF PLEDGED PROPERTY

1. It should be a thing having some monetary worth and legal value.2. It should be a thing which is sharaiah compliant.3. It should be existent at the time of contract. 4. It should be deliverable.5. It should be precisely determined with regard to its essence quantity and value.6. An article naturally conjoined cannot be pledged separately.7. It is not permissible to pledge the usufruct of a thing.8. Physical possession of the property should be given to the pledge9. It should be of sufficient value to cover ht amount of debt.

CONDITIONS OF CLAIM OR DEBT FOR WHICH PLEDGE IS GIVEN

1. It should be an established an enforceable debt. Thus pledge may be given for loan, price in credit sale, commodity of Salam etc.2. Pledge is not permitted for things for which there is no liability of compensation such as deposits, commodate loans etc.3. It is not permissible to give pledge for an amount, which the pledger will borrow from the pledge.4. It is not permissible to give pledge for a claim or debt, which is not recognized in the Shariah.5. The claim or debt should be known and defined for example in case of two loans.

MAINTENANCE OF PLEDGE PROPERTY

The Muslims jurists are unanimous on the point that the maintenance of pledged property is primarily the responsibility of the owner, i.e., pledger in this case. He will incur the cost of maintenance because the Holy Prophet (s.a.w.) has said:To the pledger return its profit ,and he is held for the responsible for its loss. The Hanafi jurists, however, divide the expenses incurred on maintenance of pledge into two categories;1. Expenses required for its subsistence, improvement, and continuation of existence; and2. Expenses incurred on its conservation and safekeeping.

The other jurists do not accept this division .In their opinion all the expenses will be borne by pledger.

BENEFITING FROM PLEDGED PROPERTY

1. By Pledger:

The majority of Muslim jurists is of the view that the pledger cannot benefit from the pledged property.The Hanafi jurist allow the benefiting from the pledged property with the permission of pledgee. Maliki jurists regard such benefiting invalid even with the permission of pledge. In their opinion such permission amounts to termination of contract. The Shafi jurists permit all kind of benefits provided it does not cause devaluation of property.

2. By Pledgee

Acoording to majority view the pledge cannot use the pledge. The permission given by hadith to milk or ride the animal will be availed only in situation where the pledger, the owner of animal refuses to near the expenses of its feeding. Hanbali jurists allowed the benefiting from pledged property of its animal. They allow the pledge to ride it or milk it in consideration for fodder given to it.The contract of rahn is basically meant for the security of debt, and not for investment and profitable use.

3. Benefit Form Pledged Property Under Bay Al-WafaBay al-wafa is a transaction in which a person in need of money of sells a commodity to the lender on the condition that when he wishes the lender would return it to him upon the return of price.Bay al-wafa is not a real sale, instead it is the contract of pledge whereby the buyer (creditor) utilizes the commodity for the period during which it stays in his possession. The Muslim jurists disapprove this transaction because it is a legal fiction for charging interest.

LEGAL CONSEQUENSES OF PLEDGE

Some of the legal consequences of pledge are as follows.1. The pledge has a right to keep possession until redemption of the pledg, and if the pledger has died, he has better right than other creditors and can make full payment of the debt from the pledge2. The pledgee can sell the pledged property with the permission of pledger, when the debt becomes due in order to satisfy it out of proceeds. He can also ask the court to have the pledge sold.3. The pledger cannot sell pledge without consent of pledge.4. It is permissible for the pledger to appoint the pledge his attorney to sell the property when the time of payment approaches.5. The pledge is not allowed to let out or give the pledge in loan because he is himself prohibited benefiting from it and consequently not authorized to confer the power of enjoyment upon others.6. If after the discharge of the debt the pledge perishes in hand of pledge, he will be liable to return the money, he has received to the pledger, and the contract of mortgage is not dissolved until the property is restored to the pledger.7. On the death of the pledger, his heirs of age will stand in his place and it will be their responsibility to free the thing pledged by paying the debt from the property of deceased person.