Surakarta Religious Court Decision No. 519 of 2015: Murabahah Financing Agreement Dispute

The plaintiffs submitted that, on 13 March 2008, the first plaintiff executed a murabahah financing agreement for IDR 275 million with the defendant. The plaintiffs leveraged a property and another plot of land, the deeds of title of which were both in the first plaintiff's name. Repayments pursuant to the agreement totalled IDR 635,937,500, with a monthly repayment obligation of IDR 3.5 million. The plaintiffs submitted that IDR 3.5 million fee per month caused them significant financial hardship: while their business was profitable they were able to make the necessary repayments, but when their business experienced some financial downturn, they instead made monthly repayments of IDR 2.5 million, pursuant to a new agreement.

The plaintiffs submitted that they had made the necessary repayments to meet their contractual obligations, but, without first consulting with them, the defendant sought to auction the first plaintiff's two properties on 18 July 2013. Moreover, that as the defendant would automatically debit the plaintiffs' account, to auction the properties was a contravention of the murabahah agreement and unlawful and should, therefore, render the auction invalid.

The court found that the plaintiffs had defaulted on the loan on three occasions and, therefore, could not be said to have held up their end of the bargain. The court dismissed the plaintiffs' claim and ordered them to pay costs (IDR 3,151,000).

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