Can a Mudarib seek termination of a Mudarabah arrangement?

In-Depth Analysis

From today, the author will pick different points or issues in a Mudarabah transaction and provide the Shariah position on each of them before moving on to the new subject which is Musharakah. The situation that the author would like to discuss is: what if a Mudarib wants to terminate a Mudarabah agreement? Are you not surprised at this question since in an ideal situation, the Mudarib would want the Mudarabah arrangement to continue for eternity if it is performing well and sharing handsome returns with the Rab Al Maal? Why then would the Mudarib want to do away with such a comfortable situation where it is enjoying the perks at someone else's money? This may happen if the market environment is fairly conducive, enabling the Mudarib to produce the results beyond the projection it had made in the business plan and the Mudarib has made a considerable amount of wealth through its share in the Mudarabah profit which it would now like to deploy so as to go it alone and does not have to share the profit with the Rab Al Maal. Going back to the 11 articles you have read so far on Mudarabah, you must have learned that a Mudarib or Rab Al Maal can unilaterally terminate a Mudarabah agreement if the Rab Al Maal has not delivered the capital to the Mudarib and that the Mudarib has not started its deployment. However, once that is achieved, the Mudarabah agreement cannot be terminated by either party unilaterally. Assume that the Rab Al Maal provided an amount of US$1 million to the Mudarib as the Mudarabah capital at the time of entering into a five-year Mudarabah agreement based on the business plan submitted by the Mudarib stating in detail that the amount shall be invested in buying off-plan real estate units which are nearing completion in different communities at the original price or at not more than 5-10% premium due to market conditions at the time. Based on its expertise, the Mudarib selected the right properties at prime locations and rented them out as and when the delivery was made by the developers. The rent received from all occupied seven properties is being distributed between the Rab Al Maal and the Mudarib at a 50:50 ratio after netting out service charges and maintenance expenses on a half-yearly basis. The Mudarabah arrangement has just entered into the fourth year and the rent from all properties has gone up by 20-30% whereas the property prices are also exhibiting an overall upward trend. The Rab Al Maal is very pleased with the Mudarib's performance and is shocked to receive a request for the premature termination of the Mudarabah agreement. What needs to happen: the Mudarib is required to return the Mudarabah capital to the Rab Al Maal if the latter accepts the request to end the Mudarabah agreement.