Purbalingga Religious Court Decision No. 1040 of 2013: Musyarakah Financing Agreement

Pursuant to a musyarakah financing agreement, in conjunction with an extension addendum, the plaintiff (bank) and defendants (customers) pooled IDR 30 million and IDR 68.7 million respectively, to fund a clothing enterprise based in Purbalingga and marketed in the Jambi area. The term of the agreement was 12 months, from 16 April 2008-16 April 2009. The extension addendum extended the agreement for an additional five months; from 6 April-6 September 2009. 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 57,527,652 in damages, and requested that the court secure this sum against the defendants’ two Purbalingga properties.

The court, however, was able to make the parties reconcile. The defendants agreed to fulfil their contractual obligations and the plaintiff agreed to withdraw its application. The court ordered the plaintiff to pay court costs.

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