Four companions of the prophet (saw) were well-known for their poetry: Abdullah ibn Rawaha, Ka'ab ibn Malik, Ka'ab ibn Zuhair and Hassan ibn Thabit.
The Qur'an criticised the poets of the Quraysh who defended their way of life and attacked revelation, but encouraged those who used it for good saying, "Except for those (poets) who believe and do righteous deeds and remember Allah much and come to the aid [of the Muslims by composing verses against those who lampoon them]..."
The Prophet(saw) confirmed the same when he said, "Poetry is at the same status as ordinary speech: the good of it (poetry) is like the good of speech and the despised of it, is like what is despised of speech." [Bukhari, Adab al Mufrad; al-Daraqutni]
He would even listen to it himself on occassion; Amr bin Sharid reported his father as saying: "One day when I rode behind Allah's Messenger (Allah bless him and grant him peace), he said (to me), 'Do you remember any poetry of Umayya bin Abi Salt?" I said, 'Yes.' He (Allah bless him and grant him peace) said, 'Then go on.' I recited a couplet and he (Allah bless him and grant him peace) said, 'Go on.' Then I again recited a couplet and he (Allah bless him and grant him peace) said, 'Go on.' I recited one hundred couplets (of his poetry)." [Muslim]
When the Quraysh increased their antagonism towards the Muslims, the Prophet (saw) instructed Hassan to "Lampoon them (through verse in return) and Gabriel is with you." [Bukhari] Hassan would recite poetry in the mosque praising the Prophet (saw) and the Muslims, the Emigrants and the Helpers, even years later.
The Hanafi jurist Ibn Abideen is reflective of the stance of the jurists on the matter. He observes the disliked kind of poetry is "perhaps what is continuously engaged in and when it is made into a kind of profession to the point where it overcomes one and busies him from the remembrance of Allah and religious sciences and that is how the hadeeth [against frivolous poetry mentioned above] is interpreted... so there is no harm in a little of it if one intends bringing up anecdotes, subtle niceties, high metaphors and noble meanings, even if there is the description of 'cheeks and physiques', because the scholars of metaphoric writing would use later poet's writings as references for those very reasons. ... and [Ibn al Humam] mentioned that the unlawful part of poetry is those words themselves that are unlawful to use, like describing private areas, or specific, living women, or describing intoxicants in arousing ways, or bars and clubs, or disparaging a Muslim or non-Muslim member of society, if the speaker intends to disparage them... ... so there is no reason to forbid poetry [altogether]; yes, if it is regarding one who is wasting time without benefit, then he is forbidden, even if the poems had good counsel and wisdom." [Ibn 'Abideen, Radd al Muhtar 'ala Durr al Mukhtar]
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