malay reservation land

04/11/23 Ainul Jaria Maidin 2013 1


RATIONALE Reserving land for certain public

purposes, land can be reserved for certain class or group of people for their sustenance and prevent extinction.

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 and natives


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 influx of Chinese and Indian immigrants to 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 ENACTMENTpassing 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 Malay peasants from diverting away from traditional agricultural activities


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

Malays willing to depart land for money.

Historians - 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 threat to their administration

need to prevent Chinese and other immigrant community from acquiring land which is most valuable commodity created for Man.


Types of Reserved Lands in MalaysiaMalay Reserved LandsMalacca Customary Lands 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

Federated Malay States Malay Reservations Enactment No. 30 of 1933 Chapter 142


Post Merdeka Laws

Federated Malay States Malay Reservations Enactment No. 30 of 1933 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 that is the states of Kelantan, Kedah, Johor, Trengganu and Perlis have their respective state Enactment.


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.

Nature of Enactments

Malay Archipelago



Perlis

Malay Reservations Enactment 1353 was modelled from 1913 Federated Malay States Enactment.

came into force on 17th Zul-Hijjah 1353/ 1935 (No.7 of 1353)


Kedah

Malay Reservations Enactment of was modelled from 1913 Federated Malay States Enactment.

Came into force in 1931 (No.6 of 1349)


Penang British claimed that there was no

customary law in existence in Island of Penang when they took over and applied 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

Federated Malay States Malay Reservations Enactment 1933

Perak was one of the earliest States to convert land into Malay Reservation.


Selangor

Federated Malay States Malay 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.

National Land 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 the State.


Johor

Adopted Federated Malay States Malay Reservation Enactment 1933 in 1936


Pahang

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


Trengganu

Trengganu followed the model of the Federated Malay States Malay Reservations Enactment 1933. It was the last to implement the Malay Reservations Enactment in 1941.


Kelantan

Legislation modelled on the 1913 FMS Enactment.

Came into force on November 4th 1930.

Almost all lands in Kelantan are declared as Malay reserve under Kelantan Malay Reservation Enactment 1930.


Federated Malay States Malay Reservations Enactment 1933 and Customary Tenure Enactment are applicable to Malays in that State.

FMS MRE is applicable in districts of Jelebu, Kuala Pilah, Rembau and Tampin.

(Federated Malay States Cap.215)

Negri Sembilan


Who is a Malay

definition of Malay varies from State to state basically depending on the geographical location and also interpretation accorded by Ruler in Council or State Authority.

definition of a Malay is determined by state enactments.


malays

Certificated siamese & Arab descent

malays

No arab descent


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 the Commissioner in writing to be a Siamese agriculturist permanently resident in the 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


A Malay Company

Definition of a Malay company or requirement 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 the

Articles of Association to Malays only; and

(d) objective of Company is to deal in Malay holding land.


Malay Company Hj Lamin bin Hj.Mohd Yunus J. in Wan

Ismail & Seng Liang Sdn. Bhd. v Musa bin Mat Jani & Anor [1990] 2 CLJ 379

dealing in favour of a company where, inter alia not all members are Malay is not a Malay company under FMS MRE s 2.

Therefore 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 the requirements to establish Malay company.

Reason - rigid requirements to establish a Malay company HOWEVER, Ruler-in-Council may 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, the alienated land cannot be declared as Malay holding.

If the proprietor is not Malay or none of the co-proprietors are Malay the registering body is not empowered to make any memorial under the MRE or inclusion of the said land under the Malay reservations list see FMS MRE s 6(vi),


Court Interpretation Syarikat Macey Berhad v.

Nightingale Allied Services (Sued As A Firm) & 2 ORS. [1995] 1 CLJ 890 Dato’ James Foong - 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 of 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 their idt to be inscribed with the words ‘Malay Reservation.’ FMS MRE section 6(iv)


No Malay holding can take effect until and unless it has been registered against RDT.

However, despite land published in gazette as Malay reservation, State Authority cannot proceed to endorse it as Malay Holding if proprietor or 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 RegistrarThe duty of Registrar is mandatory

as he shall endorse or cause to endorse on every register document of title and the issue document of title pertaining to a Malay holding the words ‘Malay holding’ and no fee shall be charged for making the memorial service.


Failure to Endorse on Title and Implications It is possible by non-endorsement of the

words ‘Malay reservation’ on the Issue Document of Title and Register Document of Title, it could lead the proprietor to abuse the law by charging or dealing with his land to the non-Malay. This 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 that a bona fide purchaser of reservation land who is without notice of this restriction, takes free from the restriction.


object of inscription as prescribed by FMS MRE s 12 is aimed at notifying public of the status.

For purpose of inscription, duty is imposed upon the Collector of calling in and enforcing the production of all 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 it.


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 the 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 the RDT in order to search as the official search is not conclusive evidence

This actually defeats the main principle of the Torrens System, that the register 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 entered and registered on the title of land 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 Malay reserve 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 - null and void?

HC & FC held that irrespective of late endorsement and that money has been released, land is still a MRL, and it comes within ambit of MRE, therefore, the charge is null and void.


Reference to Ruler in Council


Reference to Ruler in Council All the States MRE Enactment have

inserted a section stipulating for Reference to Ruler in Council in event of doubt. Situations where is necessary as provided in FMS MRE s 20.

a. definition of Malay b. the mode of operation of the Enactment c. the manner in which the provisions

thereof to be construed or carried into effect


Who is Ruler in Council Hanisah v Tuan Mat [1970] 1 MLJ

213 to mean ‘His Highness acting in accordance with the advice of the State Executive Council’. Situations where reference to the Ruler in Council is necessary as provided in FMS MRE s 20.


In FMS MRE s 20, it is stated that in cases of doubt the matter shall be referred through the Menteri Besar to the Ruler of the State Council. In Johor MRE the matter is referred through the State Secretary to His Highness the Sultan in Council.

Kelantan MRE, s 18 states that the matter may be referred to His Highness the Sultan in Council without referring to the Menteri Besar.


Kedah MRE restated & reconfirmed the 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

(see Schedule D of Kelantan MRE where it 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).


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 provides that 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 The Ruler-in-Council is further given

discretion to add, delete from or amend from time to time in the list found in the Third Schedule,

Zainal Abidin Bin Mohd.Taib v Malaysia National Insurance Sdn.Bhd.[1994] 3 CLJ 731, where the Court held that the decision of Ruler-in-Council is final and conclusive. It would only become official once it has been published in the gazette.


On the other hand, for Federal Territory purposes, the discretion to add, delete from and amend is granted to Yang di Pertuan Agung.

Negeri Sembilan the provision state that those land which is alienated under section 7 would be deemed as Malay holding, notwithstanding the definition of Malay holding contained in FMS MRE s 2.


This leads one to believe that the State Authority can declare any land as a Malay holding irrespective of the definition of Malay holding, which is 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 habetFederal 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-MalayFMS 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.


BankruptcyNo 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 TrustsGenerally, 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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