1. Wak Domok took out a RM50,000 loan from Mr. Manilinggam and used his agricultural land as security for the loan. He was given 24 months to repay the loan. 2. Mr. Manilinggam then deposited the land title with Hj. Bakhil as security for another loan without lodging a caveat. He then sold the land to Tora. 3. Under the strict interpretation approach, WD would not be able to redeem the land if he failed to repay within 24 months as time is of the essence. However, MM's actions of depositing the title and selling the land amounted to a breach of the collateral agreement, allowing WD to redeem the

1. JUAL JANJI
JANUARY 2018, PARTA QUESTION 1
Group 2:

2. January 2018, Part A Question 1
Wak Domok (WD) is the registered proprietor of a piece of agricultural land in Kuala Selangor (the said land).
Some of his crops failed and he required some cash immediately. He approached Mr Manilingam (MM), the local
moneylender. MM suggested that WD execute a transfer promising that upon payment of of the RM50,000 loan,
the said land will be retransferred to WD. Payment was agreed to be made within 24 months. The transfer was
registered on 7 January and simultaneously RM50,000 was disbursed in favour of WD.
MM subsequently deposited the issue document title (IDT) of the said land with Hj. Bakhil (HB) as security for a
loan of RM70,000. HB who was busy preparing for Umrah with his new wife, Nona did not enter a Lien Holder’s
Caveat. MM persuaded HB to allow him to make the ‘necessary arrangements with a lawyer friend in town’ for
the lodgement of a Lien Holder’s Caveat. Armed with the IDT, MM enters into a sale and purchase agreement
with Tora on 24 October 2011. Tora paid the sum RM10,000 being 10% deposit of the purchase price to MM. Tora
then made a search on the Register Document of Title and lodged a Private Caveat. MM returns the IDT to HB
and disappeared, possibly to India.
What is legal position of WD, HB and Tora?

3. Issue:
Whether Wak Domok (WD) is entitled to redeem the said land
from Mr Manilingam (MM) on the ground of jual janji
transaction?

4. Generally, Jual Janji is a security transaction that was being practised by the early society since 19th
century. Jual janji evolved from a local community loan transaction where land is used as a security for
the loan to secure full repayment of loan. In order to complete this transaction, the borrower will
transfer his land to the lender with an undertaking given by the lender that the borrower can redeem
the loan upon full settlement of the loan.
Tengku Zahara v Che Yusuf: A type of security transaction practiced commonly amongst the Malay
Muslim community. Briggs J: “The whole purpose of jual janji transaction is to provide a procedure for
securing a loan…. Without infringing the prohibition of usury which is binding on the conscience of all
good Muslims.”
In Kanapathy Pillay: Jual janji can also be practiced amongst non-Muslims.

5. Jual janji is defined as a sale of promise in the form of conditional sale, where
the land is used as security to secure loan.
When National Land Code 1965 was introduced and owner must comply with
the mandatory requirement for registration of land titles, Jual Janji transaction
was also affected.

6. The land will be transferred into the name of of the lender by filing Form 14A and
a collateral agreement will be executed. Whereby, upon full settlement of the
money he borrowed, the lender has to transfer back the land to the borrower.
In the event of default of payment, the land which had been pledged as security
for the loan will used to recover the loan. This is known as jual putus, where court
will not assist the borrower to redeem back his land.

7. Elements of Jual Janji
1. Lender;
2. Borrower;
3. Loan;
4. Land as a security;
5. Collateral agreement

8. However, problems arise in determining whether the transaction between parties is purely a
contract of sale or a security transaction.
Thus, there are two principles adopted by the Malaysian Courts which are strict interpretation
and liberal interpretation.

9. Strict interpretation

10. Transfer of land and collateral agreement are only regarded as a
contract of sale.
Agreement is only valid as a contract – time is of the essence.
Agreement to retransfer the land to the borrower confers no legal
right in the land on him.
If the borrower fail to make full settlement within the stipulated
time, court will not assist him to redeem the said land.

12. HJ ABDUL RAHMAN & ANOR
V
MOHAMED HASSAN

13. FACTS
◦ The borrower entered into a loan agreement with the lender
and transfer his land to him with a collateral agreement that
the land is to be retransferred upon full settlement within 6
months. The borrower failed to repay the loan within the
agreed time and only settled the debt 18 years after the expiry
of the agreed date.

14. ISSUE
◦ Whether the collateral agreement is a contract or it was part of
a security transaction ?

15. LOWER COURTS
◦ Applied the principle of Equity.
◦ Once a mortgage always a mortgage,
◦ The borrower has the right to redeem the land.
◦ If the agreement is in the nature of mortgage, the right to
redeem the land remains irrespective of whether or not the
time frame has expired.

16. PRIVY COUNCIL
◦ Jual janji is not a security transaction or a form of mortgage as the
only form of mortgage recognised in Malaysia is lien and charge.
◦ The collateral agreement between the parties was a contract of
sale whereby time is of the essence.
◦ The borrower was no longer entitled to redeem his land.
◦ Lord Dunedin : The judges have been too swayed by the doctrine
of English Equity and not paying attention to the fact that they
were dealing with a totally different land law.

17. A. KANAPATHY PILLAY
V
JOSEPH CHONG

18. JUDGMENT
◦ The land option to repurchase confers the borrower a
contractual right.
◦ It can be defeated by lapse of time.
◦ The right does not give rise to equitable interest.

19. Exceptions to Strict Interpretation
Extension of Time
It happens where one party asked for an extension of time when the time which have been
agreed had lapsed.
Where the lender has agreed to an extension of time to the borrower to repay the loan, thus
causing time to no longer be of the essence of the contract.
Case: Ismail Hj Embong v Lau Kong Han (1970) 1 AMR 105
-Where the defendant provided an extension of time, the plaintiff’s contractual right to
repurchase the land could still be exercised after the expiry of the extension. It will depend
on whether time is still of the essence of the contract. It was held that the conduct of the
parties was proof that time was not treated as of the essence, thus entitling the plaintiff to
repurchase the land on full payment of the sum due.

20. Evading Payment of Loan
It happens where the lender refuses to accept repayment by evading it or by inserting an
additional term not provided in the original agreement.
When the lender tries to keep the land, the borrower need not to pay the loan.
The lender’s conduct would amount to a breach of contract, thus entitling the borrower to redeem
the land.
Case: Abdul Hamid bin Saad v Aliyasak Ismail (1999) 1 AMR 105
-The creditor’s act in refusing to accept the repayment and asking for the payment to be raised
was proven to have been done in hopes that the borrower will not able to pay in order for the
creditor to own the land. The creditor then argued that his title and ownership to the land is
indefeasible. It was held that the borrower was entitled to redeem the land upon full payment of
the loan.
Case: Hatijah bte Rejab v Abdullah Saad (2004) 2 AMR 665
-It was agreed that upon repayment of the loan within five years, defendant must return the land to
the plaintiff. However, the defendant refused to retransfer the land to the plaintiff even though the
repayment is made within the stipulated time in their agreement. It was held that the defendant
was instructed to retransfer the land to the plaintiff since the plaintiff has paid the loan to the
defendant as in their agreement.

21. APPLICATION

22. 1. Lender
The lender in the present dispute is Mr Manilingam (MM), the local
moneylender.

23. 2. Borrower
The borrower in the present dispute is Wak Domok (WD) who is the
registered proprietor of a piece of agricultural land in Kuala Selangor.
He in need of some cash immediately due to failure of his crops.

24. 3. Loan
The loan concerned in the present dispute is the payment of RM 50k
given by Mr Manilingam

25. 4. Land
The land concerned in the present dispute is a piece of agricultural land
in Kuala Selangor belong to Wak Domok.

26. 5. Collateral Agreement
There is collateral agreement made between the lender and borrower whereby Mr Manilingam promised that
the said land will be transferred back to Wak Domok upon full settlement of the loan
Under Collateral agreement, the said land is in the name of Mr Manilingam
Mr Manilingam is obliged to transfer the said land back to Wak Domok upon full repayment of RM 50k within 24
months.
However, there is breach of collateral agreement when Mr Manilingam subsequently deposited the issue
document of title (IDT) of the said land with Haji Bakhil as security for a loan of RM 70k prior to expiration of
repayment.
This is supported by the facts that MM entered into Sale and Purchase Agreement with Tora on 24th October
2011. Technically, WD still has 9 months remaining to make the full repayment of 50k.
Therefore, MM had breached the collateral agreement.

27. Application - Strict Approach
From the facts given, the transaction undertaken by the parties may be scrutinized under the
strict approach.
Per the explanation given beforehand, it is known that the matter of time that was agreed upon
by the parties while embarking on the agreement is of the essence.
However, it is to be noted that such transaction is only binding in the realm of contracts. This is
per the case of A. Kanapathy Pillay v Joseph Chong.

28. The effect of a breach of that contract would be the land will not be subject to a retransfer to
the borrower.
In this present situation, it can be seen that there is an agreement on the part of Wak Domok, to
pay back Mr. Manillinggam’s money within a period of 24 months.
Wak Domok’s land was transferred to Mr. Manillinggam as a security for the loan in which
should Wak Domok fails to pay, shall result in the land to be permanently vested as Mr.
Manillinggam’s estate.

29. Therefore, the position is that if Wak Domok has paid the money he owed Mr. Manillinggam
within the period of 24 months, Wak Domok has the right to the retransfer of the land in
question.
This can be seen through the application of the case of Haji Abdul Rahman & Anor v Mohamed
Hassan, in which the time agreed upon by the parties to the collateral contract is of the essence.
Failure to adhere to the stipulated repayment period shall be the cornerstone in deciding
whether the borrower may redeem his land or not.

30. Application - Exception
In the context of exceptions, it can also be argued that the act of Mr. Manillinggam in fledding to
India can be seen to be an act of evading payments.
Having applied the exception of evading payments within this situation, it can be said that the
time is no longer the essence of this contract.
This is mainly due to curb the mala fide act of the lender in securing the land is question per the
reason that the borrower had failed in fulfilling his end of the contract – which is to pay on time.

31. As such, the position is that should Wak Domok has made clear his efforts to pay back the
money within 24 months coupled with the act Mr. Manilinggam avoiding such repayments, the
end of the 24 months will not result in a definite transfer (time is no longer the essence of the
contract).
Wak Domok still has the right for a retransfer, basing on the judgment in the case of Abdul
Hamid bin Saad v Aliyasak Ismail.
Here, the creditor refused repayments of the loan until the end of the repayment period. He
then argued that upon the end of the period, it shall be deemed as a definite transfer.

32. The court held that there was an act of evading payments by the creditor, therefore the right to
redeem the land shall not end merely because the repayment period is over.
As such, it can be seen that it is not possible for Wak Domok to repay Mr. Manilinggam as he has
disappeared to India.
Therefore, it is argued here that if Mr. Manillinggam does not return within the repayment
period (provided that Wak Domok is ready to pay and has made efforts to pay), Wak Domok still
has the right to a retransfer of the land in dispute.

33. Conclusion
Pursuant to the arguments made above, Mr. Manillinggam has breached the collateral contract
and therefore Wak Domok is in the position to legally redeem the said land.