HC nod for first Islamic bank
PRESS TRUST OF INDIA
Kochi, Feb 3: The Kerala High Court today cleared the way for setting up the country's first Islamic bank in this state.
The court nod came after it dismissed two PILs challenging the setting up of an Islamic Financial Institution in the state on the lines of Islamic Banks with the support of Kerala State Industrial Development Corporation (KSIDC).
A Division Bench comprising Chief Justice J Chelameswar and Justice Ramachandra Menon said the petitioners could not demonstrate how the impugned government order had the effect of directly promoting a particular religion. The petitions were filed by Janata Party leader S Subramanian Swamy and Hindu Aikya Vedi.
The state justified its stand and contended that the investment was commercial in nature and will not offend the secular principles of the Constitution.
The Company Al Barakh Financial Services, which was registered under the Companies Act, assured the Court that funding of financial institution will be in strict adherence to the laws prevailing in the country as well as principles of Shari at.
The petitioners complained that the government's decision was against the secular principles of the Constitution.
Swamy's contention was that Article 27 of Constitution prohibits a state government body, in this case the KSIDC, to engage in ventures like Islamic Banking.
The mandatory governing principles of Shariat, religious code of Islam, to be adhered to is that not only interest payment and receipt are barred, but also it bars certain other activities which are legitimate under Indian laws, he had stated.
KSIDC cannot be permitted to promote a corporate called AL Barakh Financial Service Ltd, he submitted.
The bank was also to have a body of Islamic scholars to advise whether the principles of shariah were being complied with.
The High Court had during the admission stage of the petition in April last year directed the government and its institutions not to participate financially or otherwise in the financial company modeled on the lines of Islamic Bank.
Lastupdate on : Thu, 3 Feb 2011 21:30:00 Makkah time
Lastupdate on : Thu, 3 Feb 2011 18:30:00 GMT
Lastupdate on : Fri, 4 Feb 2011 00:00:00 IST
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