Is a purchase made by the capital provider (Rabb al-Mal) for themselves using the capital designated for Mudarabah (profit-sharing investment) valid?
General Chapter
Al-Mughni
Book of Partnership
Primary text
One narration holds that the transaction is invalid. This view is held by Al-Shafi'i. The basis for invalidity is that since the Mudarib's (investor's) right has already attached to the capital, the capital provider cannot unilaterally appropriate it for personal purchase, similar to the ruling concerning a purchase from one's agent or an authorized slave who is not indebted. The capital provider's ownership has not been removed, even if others have the right to claim the assets, similar to the property of a bankrupt person.
Supporting text
Another narration states that the transaction is valid. This view is held by Malik, Al-Awza'i, and Abu Hanifa. They argue that since the Mudarib's right has attached to the capital, the purchase is permissible for the capital provider, analogous to purchasing from one's Mukatab (contracted slave) or an authorized slave burdened with debt. A further possibility is suggested: the transaction might be valid if debts fully encompass the assets in the slave's possession, because the creditors (Ghurama') take what is in his possession.