The trawler was intercepted off northern Perak state on Friday but the group, including six women and eight children, refused to leave the boat, northern region marine police chief Zainal Abidin Hasan said
"We towed the fishing trawler into our police base jetty as the vessel had at least five leaks and it was damaged and could sink but they still refused to get off," he added.
Zainal said the group wanted a guarantee that they would get asylum in a third country such as Australia, Canada or New Zealand, but the talks eventually failed on Sunday.
"We even had UN High Commissioner for Refugees officials here to verify their status but the Sri Lankans were not convinced and the talks broke down, so we had no choice but to detain them," he said.
Zainal added that police were investigating the owner of the Malaysian-registered trawler, saying they believe the Sri Lankans were being smuggled by a human trafficking syndicate.
Immigration activists say Malaysia is often used as