On 30 July 2008, the first plaintiff and his wife, the second plaintiff, entered into a cooperative agreement with the second defendant, the agent of which was the third defendant. Pursuant to the agreement, the term of which was 36 months, the plaintiffs leveraged the deed of title to their property. The parties also agreed that the second defendant would provide monthly income portions from the agreement of IDR 1,616,800 to the plaintiffs. The second defendant agreed to:
- ensure the security of the plaintiffs' property;
- not allow the deed of title (original or photocopy) to change hands;
- not use the deed of title, except for purposes relating to the provision of income portions; and
- return to the plaintiffs the deed of title if the agreement came to an end.
The plaintiffs agreed to:
- accept a portion of the profits, as agreed to by both sides;
- be provided with a security guarantee for the deed of title provided to the second defendant; and
- have the deed of title returned if the agreement came to an end.
The plaintiffs submitted that the second defendant had fulfilled its obligations to the plaintiffs by providing them with IDR 1,616,800 per month until April 2010, when the second defendant defaulted on this part of the agreement. The plaintiffs then filed a civil claim against the second, third and fourth defendants (as first, second and third defendants), and first defendant (as fourth defendant) with the Sleman State Court on 28 January 2011, with the decision being handed down on 16 August 2011.
Initially, the security guarantee over the second plaintiff's property had been with the first defendant pursuant to a Mudharabah agreement between the second defendant as debtor and the first defendant as creditor (dated: 27 December 2007), with an arrears of IDR 1.5 billion, with security in the form of several other deeds of title. The plaintiffs submitted that, as a result of subterfuge on the part of the first and second defendants, the security over the deed of title of a property belonging to a Prof. Dr Kuswandi was removed by the second defendant, working together with the first defendant, and replaced by the deed of title belonging to the property of the second plaintiff. Moreover, that the first and second defendants then coerced the plaintiffs into assenting to the inclusion of an addendum to the initial agreement, the contents of which were the inclusion of the second plaintiff's property, by threatening that the plaintiffs would not receive any dividends. In actual fact, the plaintiffs never received any dividends, regardless.
On 20 September 2010, the first defendant wrote to the second defendant instructing the second defendant to pay to the first defendant arrears owed pursuant to their original agreement. Failure to make payment would result in the auctioning of the property. The first defendant made an application to auction the property, but a lack of interest from prospective bidders prevented the property from being auctioned. Regardless, the plaintiffs submitted that such conduct on the part of the first plaintiff was illegal.
The Sleman State Court had, on 16 August 2011, ordered the second, third and fourth defendants to pay to the plaintiffs IDR 450 million in damages. The plaintiffs, however, filed an application with the Bantul Religious Court for, what it perceived to be, breaches of shari'a law (muamalat law) on the part of the defendants. The plaintiffs sought orders from the court that:
- the defendants not auction the second plaintiff's property;
- declare the Sleman State Court's decision to be legally binding;
- declare the Mudharabah agreement between the first and second defendants contrary to shari'a law principles and, therefore, null and void;
- declare the addendum null and void;
- the defendants pay damages, pursuant to the decision of the Sleman State Court; and
- declare the first defendant's conduct vis-a-vis the deed of title of the second plaintiff's property unlawful.
The court declined to pass judgment, however, acceding to the first defendant's objection that the parties to the dispute had agreed to resolve all disputes before the National Shari'a Arbitration Body.