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Prasad (Exe. Finance)     07 January 2014

Sale of property under pagdi system


I would like to know the procedure & more info abt sale of property under Pagdi System in Mumbai.

Kindly help & do the needful.




 3 Replies

S.QAISAR ALI ADV. (Advocate)     08 January 2014

You should contact to some local lawyer as there are different rules and regulations to sell property in different states.

Rutumbhara Nayak (lawyer)     09 January 2014

Dear Prasad, where redevelopment is concerned, very often, in the island city particularly in olden parts, there’s reference to pagdi properties. The consideration paid to a landlord as a fine, premium or consideration (pagdi) has been legalized by Section 56 of Rent Control Act, 1999. It is now also lawful for a tenant to receive any amount in consideration of the relinquishment or transfer of his tenancy. Incidentally, in the Rent Act, 1974 giving or receiving pagdi in cash was held ‘illegal’ hence there was extensive use of black money. Now too, in cities like Mumbai, for the transfer of tenancy, 33 per cent of the amount in transaction is paid in cash to the landlord to affect the transfer of tenancy or assignment. If one wants to sell his home for Rs 9 lakhs, he will have to pay Rs 3 lakh of the amount to the landlord. The purchaser of land in a pagdi system is said to be a tenant and has limited rights because a very nominal rent is collected by the landlord and receipt given accordingly. However, when there is redevelopment of the said property, the landlord usually makes a deal with the developer and stakes his claim of his 33 per cent and accordingly takes profit out of the property permanently.
Sec. 56: Rights of Tenant and Landlord to receive lawful charges – Notwithstanding anything contained in this Act, it shall be lawful for:
1) The tenant or any person acting or purporting to act on behalf of the tenant to claim or receive an sum or any consideration, as a condition of the relinquishment, transfer or assignment of his tenancy or any premises;
2) The landlord or any person acting or purporting to act on behalf of the landlord to receive any fine, premium or other like sum deposit or any consideration on respect of the grant, or renewal of a lease of any premises, or for giving his consent to the transfer of a lease to any other person.
The Procedure of sale of property under Pagdi System in Mumbai:
Lease and License Agreements are prepared for sale of property under Pagdi System in Mumbai. The Lease and License Agreements are designed to escape restrictive regulations; all terms are governed by agreement between landlord and tenant. Aside from the most basic condition that the tenancy is only for 11 months, everything must be stated in the contract. Typical contracts include a provision that, if either party wishes to prematurely terminate the contract, three month’s notice must be given. The typical agreement also prohibits subleasing. To deter tenants from overstaying, experts recommend including a clause quadrupling the rent if the tenant does not leave when the contract ends. Get an expert to guide you through the entire process. you can call me at 09555 507 507 or send me a mail at info@lawkonect.com

1 Like

Rajaram   01 October 2015

Hi i stay in a pagdi building for 50 years this property is in my fathers name. My father expired 25 years ago and later my mother expired 17 years ago. I have been staying with my brother during both my parents death,my brother has given an NOC for transfer as well. There is a dispute amongst my landlords internal family and the matter is in court for last 12 years i have been paying all rents on time and i have receipts for the same till date. I want to sell this house since the building is in a poor condition and move out but since it is under dispute my landlord is helpless saying its court. Please advise help

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