After more than 20 years since the completion of the SILK Highway, the Federal Court has delivered a split decision in Sistem Lingkaran Lebuhraya Kajang Sdn Bhd (SILK) v Orchard Circle Sdn Bhd & Pentadbir Tanah Daerah Hulu Langat [2025] CLJU 540 that could redefine land acquisition in Malaysia.
This involves a dispute over land for the SILK Highway which was ongoing for over 20 years. Orchard Circle Sdn Bhd (OCSB) challenged the surrender of its land, arguing it was never valid under the National Land Code (NLC), and thus, they were entitled to proper compensation.
Key Facts
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5/9/1998: OCSB applied to surrender its land to the Hulu Langat Land Administrator under Section 200 of the NLC via Form 12B. The surrender was approved on 11 January 1999.
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10/12/2001: The Selangor State Authority issued a compulsory acquisition (Form D under the LAA 1960) for a larger area for the SILK Highway.
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2002: First land inquiry awarded OCSB nominal compensation of RM1.00, assuming the land was already surrendered. OCSB filed a judicial review, leading to a second land inquiry, where the Land Administrator again found the land surrendered and awarded nominal compensation of RM10 for the surrendered area.
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OCSB’s Challenge: OCSB argued there was no valid surrender due to non-compliance with NLC(Sections 196, 200, and 201) – lack of written consent from the chargee and failure to complete all statutory procedures such as rent revision and title endorsement.
Legal Principles
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Section 49(1) Land Acquisition Act 1960 (LAA 1960) restricts appeals on compensation awards, appeals cannot revisit factual dispute, except where a “question of law” arises.
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A “question of law” involves interpreting statutes or legal principles, not re-examining evidence or facts.
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The NLC requirements for surrender of land under Sections 196, 200, and 201 require written consent from the landowner and chargee, rent revision, and title endorsement.
The Federal Court’s Split Decision
A dissenting judge viewed the surrender as valid based on conduct, but the majority ruled:
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The surrender was invalid due to non-compliance with NLC requirements, such as lack of written consent from the chargee (bank) and incomplete procedural steps such as rent revision and title endorsement.
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The validity of the surrender was a question of law, not fact, because it required interpreting statutory requirements, not merely reviewing facts. This made the issue appealable underSection 49(1) LAA.
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This failure meant the land was never properly surrendered and OCSB should be entitled to proper compensation for the compulsory acquisition.
Key Takeaways
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Strict Compliance with NLC: Developers must ensure all procedural requirements under the NLC are strictly followed when surrendering or acquiring land.
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Non-Compliance can lead to Prolonged Legal Battles: Non-compliance with legal procedures can result in lengthy legal disputes, which can delay development projects, increase costs, and reduce compensation.
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Proper Documentation: Developers should maintain detailed records during the land acquisition or surrender process to avoid disputes. Proper documentation, such as submitting Form 12B with correct details, statutory approvals and bank consents is crucial to prevent challenges over land surrender and compensation.
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Understand Appeal Limitations: Compensation disputes can only be appealed on questions of law, not on factual disagreements. If a surrender is invalidated due to procedural errors, developers may need to accept reassessed compensation without further appeal on factual grounds.
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Voluntary Surrender vs. Compulsory Acquisition: Voluntary surrender is different from compulsory acquisition. Voluntary surrender requires strict legal compliance, while compulsory acquisition follows a defined legal process with specific compensation mechanisms under the LAA 1960.
Checklist for Valid Land Surrender
o Submit Form 12B with full and accurate details
o Obtain written consent from the landowner and any chargees (e.g., banks)
o Ensure rent is revised
o Confirm endorsement of title after surrender
o Follow all procedural steps as per Sections 196, 200, and 201 of the NLC
– By George Miranda, Joy Sam Jia Qian, Nurafiqah ‘Izzati –
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.
