Merutai is a town of a few hundred people situated on the Sungei Merutai running North to South approximately twenty-five kilometres north-west of Tawau. The town lies on a direct route between Kalimantan and Tawau. On the 27 January two Ibans were working in a plantation just outside Merutai when they were confronted by a party of seven Indonesian irregulars who suddenly fired upon them. The two Ibans with their parangs counter attacked the enemy party killing one enemy and wounding two others. The enemy with the two wounded fled.
The authorities were immediately informed about this incident and a patrol of Security Forces was immediately sent to try to capture the fleeing enemy. Security Force follow-up operations resulted in a contact with this enemy group which resulted in the two wounded being captured. Later during the day also in this area, four Indonesian irregulars armed and in uniform robbed two shops. The loot consisted of green peas, rice, a cooking pot, vegetable oil and chickens. Two more armed and uniformed Indonesian irregulars also robbed a further Chinese house in the same area. All the enemy escaped north.
Security Forces were informed and a follow-up operation commenced. The followup patrol was ambushed by this same party of enemy. The patrol returned the fire and killed a further enemy. As a result of these incidents at Merutai on the 27 January two enemy were killed and two captured. There were no Security Force casualties.