SECURITY DEALING JUAL JANJI

Definition
Jual Janji
In this type of transaction, one agrees to sell the land
to another for some consideration and to buy back the land
after the settlement of the loan within an agreed period. If
the chargor fails to repay the loans, the chargee can go to
the Land Office to register the jualjanji transaction.
W.E.Maxwell (distinguished administrator & chronicler) who was the 1 st
writer on Jual Janji expounded its basic principles in his classic treatise,
The Law & Custom of the Malays with reference to the Tenure of Land
in (1884) 13 JMBRAS 75-200;
The Malay raises money on his holding by the transaction
called J.J, sells his proprietary right for a sum then & there
advanced to him & surrenders the land to the vendee,
coupling, however, the transfer wit the condition that if, at any
time, or within a certain time, he shall repay to the vendee the
sum so advanced, he (the vendor) shall be entitled to take
back his land. This transaction differs from our mortgage in
the facts- (1) that no property in the soil passes but merely
proprietary right; (2) the possession is actually given to the
person who advances the money
David S.Y Wong in his article on jual janji,(1973) defines Jual janji
as a customary security transaction. He described Jual Janji as that :
The borrower transfers- to use the word in a loose
sense- his land to the lender who thereby takes possession of
it. Whatever profits the lender may make out of the land will
be his to keep as a reward, akin (related to) to interest, for the
loan. The borrower is entitled to resume the land upon
discharging the debt except that, where a period was fixed for
the repayment of the loan, default will turn the original
arrangement in an absolute sale, Jual Putus.
The land shall remain in the hands of the borrower but the
ownership is in the possession of the lender. However, the lender
would allow the borrower to stay on the land. Only on default of
payment of the debt that the titles of the land will be transferred to the
lender.
The exact definition is that jual janji is a kind of Malay customary
dealing in land in the nature of a security transfer if land and the
lender, who thereby takes possession of it, and the borrower is entitles
to repurchased the land upon the discharging the debt.
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From the definition, it is similar to the equity of redemption in

mortgage, where it depends on the intent of the parties. But in jual
janji transaction, the land is transferred into the name of the lender
and the borrower is given the right to obtain a re- transfer upon
repayment of the debt within the period stipulated.
But, it is different from the concept of mortgage whereby a
mortgage is a type of security transaction where the legal title of
ownership to the land is vested / surrended to the mortgagee upon
repayment of the loan.
Mohd Isa v Hj Ibrahim &Anor (1968) 1 MLJ 186.
In this case it was defined that jual janji was a conditional
transfer of land with a right to repurchase.
On default of payment of debt or loan, the borrower can be
granted an equitable relief for the purpose of extending the time
period of payment.
The basic features of jual janji are the same as mortgage, but
with 2 exceptions:
(a) On ownership
It is a Malay culture, therefore, in term of gaining a land, it is based on
ihya al-mawat, i.e one who cleared the land , he owns it. If the land is
not cultivated along certain period, the ruler can take or forfeit the
land, as the actual ownership belong to the ruler. In actual fact there is
no right of ownership on the part of the cultivator / farmer. The jual
janji transaction has its own distinctive features but not in mortgage
transaction whereby the actual equitable principle of redemption is
alien to jual janji. Where no mortgage the title is conveyed on the
mortgagee.
(b)On the concept.
The concept of jual janji is based on community loan transaction,
religious adat, and gotong royong, where as this concept is nor
available in mortgage.
Briggs J. in Tengku Zahara v Che Yusuf [1951] 17 MLJ 1 gave
legal recognition on J.J by describing the principal characteristics &
its rationale/purpose;
(1) The seller (debtor) sells & transfers the land to the purchaser (creditor)
(2) By a collateral agreement (subordinate but from same source) the parties covenant
to resell & retransfer the land back to the seller upon payment of an identical sum
within a stipulated time;
(3) The seller remains in possession of the land, paying rental in cash or in kind to the
purchaser. This consideration becomes legitimate income to the purchaser, unlike
interest, which is forbidden in Islam
(4) If the seller shall default in paying the agreed sum to the purchaser within the
stipulated time, the transaction of J.J becomes Jual Putus & the seller is obliged to
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surrender possession of the land to the purchaser. Invariable, however, as indicated by

W.E. Maxwell, & in the true spirit of the injunction of the Quran (Surah AlBaqarah:280 If the debtor is in the difficulty, grant him time. Till it is easy for him to
repay), the seller is given time by the purchaser
Effect on Transaction.
The question is whether there is any effect of the security
transaction on the contract of sale or on the customary security
transaction.
In contract of sale, time is an essence but in jual janji time is not
essence, i.e the repayment can still be delayed.
Importance/Rationale of Jual Janji Why Jual Janji?.
Most of the jual janji transaction are in respect of land in the .1
rural areas, moderates in sizes and owned by the Malays. The amount
borrowed is usually small and is based on the potential output of the
.land rather than the true market value
Based on the concept of gotong royong, the lender is supposed to .2
.help rather than to make profit out of it
Muslims want to avoid riba which is prevalent in the practices of .3
.most commercial bank before the introduction of interest-free bank
Teoh and Khaw in their book, the Land Law in Malaysia Cases and
: Commentary, say that
To hold that such transaction to have effect only on the contract is to
cause the poor farmers to loose their valuable land and becomes
.tenant of their own land
Provisions
S.4(2)(a) of the N.L.C provides that the customary law is not effected
by the N.L.C even though there is no provision on customary tenure, it
.is still a custom having the effect in law
S.205(1) provides that under the NLC, other than the transaction
mentioned, would not be effected that in Part 14 to Part 17 (S214 to
S.219) would be affected in respect of the alienated lands. No
dealings can be effected on agricultural land measuring less than 2/5
of a hectare. This means that Malay peasants owning agri. Land
measuring less than 2/5 of a hectare cannot charge their land as
.security for a loan. Therefore they turn to J.J. to obtain loan
Under s.56 and s.57 of the Evidence Act, it is provided that
where it is expressly mentioned that anything which relates to
.customs, the court shall take the judicial notice
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Under s.206 (3) of the NLC, it was provided that nothing will
effect the contractual transaction on alienated lands, i.e the NLC
cannot intervene on this matter. Judith Sihombing, in his book
Centenary of the Torrens System in Malaysia, mentioned that s. 206 (3)
of the NLC has removed any doubt as to whether equitable relief can
be granted to transactions in alienated land which transaction do not
.conform to the code

Principle of Jual Janji

: Previously, the concept of Jual Janji was on 2 things, namely
(a) Transfer of the land for a loan;
(b)An option to re-purchase the land by the borrower at the
specific price within a stipulated period.
The land as the security, as the security usually be transferred to the
.lenders name
Different Views on Jual Janji
There are 2 views on jual janji transaction, namely whether it is an
.outright sale or a security transaction

.As an Outright(direct or complete) Sale / A Contract

Hj Abdul Rahman v Mohamed Hasan (1917) AC 209
There was a loan transaction where the land would be transferred from
the borrower to the lender. The lender had to pay back within the
stipulated period of 6 months. But after the expiry of the period, the
.borrower wanted to repurchase it
High Court & COA held : Once a mortgage, always a mortgage
Privy Council Held: As the borrower did not pay within the stipulated
period, he has no longer any right to repurchase, as it is an outright
sale and an option to repurchase. The borrower could not repurchase
or transfer the land back into his name as provided in s.4 of the
.Registration of Titles Regulation 1891
Wong See Leng v Saraswathy Ammal (1954) MLJ 141
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It was held that jual janji was a contract of sale with an option to
repurchase by the borrower. The decision followed the decision of the
above case, whereby it was said that jual janji was an outright sale
.with a contractual obligation to be fulfilled
Muray Ansley J said that The right of the respondent to repurchased
the land did not confer on the respondent any interest in the land; he
only acquired a contractual right. The respondents right is governed
by the law relating to contract, and the parties have chosen to make
time of the contract a term not prohibited by law. So, he has no right to
.repurchase
Ibrahim v Abdullah (1964) MLJ 138
There were 2 agreements made between the two, namely on the sale
and the other on the right to repurchase within 3 years. After expiry of
the period, the lender applied for specific performance to register the
land into his name. The borrower refused and the question was jual
.janji is an outright sale
.Held: It was an outright with a contractual right
Kanapathi Pillai v Joseph Chong (1981) 2 MLJ 117
Salleh Abas J. said that As the option to repurchase is only
contractual and as the right was not exercised at all, we are of the view
that the appellant has nothing to complain. He did not even bother to
protect it by a caveat. The caveat which she lodged was so far out of
time, misconceived and no use of all, and its has lost to protect its
equitable interest, which has never happened. So, the respondent
(owner) has the right to repurchase the landl
Ismail bin Haji Embong v Lau Kong Hon (1970) 2 MLJ 213
There was a transaction of sale and an option to repurchase within 8
months at a specific price. After the expiry, the plaintiff went to the
defendant to extend it whereby it was granted for another 5 to 6
months. Subsequently, the defendants father transferred the land to
.the sons name after the expiry of 6 months from the extension date
Held: Jual janji was a transaction but the issue was whether time was of
essence. The judge said that : From the evidence, even the time was
originally of an essence and the conduct of the parties was no longer
.showed, therefore the plaintiff is entitled to repurchase the land
Ahmad bin Omar v Haji Salleh bin Sheikh Osman (1987) 1 MLJ 338
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The same decision as in the case of Ismail bin Haji Embong v Lau Kong
Hon (1970) 2 MLJ 213 was decided. The time was no longer of essence.
The judge said that : Here the borrower may recover against the
registered proprietor if she is not the actual owner. The borrower still
has the right to sue if she can prove that there is a fraud.
Mohamad Isa v Haji Ibrahim & Anor. (1968) MLJ 186
The plaintiff transferred the land to the respondent. The option was
stated to be within 6 years and further extended to another 5 years. In
the meantime, the time of the repurchase still existed, the defendant
entered into another jual janji transaction to the second defendant. The
issue was whether the plaintiff could bring up the case for the
registered to declare null and void.
Held: The first defendant had committed fraud by selling the land to
another person, so the plaintiff could succeed.

.As a security Transaction

Jual janji is treated as security transaction (as defined by Wong). Here,
the expiration of time stipulated for the repurchased does not make it
an outright sale, which is similar to English concept.
Yaacob v Hamisah (1950)MLJ 255
The first agreement was the contract of sale and the second
agreement was the option to repurchase within 3 years.
Held: The judge said that: From the fact of the agreements, the
transaction was of the essence in mortgage of land whereby the
English equity could be applied. This is because the law has been
amended from Haji Rahmans case, and the Registration Title
Regulation 1891 was repealed.
Nawab Din v Mohamad Sharif (1953) MLJ 12
There was an agreement for sale and an option to repurchase. The
issue was whether it was an outright sale or only as security
transaction.
Held: It was held that it was a nature of mortgage to secure a loan and
therefore, he had the right to redeem it and the right was not affected
by the stipulation that this land could be repurchase within the
stipulated period.
Note: Once a mortgage, it is always a mortgage.

Halijah v Morad & Ors (1972) 2 MLJ 166

This was an appeal against the decision of the High court on a claim by
the respondent/ plaintiffs against the appellant/ defendant for
possession for apiece of land, and damages for trespass.
Held: The appeal was dismissed because the appellant was not given
possession of the land as the purchaser but as a creditor in order to
give her security for loan and also to enable her to collect the profit fro
the land. Since her claim for transfer the land had been filed on Oct 5,
1965, the appellant was out of time both under the Kedah Enactment
No 6 (Limitation) and under the law of Limitation Ordinance,1953.
Datuk Jagindar Singh v Tara Rajaretnam (1983) 2 MLJ 196
In this case, Lee Hun Hoe J. said that : The transaction was meant to be
a security agreement rather than an outright sale.
Mahadevan v Manilal (1984) 1 MLJ 286
The judge decided differently from the case of Kanapathi where it was
an outright sale, but the same judge said otherwise.
Salleh Abas J. said that : That having regard to the intention and
conduct of the parties at that time when the payment was made, an
agreement to secure a debt in favour of the debtors name, creates an
equitable security transaction, even though the transaction is not in
compliance with the National Land Code, relating to the situation of the
security transaction, namely charges of the security transaction.
Caveatable Interest of Borrower Protection of caveatable
interest
Does a borrower in jual janji transaction have a caveatable
interest in the land?.
The right of the borrower are protected in s.4(2) of the NLC in
this type of transaction, and under s 2 of the Interpretation and
General Clauses Act 1948 that the right of the borrower to redeem
would override a bona fide purchaser.
Then there is a need to improvise the law on s.10 on the Malay
Customary tenure whereby the borrower should be given a notice
under the agreement of jual janji .
And the provision under s.323(1) of the NLC would have to be
amended so as to allow the borrower to enter into caveat against the
title to the land just to protect his right to be transferred.
In order for claim to be cavaetable, that claim must represent a
claim that can lead to the making of a substantive registry to the
register. Caveatable interest arises only at the time after the borrower
has paid up. Judith Sihombing, in her book, gives reasons as follows:
a) In the past, the caveat for the sale was not frequently
used;
b) May be, on the attitude of the parties, whereby the
borrower has no ill- feeling towards the lender.
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Registered J.J
Vendor/ Seller (Debtor) transfers land to Purchaser (Creditor).
Purchaser registered on his name (indefeasibility of title) but
subject to J.J. agreement. Purchaser has the proprietary right.
The vendor may or may not caveat his interest. But if he
choose to caveat, it would be Registrars caveat (see Mohd. Isa
v Hj. Ibrahim). If the Purchaser breach, the vendor may sue the
purchaser under contract.
Mohamad Isa v Haji Ibrahim (1968) MLJ 186
The lender sold the land to a third party while the agreement was still
subsisting. The due date for the repayment had not been lapsed and
the borrower had not caveat the land. Somehow or another his interest
was protected on the ground that there was a fraud on the part of the
lender and the third party purchaser. Therefore, the right of the
borrower on the land was still protected.
Note: This case was termed as an irregular jual janji. Therefore the
interest of the borrower was supposed to be protected.
Unregistered J.J.
Vendor transfers his land to Purchaser. Land will remain on
vendors name. While the Purchaser may lodge private caveat
on the land. If the vendor breach, the purchaser may sue the
vendor under contract.

Development of the Law on Jual Janji Transaction

This development is based on the attitude of the court on this
transaction.
Haji Abdul Rahman v Mohaned Hasan ( 1917) AC 209
A, the owner of the land, borrowed money from B and A eventually
transferred his land to B as a security. Under the written agreement, B
promised to re-transfer the land to A if a repaid all the money borrowed

within agreeable period. However, a failed to repay but in years later, A

sought to redeem the land.
The issue was that if the collateral agreement was considered a
contract, then the claim after 18 years was statute barred. However, if
it was to be considered as a mortgage or a security transaction, it is
not, because the forms of mortgage in the FMS were lien and charge.
S.4 of the Register of Title Regulations 1891 expressly mentioned that
no other type of transactions were recognized, except lien and charge.
Held: The Privy Council decided that jual janji was a customary form of
transaction but in the lower court it was not as one of the conveyance
of security that once borrower had repaid, he was entitled to
retransfer. But the PC criticized this finding as stated by Lord Dunedin
that: Local judges have been too much swayed by the doctrine of
English Equity and not pay special attention that there were here,
dealing with totally different land law, mainly a system of registration
of title which had een described in s.4of the Registration of Title
Regulations 1891 of Selangor.
But, again in 1950, the courts were confused in:
Yaacob v Hamisah (1950)MLJ 255
Briggs J. said that The transaction involved was a jual janji and once it
is established, it matters not whether the agreement in the form of an
agreement of purchase and sale and auction. The case of Haji Abdul
Rahman shows that in either event, time is not an essence of the
contract since the transaction will affect redemption.
Wong See Leng v Saraswathy Ammal (1954) MLJ 141
The court strongly criticized the decision in Yaacobs case whereby
Bohagiar J. reaffirmed the principle expressed in Haji Abdul
Rahmans case that the principle of jual janji could amount to a
contract that the time was an essence.
Ibrahim v Abdullah ( 1964) MLJ 138
The court reaffirmed the judgment in Wong See Lengs case.
To avoid hardship, the courts have on several occasions, given relief to
the borrower that the transaction was an irregular jual janji.
Ismail bin Haji Embong v Lau Kong Hon (1970) 2 MLJ 213
The plaintiff needed some money and borrowed $2000 from the
defendant and it was agreed that the plaintiff to pay an interest of $40
per month to be payable on the loan and that his land and house would
be made securities.
Held : The case was concerning a jual janji transaction whereby the
judge decided in favour of the borrower and said that The agreement
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depends on the intention of the parties. If the time is mentioned as not

the essence of the transaction, then the time is not an essence,
delayed payment is still acceptable.
So, based on the finding of the facts, the court still failed to
acknowledge that in jual janji transaction, one can delay the
repayment.
Mahadevan v Manilal (1984) 1 MLJ 286
The judge, Salleh Abas CJ, decided differently from the case of
Kanapathi where where it was an outright sale, but the same judge
said otherwise. He said: It is the duty of the court to do justice
between the parties and to protect the interest of the creditor in jual
janji transaction.
(1) Failure to appreciate the nature of jual janji transaction, there is a
conflicting opinion on this subject. In order to provide any relief to the
borrower, the court will declare that :.
(a) the borrower as having an equitable relief in the mode
of
redemption (equivalent to the English Legal sense of
law of mortgage).
(b)The court may consider that the transaction is one of
the irregular jual janji, therefore an equitable relief
cannot be granted to the borrower, and that jual janji is
purely a Malay Customary transaction.
(2) Courts still have the authority of jual janji transaction in the light of
s.206 (3), S.4(2) (a) and s.205(1) of the NLC, hereby jual janji has
the effect/ cause of law, therefore, the court has to take judicial notice.
(3) Time is not an essence of the agreement in jual janji.

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