The pagdi system is one of the oldest forms of tenancy in Mumbai. It dates back to the pre-independence era. Landlords needed tenants. Tenants needed affordable housing. The tenant paid a lump sum at the start, called the pagdi. In return, they paid a very low monthly rent for as long as they lived there.

Millions of families in Mumbai still live under this system today. The flats are old. The rents are low. The legal rules that govern them are different from every other tenancy in the city.

This blog explains what the pagdi system is. It covers the rights of a pagdi tenant. It also covers what happens to a pagdi flat when the tenant dies.

Key Highlights

• The pagdi system is a tenancy arrangement where the tenant pays a large upfront sum and a very low monthly rent for long-term occupation

• Pagdi tenancies in Mumbai are governed by the Maharashtra Rent Control Act, 1999

• A pagdi tenant has the right to occupy the flat, sublet with landlord consent, and receive a share of the pagdi when the flat is sold or transferred

• When a pagdi tenant dies, the tenancy passes to a family member who was residing in the flat at the time of death, not through a Will

• Pagdi succession is governed by Section 7(15)(d) of the MRCA 1999, not by inheritance law

• A Will cannot transfer a pagdi tenancy. Only family members who were living in the flat can inherit it

• If no eligible family member was residing at the time of death, the tenancy ends and the landlord reclaims the flat

• Getting a legal heir certificate after the tenant's death is an important step for the family to establish their claim

What are the Rules of a Pagdi System?

Pagdi is a term used in Maharashtra, particularly Mumbai, for a one-time premium paid to secure tenancy rights in a property. In the pagdi system, a tenant pays a large one-time amount to the landlord. This is paid when they first occupy a flat. After that, they pay a monthly rent that is very low. In return, they have the right to stay in the flat indefinitely.

This is different from a regular tenancy in two ways. First, the tenant has already paid a large sum upfront. Second, the monthly rent does not go up with the market.

Pagdi tenancies in Mumbai are recognised under Section 56 of the Maharashtra Rent Control Act, 1999. The law sets out the rules that govern them.

What Are the Rights of a Pagdi Tenant?

A pagdi tenant has three main rights under the MRCA 1999.

The first is the right to continue occupation. As long as the tenant pays rent, the landlord cannot evict them. The tenant does not need to renew the tenancy. It continues for the tenant's lifetime. To understand what happens to this right when the tenant dies, read the section on what happens when a pagdi tenant dies.

The second is the right to sublet with the landlord's consent. A pagdi tenant can sublet the flat to another person. But they need the landlord's written permission first. Subletting without permission can give the landlord grounds to seek eviction.

The third is the right to a share of the pagdi on transfer. If the flat is sold or transferred, the tenant is entitled to a share of the amount received. The landlord and tenant usually split this amount. The outgoing tenant receives between 33 and 50 percent. This depends on the agreement and local practice. To understand how this works during redevelopment, read the section on pagdi flat redevelopment.

These rights belong to the tenant personally. They are tied to the tenancy, not to ownership of the flat. The landlord remains the owner of the property throughout. To understand how a Will fits into this picture, read the section on whether a Will still matters for a pagdi flat.

What Happens When a Pagdi Tenant Dies?

This is the most important question for any family living in a pagdi flat.

A pagdi tenancy does not pass through a Will. It cannot be inherited the way property is inherited. Instead, it passes under Section 7(15)(d) of the Maharashtra Rent Control Act, 1999. That section says the tenancy passes to a family member of the deceased tenant. That family member must have been ordinarily residing in the flat at the time of death.

The family member must have been living in the flat when the tenant died. Someone who was not living there cannot inherit the tenancy. This is true even if they are a close relative or named in a Will.

The order of succession usually follows this sequence: spouse first, then children, then parents, then other family members. If more than one eligible family member was residing in the flat, they may need to agree on who takes over.

The surviving family member should apply to the landlord to have the tenancy transferred into their name. Getting a legal heir certificate is an important step. It establishes who the legal heirs are. It helps the surviving family member prove their relationship to the landlord.

Does a Will Still Matter for a Pagdi Flat?

A Will cannot transfer a pagdi tenancy. This is one of the most common misunderstandings among families in pagdi flats. Even if the tenant names someone in their Will to receive the flat, that has no legal effect on the tenancy.

The law looks at who was residing in the flat at the time of death. If the person named in the Will was not living in the flat, they do not inherit the tenancy. The tenancy passes to whoever was living there, not to whoever is named in the Will.

A Will still governs the tenant's other assets. This includes savings, investments, other property, and jewellery. It can also name a guardian for minor children. It can reduce disputes among family members over other estate matters.

The flat is governed by tenancy law. Everything else the tenant owns is governed by succession law. To understand what happens to the rest of the estate, families should read about what happens to property when someone dies without a Will.

What Happens to Tenants when a Pagdi Flat Undergoes Redevelopment?

Pagdi tenants have rights when a building is redeveloped. In Mumbai, many old buildings are being redeveloped. These schemes are approved by the Maharashtra Housing and Area Development Authority.

The landlord cannot simply evict the pagdi tenants during redevelopment. The tenants are entitled to alternative accommodation or a share of the redevelopment benefit. This depends on the agreement between the landlord and the developer.

The successor who inherits the tenancy has the same redevelopment rights as the original tenant. These rights do not reduce just because the tenancy has passed to the next generation.

How AasaanWill Helps Pagdi Tenants in their Inheritance Planning

AasaanWill helps families who live in pagdi flats with the legal steps after the tenant's death. AasaanWill also helps families plan their estates so nothing is left unprotected.

• Obtaining a legal heir certificate after the death of a pagdi tenant, so the surviving family member can establish their claim to the landlord

• Drafting a Will that covers all the assets the tenant owns outside of the pagdi flat, so the rest of the estate passes clearly and without dispute

• Explaining the difference between what a Will can and cannot do for a pagdi tenancy, so families understand what planning steps are still needed

• Helping families coordinate their tenancy succession documents with a complete estate plan

AasaanWill's Will writing service helps families draft Wills that work alongside their tenancy arrangements as one complete plan.

Conclusion

The pagdi system is a tenancy arrangement unique to Mumbai. The tenant pays a large upfront sum. They get the right to occupy the flat at a low monthly rent. These tenancies are governed by the Maharashtra Rent Control Act, 1999.

When a pagdi tenant dies, the tenancy passes to a family member who was residing in the flat. It does not pass through a Will. Families must take the right legal steps after the death to transfer the tenancy formally.

A Will still matters for everything the tenant owns outside of the pagdi flat. Most families need both a properly written Will and clear documents showing who can succeed to the tenancy.

Frequently Asked Questions

1. What is the pagdi system in Mumbai?

The pagdi system is a tenancy arrangement where the tenant pays a large lump sum upfront and a very low monthly rent for the right to occupy a flat indefinitely. It is one of the oldest forms of tenancy in Mumbai and is governed by the Maharashtra Rent Control Act, 1999.

2. What does pagdi mean?

Pagdi is a term used in Maharashtra, particularly Mumbai, for the one-time premium paid to secure tenancy rights in a property. Under the pagdi system, this amount may be paid to the landlord when the tenancy begins or to the outgoing tenant when the tenancy rights are transferred.

3. What are the rights of a pagdi tenant in India?

A pagdi tenant has the right to continue occupation as long as rent is paid, the right to sublet with the landlord's written consent, and the right to a share of the pagdi amount when the flat is transferred or sold.

4. What happens to a pagdi flat when the tenant dies?

The tenancy passes to a family member who was ordinarily residing in the flat at the time of death. This is governed by Section 7(15)(d) of the Maharashtra Rent Control Act, 1999.

5. Can a pagdi tenancy be transferred through a Will?

No. A pagdi tenancy cannot be transferred through a Will. The law looks at who was residing in the flat at the time of death, not at what the Will says.

6. Who is eligible to inherit a pagdi tenancy?

A family member who was ordinarily residing in the flat at the time of the tenant's death. This usually means a spouse, child, or parent. Someone who was not living in the flat is not eligible, even if they are named in a Will.

7. What is pagdi flat transfer?

Pagdi flat transfer is the process of transferring tenancy rights in a pagdi property from an outgoing tenant to an incoming tenant. In such a transfer, the outgoing tenant may receive a portion of the agreed pagdi amount from the incoming tenant in exchange for relinquishing their tenancy rights. The landlord may also receive a separate amount as part of the transfer.

8. Does a pagdi tenant own the flat?

No. The pagdi tenant has the right to occupy the flat but does not own it. The landlord remains the owner of the property.

9. What is a legal heir certificate and why does a pagdi family need it?

A legal heir certificate is a document that identifies the legal heirs of a deceased person. Families who inherit a pagdi tenancy need it to prove their relationship to the deceased tenant when dealing with the landlord.

10. What happens if no eligible family member was residing in the flat when the pagdi tenant dies?

If no eligible family member was residing in the flat at the time of death, the tenancy ends. The landlord reclaims the flat.

11. Can the landlord evict a pagdi tenant?

A landlord can seek eviction only on specific grounds under the Maharashtra Rent Control Act, 1999. These include non-payment of rent or misuse of the premises. As long as the tenant follows the terms of the tenancy, the landlord cannot evict them.

12. Does a pagdi tenant have rights during building redevelopment?

Yes. Pagdi tenants are entitled to alternative accommodation or a share of the redevelopment benefit. These rights pass to the successor who inherits the tenancy.

13. Is a Will useful for a pagdi tenant?

Yes, but not for the pagdi flat itself. A Will governs all other assets the tenant owns such as savings, investments, and personal belongings. It can also name a guardian for minor children.

14. What is MRCA 1999?

MRCA 1999 stands for the Maharashtra Rent Control Act, 1999. It is the law that governs rent and tenancy arrangements in Maharashtra, including pagdi tenancies in Mumbai.

15. Can AasaanWill help with pagdi flat succession?

Yes. AasaanWill helps families obtain a legal heir certificate after the death of a pagdi tenant and helps draft a Will that covers all assets outside the pagdi flat as part of a complete estate plan.

Disclaimer: This article is for general informational purposes only and does not constitute legal advice. The information presented reflects the law as of the date of publication. For advice on your specific situation, please consult a qualified advocate.

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