Borobudur Law and Society Journal

Islamic banks that finance customers through murabahah and then auction the collateral of defaulting customers face a question that legal compliance alone does not answer: whether the right to execute is exercised fairly. This normative study asks how the auction of collateral securing murabahah financing in the case of CV Megatama Distribution against PT Bank Syariah Indonesia and the Jambi State Assets and Auction Office should be assessed under the concepts, sources and philosophy of Islamic economic law, and how far the auction reflects justice and the protection of wealth (ḥifẓ al-māl) in maqāṣid al-sharīʿah. It uses statutory, conceptual and case approaches, and examines the case through the published study of it because the court decision was not available. The study finds that the bank’s right to execute is consistent with Islamic law, but that notice, valuation, price and the return of any surplus decide whether execution protects the wealth of both parties. A five-criterion test derived from ḥifẓ al-māl shows that, on the available record, the reported sale price and the alleged absence of notice raise questions that cannot be resolved without the decision and the auction file. Islamic banks should treat execution as part of their sharia duty, document each stage and place execution decisions under sharia supervision.