Out-of-State Trust Can Claim Rent-Act Exemption Under 2018 MP Notification, Rules Supreme Court

A Division Bench set aside a High Court order rejecting Scindia Devesthan Trust's eviction suit, holding a 2018 State notification extended rent-act exemption to public trusts registered outside Madhya Pradesh.

The Supreme Court on 19 March 2026 allowed an appeal by Scindia Devesthan Trust, setting aside a Madhya Pradesh High Court order that had rejected the trust's eviction suit on the ground that the trust was not registered under the M.P. Public Trust Act, 1951 and therefore could not claim exemption under Section 3(2) of the M.P. Accommodation Control Act, 1961. A Division Bench of Justice Aravind Kumar and Justice Prasanna B. Varale held that a subsequent State notification dated 12 July 2018 — which explicitly extended the exemption to public trusts registered in other States of India — rendered the High Court's reasoning untenable. The matter was remitted to the trial court for disposal on merits.

How the Dispute Reached the Supreme Court

Scindia Devesthan Trust filed an eviction petition against the original respondent, Jamuna Prasad Saraswat, seeking eviction and arrears of rent on various grounds. On receiving summons, the defendants appeared and filed a written statement denying the plaint's averments. During the pendency of proceedings, they also filed an application under Order 7 Rule 11 of the Civil Procedure Code, 1908, seeking rejection of the plaint.

The defendants' core argument was that the trust had been declared a public trust by notification dated 4 July 1968 under Section 36(2) of the M.P. Public Trust Act, 1951, but the exemption earlier granted to the trust's property — which is situated outside the State where the trust is registered — was cancelled by a State Government notification dated 18 September 1971. That cancellation had been challenged by the trust before the High Court in M.P. No. 35/1972. The High Court maintained the cancellation by judgment dated 25 April 1973, and the trust did not challenge that judgment further, allowing it to attain finality.

The defendants further contended that a notification dated 7 July 1989, issued by the State Government under Section 3(2) of the M.P. Accommodation Control Act, 1961, exempted educational, religious, or charitable public trusts registered under the M.P. Public Trust Act, 1951 from the Act's provisions. Since Scindia Devesthan Trust was not registered under that Act, the defendants argued it could not claim the benefit of this exemption and the suit was therefore not maintainable.

The trial judge dismissed the Order 7 Rule 11 application on 19 March 2012. The defendants' revision was, however, allowed by the High Court of Madhya Pradesh at Gwalior by order dated 6 April 2017, in Revision Petition CR No. 109/2012. The High Court's order effectively rejected the plaint, prompting the trust to approach the Supreme Court by way of Special Leave Petition (Civil) No. 18301/2017.

The Pivotal Role of the 2018 Notification

During the pendency of the appeal before the Supreme Court, the trust filed I.A. No. 6467/2020, enclosing a notification dated 12 July 2018 issued by the State Government in exercise of the power conferred under Section 3(2) of the M.P. Accommodation Control Act, 1961.

The Court examined this notification and found it to be issued in continuation of the earlier notification dated 7 July 1989 — the very notification the defendants had relied upon to challenge the suit's maintainability. The 2018 notification, however, went further: it exempted any accommodation situated in the State of Madhya Pradesh owned by a public trust registered in other States of the Republic of India for educational, religious, or charitable purposes from all provisions of the Act.

The significance was direct. The High Court had held that the 1989 notification barred suits by trusts registered outside Madhya Pradesh. But the 2018 notification — a continuation of the same series — expressly brought such trusts within the scope of the exemption. The Court held that in light of this subsequent notification, the High Court's finding could not be sustained.

The Court's Reasoning

The Court identified a single, short point for determination: “whether the plaintiff was not entitled to claim exemption in terms of Section 3(2) of the M.P. Accommodation Control Act, 1961?”

The answer turned on the 2018 notification's effect. Since that notification was a continuation of the 1989 notification and explicitly covered trusts registered in other States, the foundation of the High Court's order — that the trust's out-of-State registration disqualified it from the exemption — no longer held. The Court stated that the impugned order was liable to be set aside on this short ground alone.

The Court also noted the procedural context in arriving at its decision to hear the matter on merits despite the respondents being unrepresented. The original eviction proceedings dated to 2010, the SLP was filed in 2017, and keeping the matter further pending would, in the Court's view, only prolong the trust's ordeal. The Court disposed of the appeal on merits rather than adjourning it.

Directions on Fresh Notice to Defendants

While allowing the appeal and remitting the matter to the jurisdictional trial court, the Court took care to protect the defendants' right to notice, given that respondents Nos. 1, 1.1 to 1.3 were served but unrepresented before the Supreme Court. The Court directed that before the trial court proceeds with the trial, it must issue fresh notice to the respondents–defendants. The suit may proceed only after such notice is effected or held valid.

The Court also clarified that all other contentions of both parties are kept open for adjudication by the trial court. No costs were awarded.

Outcome

The Civil Appeal arising out of SLP (Civil) No. 18301/2017 was allowed. The High Court's order dated 6 April 2017 in CR No. 109/2012 was set aside. The matter was remitted to the jurisdictional trial court to be disposed of on merits and in accordance with law, subject to the trial court first issuing fresh notice to the respondents–defendants. All pending applications were consigned to records. No order as to costs was passed.