Muwatta Imam Malik (Riwayat Yahya)

Imam Malik, may Allah have mercy on him, said: According to us, there is no difference of opinion in this matter that if the mortgaged item is such that its destruction is known, like land, house, and animals, then in this case, the destruction of the mortgaged item will not reduce the right of the mortgagee at all; rather, the loss will be upon the mortgagor. And if the mortgaged item is such that its destruction is known only by the statement of the mortgagee (like gold, silver, etc.), then the mortgagee will be liable for its value (in the case where he does not have witnesses for its destruction). Now, if the mortgagor and the mortgagee differ regarding the amount of the mortgage, the mortgagee will be told: You should swear an oath and describe the characteristics of the mortgaged item and the amount of the mortgage. When he describes it, knowledgeable people will estimate the value of the item according to the characteristics described by the mortgagee. If the value is more than the amount of the mortgage, then the mortgagor will recover from the mortgagee the excess amount of the mortgage. If the value is less than the amount of the mortgage, then the mortgagor will be made to swear an oath; if he swears, then the amount by which the mortgagee has stated the mortgage to be more than the value will be dropped from his liability, and if he refuses to swear, then he will pay that amount to the mortgagee. If the mortgagee says: I do not know the value of the mortgaged item, then the mortgagor will be made to swear an oath regarding the characteristics of the mortgaged item, and the decision will be made according to his statement, provided that he does not state anything contrary to reality.

Imam Malik, may Allah have mercy on him, said: This is when the mortgaged item is with the mortgagee and he has not placed it with someone else (otherwise, there will be no liability upon the mortgagee, even if he cannot produce witnesses).