Purbalingga Religious Court Decision No. 310 of 2014: Musyarakah Financing Agreement

Pursuant to a musyarakah financing agreement, the plaintiff (bank) and defendants (customers) pooled IDR 20 million and IDR 18.8 million respectively, to fund a coconut and brown sugar enterprise. The term of the agreement was 36 months, from 17 April 2007-17 April 2010. The plaintiff submitted that the defendants went into arrears, causing the plaintiff to serve the defendants with several written warnings. Upon conducting an inspection of the defendants’ management of the enterprise, the plaintiff discovered that the defendants had never shared the profits at the end of each month (as required pursuant to art 6(2) of the agreement), and had failed to return capital to the plaintiff, pursuant to the schedule stipulated in art 8(1) of the agreement. The plaintiff, in lodging an application with the court, pursuant to art 49(i) of Law No. 3 of 2006 on Amendments to Law No. 7 of 1989 on the Religious Judiciary, in conjunction with art 55(1) of Law No. 21 of 2008 on Shari’a Banking, sought IDR 53,732,715 in damages, and requested that the court secure this sum against the defendants’ Purbalingga property.

Despite being summonsed to attend the proceeding, the defendants were absent. In their absence, the court declared the agreement valid, and ordered the defendants to pay to the plaintiff IDR 53,732,715 in material damages, as well as court costs (IDR 1,401,000).

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