I tried the following during August 2010:
Obtain seeds as fresh as possible.
Remove the reddish aril (aril was quite oily) completely by washing with water and gentle rubbing.
File a small area of seed (black/dark brown) with an emery board.
Soak in water approx. 2 hours.
Mix 2 parts multipurpose compost and 1 part sharp sand.
Fill clear colourless plastic pots (has layer of grit at the bottom) with compost.
Water the compost and allow water to drain from the bottom of pot,
Make a hole (about 1cm-cube or approx size of seed) at the edge of the compost with the pot, put seed in and cover with compost.
Stretch clingfilm over the top of pots and tie with rubber band.
Put pots on foil-lined tray to reflect light and in sunniest spot in the house.
I watered sparingly from the base of pot after planting if the compost looked dry.
After 32 days I had 1 (of 12 seeds) germinated.

I found it useful to read this article (found it by google)
Revista Arvore
Print version ISSN 0100-6762
Rev. Arvore vol.28 no.3 Vicosa May/June 2004
doi: 10.1590/S0100-67622004000300002
"Seed germination and removal of Michelia champaca L. (Magnoliaceae) in eucalypt stands: the influence of the aril"
"Germina��o e remo��o de sementes de Michelia champaca L. (Magnoliaceae) em talh�es de eucalipto: influ�ncia do arilo"
by Giovano Candiani, Mauro Galetti and Victor Jose Mendes Cardoso