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When it comes to reconstruction, pagdi properties are frequently mentioned, especially in older portions of the island metropolis. Section 56 of the Rent Control Act of 1999 authorizes the payment of thought as a fee, payment, or concept (pagdi).
WHAT IS PAGDI SYSTEM?
In India, the 'pagdi' system is a type of leasing in which the renter is also a co-owner of the property. A type of tenure, the pagdi framework, prospered in the bygone eras because, preceding 1999, there was a compelling reason to get into an agreement with the property manager for rent. Lease receipts covered the entire cycle, and the prices would stay unchanged for a long time as if expansion had never happened.
An occupant must pay a reasonable fee and lease under the pagdi system, which dates back to the border time. Locals claim it was proposed to relocate assets without an archive to avoid paying enlistment fees and capital increases assessments to the British overlords. The conversation took place over the phone and was based on shared trust.
IS PAGDI SYSTEM LEGAL IN INDIA?
The framework was made legal by the Maharashtra Rent Control Act of 1999, which went into effect on March 31, 2000. Area 56 of this Act considered it legal since it says as follows:
● The occupant or any individual performing or suggesting to act or implying to follow up for the resident's benefit to ensure or obtain any sum or any concept, as a condition of his surrender, move, or duty of his leasehold of any premises.
● The landowner or any individual acting or implying to act on behalf of the property manager to obtain any acceptable, high price, or other similar aggregate or store, or any thought regarding the award, or recharging of rent of any premises, or for giving his consent to the exchange of rent to another individual.
In this method, a landowner may grant the occupant a kind of possession in exchange for a financial deposit. In this fractional proprietorship, the occupant has a certain right over the asset but not the land. In this arrangement, the part-owner may rent the property, but the rent he receives should be shared between the property's genuine owner and the part-owner who is the primary resident. As a result of this arrangement, the first proprietor will be able to obtain some more.
Can the landlord evict the tenant in the Pagdi system?
No tenant can be evicted from his property without completing the legality, i.e., filing a formal eviction lawsuit in the relevant court for valid legal reasons. If the tenant pays the rent on time and follows all tenancy requirements, the landlord's eviction action will fail miserably.
It is also now allowed for a tenant to collect any payment in exchange for the surrender or transference of his lease. Given that providing or receiving pagdi in actual money was declared "unlawful" by the Rent Act of 1974, there seemed to be widespread use of black currency.
PAGDI SYSTEM LAW:
The Pagdi system was a type of leasing practiced in various parts of India a long time ago. Before 1999, property owners did not have a written agreement, and the only documents that existed were rent records.
The renter and landlord are co-owners of the property in a pagdi system, and tenants have the right to sublease or sell the property subject to specific terms. The terms stipulated that the renter obtain prior approval from the owners and that, in the event of a sale, the tenants split 33 percent or an agreed percentage of the retail price.
The state government recently suggested changes to the Maharashtra Rent Control Act, 1999, focusing on private and business tenants who live on premises larger than 847 sqft and 547 sqft whose lease across a few Mumbai structures is restricted by the Pagdi framework.
This proposal was also advanced in an offer to deliberately transition away from the "original" lease control framework presented in 1947.
Pagdi System in Mumbai:
The Pagdi framework in Mumbai guarantees the occupant that the lease for the property stays ostensible regardless of the ascent in expansion or some other market variances. In South Mumbai's few lease-controlled flats, inhabitants frequently pay as little as Rs 400-Rs 500 as a lease when the going rate is around Rs 25,000-Rs 70,000.
Since it is now pronounced what the Pagdi framework is, let us discuss its implementation into the RERA Act. The government aims to bring the expiring framework restricted by the Pagdi System under the Real Estate Regulation (and Development) Act, 2016 (RERA) and provide guarantee and lease security to the inhabitants
The Maharashtra Housing and Area Development Authority, which collects property taxes, has taken on redeveloping these designs. Around 16,000 houses in Mumbai, including Pagdi properties, have been following this approach for repairs.
Transfer of ownership and tenancy rights in Pagdi System
If there should be an occurrence of sub-letting, the old inhabitant, who presently is a proprietor and the first landowner of the property, will share the lease sum among themselves, as a rule, at a 35:65 proportion. This works for the landowner to bring in some cash off their resource while sidestepping charges. The old occupant benefitted too, and the new inhabitant leased the premises at a highly ostensible lease. There is no recommended regulation about charges to be paid to a property manager for a No Objection Certificate.
For example, in the Pagdi framework, if a present inhabitant needs to sell their home for Rs.10 lakh, they are obliged to pay close to 3 to 5 lakhs to the property manager. They appreciate confined freedoms because the landowner gathers ostensible leases and gives the receipts.
According to Section 7 (15) (d) of the Maharashtra Rent Control Act, 1999, a relative of the deceased occupier staying with them will be qualified first from the family to inherit the tenancy. When a present pagdi occupant is killed, the tenure freedoms must be transferred to the lawful successor (s). The new occupant (lawful successor) has the right to request that the property manager issue a new lease receipt in the name of the heir(s) (s). Testamentary progression, on the other hand, is absurd because occupancy privileges are hard to overlook for the resident. So an occupier cannot present their tenancy liberties under a Deed.
As a result, the relative who wishes to protect the deceased inhabitant's tenure rights must produce proof that they were continuously living with the deceased occupant at the time of their death. For the estate of such occupancy liberties over the premises, such a relative will have priority over any other members of the family.
CONCLUSION:
The Pagdi system falls short of meeting the needs of landowners and occupiers in today's society and is therefore out of date, demanding either reasonable revisions to this tenure framework to meet the needs of the contemporary world or its complete elimination.
About Author
Jatin Dubey
An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years.
He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.
An enthusiastic content writer who is a law graduate and has been working as Real Estate Consultant for around 9 years.
He has worked with top Real Estate Agencies and Builders in Delhi, Bangalore and Pune. His skills to perform market analysis and explore high potential localities has helped many clients in the past.
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