Ethnic Indians in Malaysia claimed victory Monday as sedition charges against three leaders of rights group were dropped, a day after the police crushed a rally of more than 10,000 Indians immigrants.

Three key leaders of Hindu Rights Action Force (Hindraf), a Malaysia rights group, were discharged by a court after dropping sedition charges for speeches earlier this month in which they criticised preferential treatment for majority Muslim Malays, malaysiakini.com reported.

The trio had faced three years in jail.

About 1,000 jubilant supporters carried the freed activists out of the court premises on their shoulders.

One of the demands of the Sunday rally was the release of the three Hindraf members. The rally was also meant to support a $4 trillion lawsuit filed in London in August by Hindraf, demanding that Britain compensate Malaysian Indians for bringing their ancestors to the country as indentured labourers and exploiting them.

'We are seeking justice for the Indian community and today's verdict shows that we have made a small step in the correct direction,' said P. Waythamoorthy, chairman of Hindraf, which organised the demonstration.

'It is a victory for the Indian community in Malaysia, but there is still a lot more work to do,' he said after the court ruled the charges must be dropped because prosecutors failed to provide transcripts of speeches made by the three.

Ethnic Indians constitute eight percent of the total population of 27 million but control just 1.5 percent of the economy.