When after the battle with Banu Nadir the lands of the Jews were occupied the question arose as to how such lands were to be distributed. To solve this issue, the following verse was revealed to the Holy Prophet:
"Whatever lands fall to you from the people of the town, they belong to Allah and the Apostle and orphans and the needy and the wayfarer and the poor among the Muhajreen who were driven from their homes, and for all those who come after."
During the caliphate of Umar when extensive conquests were made in Iraq and Syria, the combatants demanded that all agricultural funds left by the enemy should be distributed among them.
Umar convened an assembly at which this question was discussed. Abdul Rahman bin Auf, Zubair bin Al-Awam, and Bilal bin Rabah among others were strongly of the view that such lands should be distributed among the soldiers.
Umar observed that there were various aspects of the question and each aspect had to be taken into consideration carefully.
The economic aspect of the question was that if such lands were distributed no assets would be left with the state to provide the source of revenue for the future. Under the circumstances the best course was that such lands should be state property so that income accruing therefrom could be utilised for meeting the future needs.
The social aspect was that if such lands were distributed some people would get rich, while the others would remain poor. Those who have fought on various fronts would on that basis get lands in various countries and that would create great disparity among the ranks of the Muslims. That was repugnant to Islam.
Umar emphasised that in the verse of the Holy Quran on the subject (quoted above), the words 'and those that will come after,' were of particular significance. The implication was that such lands should remain state property so that the coming generations might also profit therefrom.
"These lands belong to the coming generations and are therefore the property of the nation. How can I then distribute them among those who are present and deprive those who will come after."
The debate lasted for several days, and ultimately the concensus of opinion emerged in favour of the view advanced by Umar. According to the four schools of law that emerged subsequently three schools upheld the view taken by Umar. The school of Imam Shaf'i, however, insisted that the conquered lands should have been divided among the combatants.