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Fatwa CenterA case of defective Mudhaarabah
Question
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 you. AYAZ TAIMURI KARACHI-PAKISTAN
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad 
is His Slave and Messenger.
Your question is somewhat unclear; however, the information provided in the question is enough to consider such a partnership null and void as well as defective because you mentioned that the investee guarantees the capital and incurs the net loss and that he is also obliged to pay a monthly payment regardless of earning profits or incurring loss. If the Mudhaarabah (co-partnership) is defective, then the owner of the capital is entitled to the whole amount of capital and the profits if there are any. If there is loss incurred, it will be incurred solely by the capital owner. The investee is entitled to a wage payment for his work and efforts equal to what is customarily given to a worker according to his situation.
For further information, please refer to Fataawa 10549 and 231382.
Allaah Knows best.
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