Judicial Commissioner Lee Swee Seng at a Hight Court in the northern city of Ipoh ruled the certificates of conversion null and void because it was unconstitutional, against the right of natural justice, and it was given without hearing the mother or children.
He also said it was unlawful as Sharia law in Perak state itself says that the children must be present to utter the affirmation of faith.
Lee added it was unconstitutional because Article 3, 5 and 11 of the Federal Constitution states that a mother has an equal right to raise her children to follow her own religion.
In 2009, the kindergarten teacher claimed that her estranged husband K Patmanathan stormed into her house in Ipoh and then took the youngest daughter and the three children's birth certificates.
She later discovered that her husband had converted to Islam and had also converted her three children.
On November 27 last year, the High Court ruled that Indira should have custody of all three children but her husband, now known as Mohd Ridzuan Abdullah, has yet to hand over the youngest daughter.
Muslim majority Malaysia has a mixed population including ethnic Indians and ethnic Chinese.
Conversions of children and "body-snatching" cases have raised tensions in past years.
