A three-man bench chaired by Datuk Seri Mohamed Apandi Ali delivered the decision to a packed court room, ruling that Putrajaya’s appeal was allowed.
The church can appeal the decision in the Federal Court but it has to obtain leave by framing legal questions which are of public interest.
In an immediate reaction, The Herald editor Father Lawrence Andrew said he was disappointed with the decision.
He said the weekly would appeal against the decision at the Federal Court.
The Herald lawyer, S. Selvarajah, said he would continue with the next legal course of action as instructed by his client.
Apandi explained that the government did not violate the Church’s constitutional rights in banning the use of the word in The Herald.
"It is our common finding that the name Allah was not an integral part of the Christian faith and practice," he said.
"Such usage if allowed will enviably cause confusion within the community."
Apandi argued that the state and the people were of paramount importance, adding that the welfare of the individual and group must yield to the community.
"So the minister had sufficient material before him to ban The Herald from using the word.
"Thus, there is no plausible reason for the High Court to interfere with the minister's decision," said Apandi.
The judge who read a summary judgment said the Home Minister had acted within his powers to disallow the Catholic weekly from using the word “Allah” in its Bahasa Malaysia section.
“Our common finding that the use of Allah is not an integral part of the Christian faith, so we find no justification for why they insist on using the name or word in their publication,” he told a packed court room.
Putrajaya's lawyer, Suzana Atan, had on September 10 submitted before the judges that the Home Minister banned the use of the word Allah in the Herald on grounds of national security and public order.
She said the prohibition was ordered as it touched on Islamic religious sensitivity.
Suzana added that after the High Court ruling four years ago, there were several arson attempts on churches and an incident in which vandals tossed a pig’s head into a mosque.
She argued that the ban was actually a pre-emptive measure by the minister, adding that the use of the word by Catholics caused a lot of confusion among Muslims and Christians as it had a different meaning to both religious groups.
Suzana also told the court that the Home Minister had the absolute discretion under the Printing Presses and Publications Act 1984 to impose conditions when approving permits for publications.
Porres Royan, who appeared for the church, said the national security and public order argument by Putrajaya was an afterthought.
Royan went on to explain that in 1982 there was an exemption order where the word could be used in the Al-Kitab imported from Indonesia and also in the languages of the natives of Sabah and Sarawak.
He said the Herald had been using the word in its Bahasa Malaysia section since 1994.
Royan also said the government allowed the Al-Kitab in the Indonesian and Malay languages, which contained the word Allah, to be imported and printed in the country as part of the 10-point solution in April 2011.
The Allah row erupted in early 2009 when the Home Ministry threatened to revoke the Herald’s permit for using the word Allah to refer to God.
This action prompted the Catholic Church to sue the government for violating its constitutional rights.
On December 31, 2009, the High Court allowed the church's judicial review application and lifted the Home Minister's ban on the use of the word in the Herald.
Judge Lau Bee Lan said the church had a constitutional right to use the word Allah in its newspaper on the grounds that religions other than Islam can be practised in peace and harmony.
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