Mojokerto Religious Court Decision No. 2860 of 2015: Shari'a Economy Property Auction Request

The plaintiffs submitted that they had entered into a murabahah financing agreement with the first defendant on 19 September 2011 for IDR 175 million. The money was to be used to finance a shop, and the plaintiffs agreed to repay the money to the first defendant within 60 months, leveraging their 224m2 family property in Jabon village, Mojokerto. The plaintiffs submitted that they had chosen to borrow from a shari'a bank because they were both Muslims and wished to conduct business in accordance with the Qur'an and Sunnah.

Between October 2011-August 2012, the plaintiffs adhered to the repayment structure, and made 11 repayments (IDR 47,500,000). By September 2012, however, the plaintiffs' business had become less profitable as the number of market competitors increased. The plaintiffs still made their monthly repayment on 29 September 2012, but submitted that they had requested a restructuring of the agreement to accommodate their recent financial hardship. Moreover, they also submitted that the first defendant should have provided the plaintiffs with an opportunity to sell the property on their own to enable them to make future repayments. Instead, on 24 April 2013, the first defendant sent to the plaintiffs a letter stating its intentions to auction the leveraged property the following morning (25 April 2013).

The plaintiffs learned that the third defendant, who had successfully bid at auction for the property, had already visited the property before auction with an employee of the first defendant, expressing an interest to purchase it for IDR 225 million. The plaintiffs had rejected the offer, wishing instead to resolve the dispute through legal channels. The plaintiffs submitted that the first and third defendants had clearly colluded to acquire the plaintiffs' family property. Moreover, that the property should have been able to attract IDR 400 million at auction.

The plaintiffs requested that the court:

  1. invalidate the auctioning of their property;
  2. afford them the opportunity to sell their property on their own; and
  3. prohibit the second defendant from dealing with the property.

The court found, however, that it was precluded from adjudicating the case as the parties had agreed to resolve any disputes before the National Shari'a Arbitration Body (Badan Arbitrase Syari'ah Nasional).

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