Malay reserved land

LAND RESERVATION
Rationale and importance of reserving
land for a particular purpose or
community
05/14/14 Ainul Jaria Maidin _2011 1

Purpose of Land Reservation
• The act of reserving land for public purposes
has been a prominent feature of a civilised
nation for a long time.
• Reason for reserving land is to ensure that it
will be available when it is needed to meet the
requirement of the public especially for
purposes related to education, religion or
other social activities such as a playfield to
promote physical activities.

• Besides reserving land for certain public
purposes, land can be reserved for certain
class or group of people.
• principally aimed at
– protecting proprietary interests
– prevent extinction of a particular race from
their motherland by restricting sales of land to
migrant communities who came in search of
greener pastures or colonialist policies.

• Concept of reservation found in
various communities:
– US for American Indians
– Australia for Aborigines
– New Zealand for Maori
– South Africa for Africans
– Malaysia for Malays – malay reserved,
adat perpatih customary land and adat
naning customary land in malacca and the
natives in sabah and sarawak.

MALAY RESERVATION
Concept and Administration

Ideology of Malay Reservation
• To protect Malay land from being sold to
immigrant communities.
• Malay Reservation Enactment 1913 tended to
artificially protect Malays from economic
dislocation that resulted from the influx of
Chinese and Indian immigrants to the Malay
Peninsular (Gordon Means, “Special Rights as a
Strategy for Development: The Case of
Malaysia”, in Comparative Politics 1972 5(1);
Jomo Sundram.

MALAY RESERVATION
ENACTMENT
• passing of Enactment was due to
development of colonial capitalist
economy.
• growth of capitalism enterprises
under colonialism led to a rapid
increase in immigrant population and a
corresponding growth in rice
consumption, which affected padi
production in several ways.

• Increase in rice consumption was largely
met by increasing imports of cheap rice
from Thailand and Burma.
• In 1890 rice imports constituted more than
35% of total imports; this exceeded the
government revenue and amounted to 31 %
of export receipts (JOMO 1988 p.16)
• In order to minimise loss of foreign
exchange and to curb the Malay peasants
from diverting away from the traditional
profession

• British colonialists introduced land
reservation in favour of Malays with
objective of protecting Malay land
proprietary interests to prevent Malays
from dealing with immigrants.
• Rapid development in Malay States brought
about influx of immigrants especially owing
to British colonial policy
• workforce to work in time mines, rubber
plantations, construction and development
of infrastructure

• Chinese immigrants were very keen to
acquire land in Malay states and Malays were
also willing to depart with land for monetary
considerations.
• Historians were of view that principle reason
for introducing Malay Reservation by British
is to prevent the prominence of Chinese
community, which was growing strong with
forming of secret societies (kongsi gelap)
and gaining economic dominance compared to
other immigrants.

• British felt that this could pose a
threat to their administration as such,
the need to prevent Chinese and other
immigrant community from acquiring
land the most valuable commodity
created for Man.

Types of Reserved Lands
in Malaysia
• Malay Reserved Lands
• Malacca Customary Lands
• Customary Land in N9
• Native Lands in Sabah and Sarawak
• Malay Agricultural Settlement Kampung
Bahru, Federal Territory

Malay Reserved Law
• Laws were introduced by British during pre-
Merdeka period
• Malaysian government also introduced post
Merdeka law to safeguard Malay land
ownership.
• laws relating to Malay Reservation will need
to be studied at two different periods, i.e.
pre-merdeka and post merdeka period.

Pre Merdeka Laws
• Federated Malay States Malay
Reservations Enactment No. 15 of 1913
Chapter 142

Post Merdeka Laws
Chapter 142
• Federal Constitution of Malaysia 1957

• Two sets of Enactment regulating Malay
Reserved land.
• Enactments aimed at specific object of
preserving and protecting Malay land
proprietary rights.
• There is one single uniform law known as the
Federated Malay States Malay Reservations
Enactment 1933 (Cap 142), which is applicable
to the States of Selangor, Perak, Negeri
Sembilan, Pahang and the Federal Territory of
Kuala Lumpur.

UnFederated Malay States
• former UnFederated Malay States
states of Kelantan, Kedah, Johor,
Trengganu and Perlis have their
respective state Enactment.

Nature of Enactments
• Provisions in the Enactment differs and this, to
certain extent has defeated the objective of
Malay reservation institution:
– ambiguity in definition of Malay
– loopholes in policy of disposal or dealing in Malay
reserved land
– inclusion of other races to hold Malay reservation
land, even though Federal Constitution expressly
prohibits non-Malay from dealing with Malay
reservation land.

Perlis
• Malay Reservations Enactment 1353 was
modelled from 1913 Federated Malay
States Enactment.
• Wef - 17th
Zul-Hijjah 1353/ 1935 (No.7
of 1353)

Kedah
• Malay Reservations Enactment of was
modelled from 1913 Federated Malay
States Enactment.
• Wef - 1931 (No.6 of 1349)


Penang
• British claimed that there was no customary
law in existence in Island of Penang when
they took over.
• Freeway to apply English common law.
• Ong Cheng Neo v Yeap Cheah Neo (1897) 1
Ky. 326, 337 Privy Council – island was a
deserted territory and there was no trace
of any laws having been established;
therefore the English law was applicable.

Penang …cont..
• No recognition was given to law of the
natives of State, as there was only
few Malay families found when
British first occupied the state
• Regina v. Willians (1858) 3 Ky. 16.
• Therefore, Malay reservation law was
not introduced in Penang.

Perak
Reservations Enactment 1933
• Perak was amongst earliest States to
convert land into Malay Reservation.

Selangor
Reservations Enactment 1933 is
applicable in Selangor.

Kuala Lumpur
• Initially prior to Merdeka, British had
declared 4 areas into Malay Reservation under
the Malay Reservation Enactment 1913.
• Sungai Pencala Malay Reservation, about 756
acres;
• Segambut Malay Reservation about 710 acres.
• Selayang Malay Reservation about 542.4
acres;
• Gombak Malay Reservation about 3640 acres.
• Kampung Baru Malay Agriculture Settlement.

Malacca
• No Malay Reservations policy in Malacca
being a member of Straits Settlement
• British has maintained and protected
customary rights of Malays – customary
land – adat perpatih
• National Land Code (Penang and Malacca
Titles) Act 1963 governs customary land in
Malacca.
• Section 108 of Act - transfer, lease and
transmission of customary land should only
be made in favour of Malay domiciled in
State.

Johor
• Adopted Federated Malay States Malay
Reservation Enactment 1933 in 1936

Pahang
• Pahang a member of Federated Malay
States applied uniform law of four
States i.e. Federated Malay States
Malay Reservations Enactment 1933.

Trengganu
• Trengganu model - Federated Malay
States Malay Reservations Enactment
1933.
• Last state to introduce Malay
Reservations Enactment in 1941.

Kelantan
• Adopted 1913 FMS Enactment.
• Wef - November 4th
1930.
• Kelantan Malay Reservation
Enactment 1930.
• Almost all lands in Kelantan are
declared as Malay reserve

Negri Sembilan
Reservations Enactment 1933 and
Customary Tenure Enactment are
applicable to Malays in the State.
• FMS MRE is applicable in districts of
Jelebu, Kuala Pilah, Rembau and Tampin.
• (Federated Malay States Cap.215)

Who is a Malay
• Definition of Malay varies from State
to state
• Analysis - depending on geographical
location and interpretation accorded by
Ruler in Council or State Authority.
• definition of Malay is determined by
State Enactments

Perlis
• s 2 “Malay” means a person belonging to any
Malayan race or person of Arab descent who
habitually speaks the Malay language or any
Malayan language and professes the Muslim
religion.
• “Siamese” means a Siamese certified by
Commissioner in writing to be a Siamese
agriculturist permanently resident in State of
Perlis.
• Perlis being situated near border of Thailand,
a Siamese has right to acquire MRL.
• person of Arab descent who habitually speaks
Malay language is considered Malay in Perlis.

Kedah
• S.2 of Kedah Enactment provides “Malay”
means a person professing the Muslim religion
and habitually speaking the Malay language of
whose parents one at least is a person of
Malayan race or Arab descent. (Vide E 9/54
Kedah Laws 1559)
• Siamese is included as natives and has right to
acquire Malay reserve lands.

Johor
• “Malay” means a person belonging to the
Malay or any Malaysian race who habitually
speaks the Malay language and professes the
Muslim religion and such expression shall be
deemed to include the authorities, boards,
bodies, societies, associations and companies
described in the Second Schedule to this
Enactment:
• with a preamble that reads ‘An Enactment to
prevent interests in land passing out of the
hands of the Malay race.’ Johor Malay
Reservation Enactment 1936 has employed
the word ‘Malaysian’ instead of ‘Malayan.’

Kelantan
• s 3(i) provides “Malay” means a person
belonging to any Malayan race who
speaks any Malayan language and
professes the Mohammedan religion,
and shall include (a) the Majlis Ugama
Islam (b) the Official Administrator
when acting as administrator or
trustee of the estate of a deceased
Malay

Terengganu
• “Malay” means a person belonging to any
Malayan race who habitually speaks the
Malay language or any Malayan language
and professes the Moslem religion

Establishing of Malay Company
• Malay company or
• Requirements for a company to be able
to deal with Malay Reserved land.
• Malay Company defined only in FMS
MRE s 2 and Trengganu MRE s 2.

A Malay Company
• Requirements of Malay Company are:
• (a) registered under Companies Act 1965
• (b) all members are Malays
• (c) transfer of shares restricted by Articles
of Association to Malays only
• (d) objective of Company is to deal in Malay
holding land.

Malay Company
• Wan Ismail & Seng Liang Sdn. Bhd. v
Musa bin Mat Jani & Anor [1990] CLJ 379
• dealing in favour of a company where, not all
members are Malay is not a Malay company
under FMS MRE s 2.
• Any dealing conducted by company is
contrary to FMS MRE s 7 and shall be
declared as null and void by virtue of FMS
MRE s 19.

• other States’ MRE have not included any
provisions on requirements to establish
Malay company
• Reason - rigid requirements to establish a
Malay company HOWEVER, Ruler-in-
Council can declare or include any person,
companies, corporations or bodies to be
treated as ‘Malay’ for purposes of MRL
• (Johor MRE s 2; Kedah MRE s 19; Kelantan
MRE s 9A(1) Perlis MRE s 9(1) & 17A(i)).

Requirements to be fulfilled to be
recognised as Malay Holding
• By virtue of FMS MRE s 2(a) requirements
of Malay holding are:
• i. Either proprietor or co-proprietor shall be
a Malay
• ii. alienated land
• iii. declared and gazette as Malay
reservation; and
• Iv. Inclusion of land under official Malay
reservations list

Malay Holding
• All requirements are mandatory to be
fulfilled before a land can be declared as
Malay holding.
• Failure to comply with any one requirements,
alienated land cannot be declared as Malay
holding.
• If proprietor is not Malay or none of co-
proprietors are Malay the registering body
is not empowered to make any memorial
under MRE or inclusion of said land under
Malay reservations list - FMS MRE s 6(vi)

• Syarikat Macey Berhad v. Nightingale
Allied Services (Sued As A Firm) & 2
ORS. [1995] 1 CLJ 890
• in a Malay Holding there must be a Malay
proprietor or co-proprietor. if all are non-
Malays, land cannot be declared as Malay
Holding
• However, if one proprietor is Malay and
others are non-Malays, then land can be
declared as Malay Holding.

Endorsement on IDT
• Requirement - Title must be endorsed
with words ‘MALAY RESERVATION’
“TANAH RIZAB MELAYU”
• Registered proprietor is required to
submit to registering authority IDT
to be inscribed with words ‘Malay
Reservation.’ FMS MRE section 6(iv)

• No Malay holding can take effect until and
unless registered against RDT.
• However, despite land published in gazette
as Malay reservation, State Authority
cannot proceed to endorse it as Malay
Holding if the proprietor or a co-proprietor
is not a Malay
• Syarikat Macey Berhad v. Nightingale
Allied Services (Sued As A Firm) & 2 Ors
James Foong J. ‘since, the land has never
been registered in name of Malay proprietor
or co-proprietor, the memorial so entered on
the affected titles is therefore erroneous.’

Duty of Registrar
• The duty of Registrar is mandatory as
he shall endorse or cause to endorse on
every RDT and IDT pertaining to a
Malay holding the words ‘Malay holding’
• No fee (services charges) can be
imposed for making the memorial.

Failure to Endorse on Title and
Implications
• Non-endorsement of words ‘Malay
reservation’ on IDT and RDT, could lead
proprietor to abuse the law by charging or
dealing with his land to non-Malay.
• Problem of non-endorsement on the title was
described as early as 1928 in the
Commissioner of Lands Circular, where the
committee provided solution to this problem

• In cases of omission to inscribe the words
“Malay Reservation” on the register
document of title, a grant to land in a Malay
Reservation which is sold, in execution of a
decree, to non-Malay.
• The Court, on a reference by the Registrar
under s.238 Land Code, held mere
notification in the Gazette of declaration
of reservation does not amount to notice to
a purchaser, and a bona fide purchaser of
reservation land who is without notice of
this restriction, takes free from the
restriction.

• objective of inscription prescribed by
FMS MRE s 12 is aimed at notifying
public of the status. (mirror
principle)
• For purpose of inscription, duty is
imposed upon Land Administrator for
enforcing the production of IDT to
land held by Malays within a declared
area, immediately after declaration
takes effect

• Asia Commercial Finance (M) Bhd. v
Pemungut hasil Tanah & Anor. [1983]1 CLJ
86.
• registered proprietor sold two pieces of
land to Rohani who, while waiting for land
to be transferred to her, applied to Asia
Commercial to refinance the sales and
purchase of land.
• A private search was made on title and it
did not disclose anything.
• when the transfer, charge and lien-holder’s
caveat was submitted for registration, the
Land Officer rejected instruments
presented for registration of dealing.

• Ground for rejection - land was gazetted as
MRL in 1931 under MRE 1913, and it is
subject to provisions of MRE 1933.
• Finance company is not a body included and
specified in Second Schedule in Enactment,
therefore the finance company is barred
from holding the land as a chargee.
• The company argued that certificate of
official search failed to disclose that land is
MRL, therefore they are bona fide chargee
for value within ambit of section 340 (3)
NLC.

• Wan Hamzah J, held that one has to
go beyond RDT in order to search as
the official search is not conclusive
evidence
• This actually defeats the main
principle of Torrens System, that
RDT is everything.
• It seems that the judge has erred in
law by suggesting to conduct search
beyond RDT.

• Badiaddin v First Malaysia Finance
Berhad & Anor [1988] 2 CLJ 32;
[1998] 2 CLJ 75 FC. The land was
gazetted as ‘Malay Reservation’ and
published in February 2nd
1917 but was
only endorsed on the RDT on February
18th
1984, i.e. after 67 years.
• To make matters worse the land was
already charged to a non-Malay
company in 1981.

• Upon discovery of this endorsement,
company appealed to MB of Negeri
Sembilan to revoke status of MRL as they
are bona fide chargee.
• State Authority agreed to insert company
in FMS MRE 1933 s 17 Schedule 2, and
gazetted on March 27th
1986.
• Q – Status of charge?
• HC & FC held that irrespective of late
endorsement and that money has been
released, land is still MRL, and it comes
within ambit of MRE – making charge null
and void

Reference to Ruler in
Council

• All MRE Enactments inserted a section
stipulating for Reference to Ruler in Council in
event of doubt.
• Situations for reference to Ruler in FMS MRE
s 20.
• a. definition of Malay
• b. mode of operation of the Enactment
• c. manner in which the provisions are
construed or put into effect

Who is Ruler in Council
• Hanisah v Tuan Mat [1970] 1 MLJ 213
to mean ‘His Highness acting in
accordance with advice of the State
Executive Council’.
• Situations where reference to the Ruler
in Council is necessary as provided in
FMS MRE s 20.

• FMS MRE s 20 - in cases of doubt matter
shall be referred through Menteri Besar
to the Ruler of State Council.
• Johor MRE - matter is referred through
State Secretary to the Sultan in Council.
• Kelantan MRE, s 18 - the matter may be
referred to Sultan in Council without
referring to the Menteri Besar.
•

• Kedah MRE restated & reconfirmed right
of Ruler in Council to declare ‘any person of
any race or nationality be deemed to be
recognised as “Malay”.
• Shirlie Gordon in “Contradictions”, - Kedah
provision was inserted later to allow
European wife of Tunku to inherit his MRL
upon his death. She was declared as a
‘Malay’ for purposes of MRE to inherit the
land.

• Kelantan MRE s. 9A & 13A (i)
– Included provision where Ruler-in-Council
can alienate, transfer, transmit or charge
Malay reserve land to anyone who is not a
Malay
– Schedule D of Kelantan MRE has
approved for example Ban Hin Lee Bank
Bhd, Chung Kiaw Bank Limited to acquire
interest in MRL.

• Foo Say Lee v. Ooi Heng Wai
[1969] 1 MLJ 47
• FC –agreement to transfer MRL
subject to consent of Ruler in Council
is not contrary to Kelantan MRE.
• Reason - MRL can be transferred to
a non-Malay subject to approval of
Ruler in Council.

• Kelantan Ruler not empowered to declare any
person as Malay unlike Kedah MRE which gives
a wide discretion to Ruler-in-Council to
declare any person of any race or nationality
as Malay (Kedah MRE s 19)
• Kelantan MRE allows the person to acquire a
right or interest over land.
• Trengganu MRE does not declare bodies as
Malays, it merely grants a right to them to
hold MRL with consent of Sultan-in-Council.

Non-Malay to Non Malay
• A non Malay proprietor of MRL has
ABSOLUTE RIGHTS to transfer right or
interest to non-Malay without prior
consent from Ruler (Kelantan MRE s
3A(iii)).
– Tan Hong Chit v. Lim Kim Wan [1964] MLJ
113
– Syarikat Macey Bhd. v Nightingale Allied
Services (sued as a firm) & Ors.

• Decision of Rulers is FINAL &
CANNOT be questioned or revised by
court (FMS MRE s 20).
• What if abuse of MRL ???

• Kelantan MRE s 13 - right of question exits
until the decision has been certified under
hand of State Secretary.
• Hanisah v. Tuan Mat [1970] 1 MLJ 230
-Kelantan MRE s 13 merely states decision
of Ruler in Council should not be revised or
questioned by Court. does not in obstruct
court to expound Acts of Parliaments.
• Furthermore it is duty of Court and not
Ruler or the legislators

• Zaleha bte Sahri v. Pendaftar Hak Milik
Tanah Johor [1996] 2 CLJ 147 - court
granted a declaratory order to revoke
status of MRL by virtue of landowner not
being a Malay without referring matter to
Ruler-in-Council.
• Johor MRE it is mandatory to refer to
Ruler-in-Council in cases of mode of
operation of Enactment, on definition of
Malay and manner provisions to be
construed or carried into effect.
•

• Abdul Malik Ishak J. Decision was more
in sympathy for the appellant rather
than analysing the initial objective of
the establishment of MRE.

• Asia Commercial Finance (M) Bhd.
v Pemungut Hasil Tanah & Anor.
(1983) CLJ 86 ;
Zainal Abidin Bin Mohd. Taib v
Malaysia National Insurance
Sdn.Bhd.[1994] 3 CLJ 731
observations that decision of Ruler-
in-Council shall be final and shall not
be questioned or revised by any
Court.

Disposal of MRL by State
• Non-Malay person cannot apply for MRL
from State Authority,
• He may be able to acquire a share or
interest in the MRL if he would make an
application through a company or
corporation that are specified in the Third
Schedule.
• FMS MRE s 7&20 - the Ruler-in-Council
has discretionary powers to declare any
company or corporation as Malay and this
decision, as has been argued earlier, is final
and cannot be questioned by the Court.

Ruler-in-Council’s discretion
• Ruler-in-Council is given discretion to add,
delete from or amend from time to time
the list in Third Schedule
• Zainal Abidin Bin Mohd.Taib v Malaysia
National Insurance Sdn.Bhd.[1994] 3 CLJ
731 - decision of Ruler-in-Council is final
and conclusive. It would only become
official once it has been published in the
gazette.

• Federal Territory - discretion to
add, delete from and amend is
granted to Yang di Pertuan Agung.
• Negeri Sembilan - land alienated
under section 7 would be deemed as
Malay holding, notwithstanding the
definition of Malay holding contained
in FMS MRE s 2.

• State Authority can declare any land
as a Malay holding irrespective of
definition of Malay holding, found in s
2 of MRE.
• On the other hand, this might not be
true, as s 7 must be read together
with ss 2(a) & 6

• Mohd Hishamudin Yunus J. in Sime Bank Bhd.
v Projek Kota Langkawi Sdn Bhd, [1998] 4
MLJ 334 while delivering judgement of the
case made a passing remark that he was very
curious to know how the State Authority could
have alienated a Malay Reservation land that
has been declared as Malay reserve in 1933 to
the defendants who are not Malay within the
definition of Kedah MRE in 1993
• .

• Mohd Hishamudin Yunus J. in Sime Bank
Bhd. v Projek Kota Langkawi Sdn Bhd,
[1998] 4 MLJ 334 - Remarked that he
was very curious to know how State
Authority could have alienated MRL
declared as MRL in 1933 to defendants
who are not Malay within definition of
Kedah MRE in 1993

Alteration & Revocation of
MRL

• FMS MRE s 4(i) allows Menteri Besar,
subject to approval of Ruler-in-
Council to alter limits or boundaries
of MRL subject to Article 89(1)
• Land declared as MRL prior to
Merdeka Day - Article 89(1) is
mandatory to be followed. – require
2/3 majority in State Legislative
Assembly

• Menteri Besar cannot alter status of
MRL until he complies with Article
89(1).
• Non-compliance would declare
alteration as null and void.
• If declaration made after Merdeka
Day, State Authority can safely rely on
provisions of Enactment without
adhering to Article 89(1).

• No revocation or alteration of MRL is
valid until it published in Gazette.
• Mohamed Isa & Ors. v. Abdul Karim &
Ors. [1970] 2 MLJ 180 - Raja Azlan
Shah - MRL will only lose its
character by way of an express
revocation under States’ MRE

Lands Declared prior to
Merdeka
• Cannot be revoked or excised unless it
follows stringent rules in Article 89(1) of
Federal Constitution.
• If revocation did not adhere to procedures
in Federal Constitution, then it would be
declared as nullity.
• Procedure does not apply to MRL declared
after Merdeka Day.

Restrictions & Prohibitions on
Dealing

• Rationale of policy of reservation in law
implies a right of exclusive control &
ownership to a particular person or groups
of persons identified by law as sole
beneficiaries of policy of reservation.’
• Intrinsic & inherently consistent with
purpose of reservation will be imposition of
prohibition against dealing, such as
transfer, charge or lease.
• Restriction as to dealing by power of
attorney, entry of caveat, bankruptcy,
attachment, trusts

Transfer
• FMS MRE s8 - no Malay holding can be
transferred to Non-Malays
• Idris Bin Haji Mohamed Amin v. Ng Ah
Siew [1935] FMSLR 70, Ct – ‘intention of
Enactment was to preclude Malays from
parting with any rights or interest in reserved
lands.

• Tan Hong Chit v. Lim Kin Wan(1964)
30 MLJ 113 - a non-Malay who has been
occupying MRL prior to its declaration
can transfer his land to other non-
Malays without approval of Ruler in
Council as he is not bound by MRE
provisions

• Haji Hamid Bin Ariffin & Anor. v.
Ahmad Bin Mahmud, [1976] 2 MLJ
79 - issue was could Malay proprietor
sell his Malay reserve land to a
Siamese under the Kedah MRE?
• Secondly, presuming transaction is
void and land is sold to a Malay
purchaser, will it pass a good title to
new purchaser?

nemo dat quod non habet
• Federal Court - by virtue of Kedah
MRE s 6, no MRL could be
transferred from Malay to Siamese.
• Secondly, by applying legal maxim,
nemo dat quod non habet, (no one can
give what he does not possess), no
legal and good title can be passed
from a void transaction or no
subsequent dealing can be legalised
from a void dealing.

•
• Foo Say Lee v. Ooi Heng Wai, [1969] 1
MLJ 47 FC - the purported agreement to
transfer MRL, subject to consent of the
Ruler in Council is not contrary to Kelantan
MRE.
• Reason - MRL may be transferred to non-
Malay subject to Ruler’s consent.

• Privy Council in Mistry Amar Singh v.
Serwano Wofunira Kulubya [1963] 3
W.L.R. 513 - ‘the purpose of said
legislation is to protect Africans and
to preserve African land for use by
Africans.’
• In this case, respondent an African
the registered proprietor of certain
‘mailo’ lands purported by agreements
to lease lands to the appellant, an
Indian.

• Section 2 of the Uganda Land Transfer
Ordinance prohibits occupation by a non-
African unless the consent in writing of the
Governor has been given. In this case, the
parties did not obtained the relevant
consent, as a result both of them had
contravened the law and committed
punishable offences.
• Privy Council held that as the respondent is
a member of the protected class, and the
said legislation was intended to be for the
benefit of Africans as a class therefore the
agreement so entered is void ab initio.

• The Court cited with approval the judgement
of Lord Mansfield in Browning v. Morris (1778)
Cowp. 790, where he said:
“But, where contracts or transactions are
prohibited by positive statutes, for the sake of
protecting one set of men from another set of
men; the one, from their situation and
condition, being liable to be oppressed or
imposed upon by the other; there, the parties
are not in pari delicto; and in furtherance of
those statutes, the person injured, after the
transaction is finished and completed, may
bring his action and defeat the contract.”

Charge MRL to Non-Malay
• FMS MRE s 8(i) states that no MRL can
be charged to non-Malay except to
Government, Co-operative Societies
registered under Co-operative
Societies Act 1948 (FMS MRE s 17(1)(a)
& to any person specified in Second
Schedule of FMS MRE,

• Charge of MLR to non-Malay not permitted
unless to a person specified in the Second
Schedule of MRE.
• This is due to the fact that the person in
Second Schedule need not be a born Malay
under MRE s 2.
• Any person may apply to the State
Authority to be declared as Malay for the
purposes of the MRE and to be inserted in
MRE Second Schedule. Therefore, a
company can after registering the charge
apply to the State Authority to be included
in the Second Schedule.

• Zainal Abidin Bin Mohd. Taib v.
Malaysia National Insurance Sdn.
Bhd [1994] 3 CLJ 731 - a charge was
created and registered on September
6th
1982 to the Defendant, a non-
Malay company.
• The defendant applied to the State
Authority to be included in the
Second Schedule as a recognised
Chargor only after registration of the
charge.

• This was approved only in October
23rd
1991. Subsequently the State
Authority by its letter dated July 21st
1992, agreed to have a retrospective
approval, dating back to January 1st
1982 of declaring the non-Malay
company as a Malay for the purposes
of the charge under section 17 and
Second Schedule of FMS MRE. Faiza
Thambi Chik J. held that the charge
is valid and the decision of the Ruler
in Council is binding.

• Badiaddin v First Malaysia Finance
Berhad Mustapha Hussain J. held that
even though the declaration of MRL was
entered only after the charge has been
registered, the charge is still void as the
land is a MRL.
• This is despite the State Authority has
approved to insert the Respondent in
Schedule 2 of s 17 MRE, as a company
qualified to hold a MRL.
• Federal Court upheld the decision in 1998
and there was no attempt to distinguish
this case with Zainal Abidin Bin Mohd.
Taib v. Malaysia National Insurance
Sdn. Bhd.

Confusion in Kelantan
• Ho Giok Chay v. Nik Aishah (1961) 27
MLJ 49 Hepworth J. held after
analysing s 7(i) and 9A held that a
charge created in favour of a non-Malay
by a Malay on a Malay reserve land was
void ab initio.

• Whereas, in T. Bariam Singh v.
Pegawai Pentadbir Pesaka Malaysia
[1983] 1 MLJ 232, Mohamed Zahir J.
held can create charge of MRL but in
foreclosure proceedings the
purchaser must be a Malay. And
disagreed with the decision of
Hepworth J. in Ho Giok Chay v. Nik
Aishah.
•

• Recently in, Dato’ Haji Nik Mahmud bin
Daud v. Bank Islam Malaysia Bhd. [1998]
3 MLJ 393 the CA avoided to provide a
solution to this conflicting judicial opinion
however, went on to say that ‘a charge
transfers or vests a right or interest to or
in the land in the chargee, otherwise a
charge would be valueless and of no effect,
the essential element being that the
chargee is entitled to reimburse himself
out of the land, that is to compel payment
of the amount due by sale of the land
itself.’

• In Sime Bank Bhd v. Projek Kota
Langkawi Sdn Bhd 1998] 4 MLJ 334 a
Malay or Siamese in the light of s 6(1)
of Kedah MRE can create a charge of
MRL in favour of a non-Malay.
•

Lease
• General prohibition in MRE s 8(i) against
creation of leases of Malay reserve land to
non-Malay.
• However, Kelantan MRE s 7(iii) allows lease of
Malay reserved lands situated within town
areas to non-Malays, subject to the approval
of His Highness the Sultan. The said lease
should not exceed 3 years and non-renewable
and any provision in the lease which allows for
renewal shall be declared as null and void.

• In respect of Malay reserved lands outside
the boundaries of town, monthly leases
may be given to non-Malays and such lease
may be terminated upon giving one month'’
notice, however, such leases does not
require the consent of the Sultan.
• In Dato’ Haji Nik Mahmud bin Daud v.
Bank Islam Malaysia Bhd,[1998] 3 MLJ
393, 400 Abdul Malek Ahmad JCA held
that the Kelantan MRE allows the Malays
to lease the Malay reserved lands to non-
Malays.

Entry of Caveat
• Non-Malays are allowed to enter a caveat on
MRL. The State MRE provisions are silent on
this issue. In RAP Nathan v Haji Abdul
Rahman Bin Haji Yusoff & Ors, [1980] 1
MLJ 248 Syed Agil Barakbah J held that
eventhough the plaintiff is not Malay he has
a caveatable interest in the MRL.
• In addition to those treated as Malays for
the purposes of Malay reservation, that are
normally found in the FMS MRE schedule can
also enter caveat on a Malay holding.

Lien
• In FMS MRE s 10, it is stated that no lien can
be created on Malay holding. The provision is:

• “No lien by deposit of issue document of title
for any Malay holding as security for a debt
shall be capable of being created in favour of
any person, and no caveat in support of any
such lien by deposit shall be capable of
registration in any land Office or Registry of
Title.”

Exceptions
• However, the FMS MRE provides an exception
to the general rule by allowing the title of
Malay holding land to be deposited to:
• (i)    in favour of Menteri Besar;
• (ii)  any such co-operative society registered
under the Co-operative Societies Act 1948;
• (iii)  any such person specified in the Second
Schedule.

Granting of Power of Attorney
• There is clear prohibition in FMS MRE s 9
on the creation of power of attorney in
favour of a Non-Malay to act on behalf of a
Malay proprietor to transfer, charge or
lease of a MRL or Malay holding. Such
memorandum shall be declared as void and
shall not be capable of registration. The
exception to this general rule is that a
specific power of attorney could be
created on Malay holding or MRL if it deals
with cross transfer and alteration or
variation of conditions.

• In pre-Merdeka case of Gan Khor v
Soan Bin Pelita [1935] FMSLR 39
the Judge had avoided to discuss the
issue whether the power of attorney
created in favour of the non-Malay
was valid or not under the 1913 MRE.
However, FMS MRE 1913 s 8(ii)
speaks that the power of attorney
between Malay and non-Malay is
revocable.

• in Idris Bin Haji Mohamed Amin v. Ng
Ah Siew [1935] FMSLR 70 at p77,
the Appeal Court held that as the power
of attorney relates to a right and
interest in land, therefore it is in
contrary with the spirit of the MRE and
cannot be enforced.

• In the subsequent case of Sakinah v.
Kua Teong How [1940] FMSLR 246,
Howes J. approved the above case
that the power of attorney purported
to give the chargee a right or
interest on the land, and as such was
contrary to the provision of s 8(i) of
1913 MRE.

Bankruptcy
• No Malay holding shall vest in the
Official Assignee upon the registered
proprietor being declared bankrupt
according to FMS MRE s.12, unless, the
registered proprietor is declared
bankrupt prior to the coming into force
of the MRE.

Attachment in Execution
• “No Malay holding shall be attached in
execution of a decree or order of any
Court unless the suit or proceeding in
which such decree or order was made
was instituted before the
commencement of this Enactment.”

• However, in pre-Merdeka case, The Official
Administrator v. Haji Abdul Majid bin
Shakabudin [1938] FMSLR 75, 76, the court
held that there is nothing to prohibit the
administrator from selling the MRL and using
the purchase money to pay off the creditors
whatever their race are. The only prohibition
is that the land could only be sold to Malay.

Restriction as to Creation of
Trusts
• Generally, no trusts could be created or
enforced by Non-Malay on Malay holding
or MRL. By applying the literal
interpretation, one can safely assume
that the provision does not mention
either expressly of impliedly any
prohibitions against the appointment of
non-Malay trustee.

Grants of Probate and
Letters of Administration
• There is clear prohibition that no grant
of probate or of letters of
administration shall operate to vest and
Malay holding or Malay reservation in
any executor or administrator who is
not Malay. See FMS MRE s 15.
•

Consequence of Contravention
of MRE
• i. Avoidance of Dealing
• ii. Risk Forfeiture by the State

• in Idris Bin Haji Mohamed Amin v. Ng
Ah Siew [1935] FMSLR 70 said that
‘the obvious intention of the Enactment
was to secure for Malays only land
comprised in Malay reservations.’

• Therefore, in the FMS MRE s 8(i) it is
provided that dealings that infringe the
laws shall not be capable of registration.
Furthermore, those dealings that are
contrary to the MRE, shall be declared as
null and void in almost all the FMS MRE s
19(i) In addition, no action for breach of
contract shall lie in respect any dealing or
disposal or any attempt to deal in or
dispose of any Malay holding contrary to
the provisions of the FMS MRE 19(ii) In
addition, any rent paid in pursuance of the
contrary dealing would not be recoverable
in the Court see FMS MRE 19(ii).

Risk Forfeiture by the State
• “If at any time it shall appear to the
satisfaction of the Ruler-in-Council that any
Malay or Siamese has attempted to vest in
any person any Reservation land held by him
under any document of title, contrary to the
provisions of MRE S 6, the Ruler-in-Council
may, by order in writing, signed by the
Menteri Besar, direct all interest of such
Malay or Siamese as the case may be,

• in such land shall be forfeited and upon the
registration of such written order in the
manner prescribed in Enactment No.56
(Land) such land shall vest in the Sultan
absolutely; provided that one month’s
notice to show cause against such
forfeiture shall have been served upon
such Malay or Siamese, as the case may be,
and cause shall not have been shown to the
satisfaction of the Ruler-in-Council within
the period prescribed in the notice.

• Before Ruler-in-Council can forfeit the
MRL, he must make sure that:
• a. The Malays or Siamese has attempted to
vest the Reserve land to Non-Malay or to
all those Malay companies, which have not
been declared as Malay.
• b. It is a MRL held under document of title.
• c. The dealing is contrary to the MRE
• d. Order shall be in writing, signed by the
Menteri Besar;

• e. Follow procedures prescribed in
NLC
• f. One month notice to be given to
proprietor to show cause why the said
land could not be forfeited.
• g. The Ruler-in-Council unsatisfied
with the reason given.
• h. Forfeiture takes effect.
CHAPTER 142.docx

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