Is set-off (Qass/Taqaas) permissible when the master (Sayyid) owes the indentured servant (Mukatab) a debt, and the servant owes the master a debt?
General Chapter
Al-Mughni
Book of Mukātaba (Contractual Manumission)
Primary text
If both debts are cash (Naqd) of the same currency type, immediately due (Halin) or due at the same deferred term (Mu'ajjalayn), set-off is mandatory, and the debts cancel each other out. This is considered more appropriate than set-off between unrelated strangers. Regarding debts in two different currencies, such as Dirhams and Dinars, Ibn Abi Musa permits it if both parties agree to treat them as set-off against each other. This is considered a sale (Bay'), and the set-off is established only upon mutual consent. However, Al-Qadi prohibits this, viewing it as the sale of debt for debt, which is prohibited by the Prophet (peace be upon him) and invalid between strangers, thus invalid here. If the debts involve goods (Ard) or goods against cash, set-off without mutual consent is never permissible. Furthermore, even with mutual consent, set-off is invalid because it constitutes the sale of debt for debt.
Supporting text
If one party takes possession of the other's due right and then hands it to the other in exchange for what is owed in his liability, it is permissible, provided the established liability is not from a Salam (forward sale) contract; if it is from Salam, taking an exchange before full possession is invalid. Generally, the ruling concerning the indentured servant and his master in debt matters is the same as for strangers, except according to the view of Ibn Abi Musa.