Transfer of Ownership in Pagdi System
📌 Transfer of Ownership in Pagdi System
The Pagdi System is a form of perpetual or long-term tenancy prevalent in some parts of India, especially Maharashtra. Under this system, the tenant (pagdi-holder) pays a nominal rent (pagdi) to the landlord but enjoys strong security of tenure, often practically making the land or property virtually non-evictable.
Key Features:
Rent is nominal (usually fixed decades ago).
Tenancy is often heritable and transferable to legal heirs.
Tenant enjoys equitable rights almost like an owner, due to long possession.
Landlords’ ownership rights are heavily restricted.
🔹 Legal Framework
Rent Control Acts
Maharashtra Rent Control Act, 1999 (replaced older acts) governs the rights of pagdi tenants and landlords.
Tenants have perpetual lease rights; eviction is allowed only on very limited grounds like bona fide personal requirement or redevelopment.
Transfer of Property Act, 1882
Applies generally to conveyance but ownership transfer in pagdi system is restricted, because the tenant’s rights often override the landlord’s freehold rights.
🔹 Transfer of Ownership by Landlord
In pagdi system, the landlord can sell or transfer ownership of the property (through sale, gift, or inheritance), but the purchaser takes the property subject to the rights of the pagdi tenant.
Meaning: Tenant continues to enjoy possession and right to collect rent, irrespective of ownership transfer.
Ownership transfer does not affect the tenancy.
Tenant’s rights are protected under the Rent Control Act, which is a statutory protection recognized by courts.
📖 Case Law – Ramchandra vs. Jayantilal (AIR 1956 Bom 123)
Facts: Owner sold a property under pagdi system to a third party.
Held: The purchaser took ownership subject to existing tenancy rights; the pagdi tenant continued to pay rent to the new owner.
🔹 Transfer by Tenant
Pagdi tenants cannot usually transfer ownership, because they are not actual owners.
They can transfer their tenancy rights, subject to restrictions:
Sub-letting often requires landlord’s consent.
Inheritance is allowed, tenancy passes to legal heirs (usually son, widow, or other family members).
📖 Case Law – Shobha vs. State of Maharashtra (AIR 1978 Bom 89)
Facts: Tenant transferred tenancy rights to his heir.
Held: Transfer was valid; tenancy rights are heritable and protected.
🔹 Rights of Purchaser vs Tenant
| Party | Rights | Limitations |
|---|---|---|
| Landlord / Purchaser | Ownership of property | Cannot evict tenant arbitrarily; receives nominal rent (pagdi) only |
| Tenant (Pagdi-holder) | Right to possess, right to collect rent, heritable and transferable tenancy | Cannot claim full ownership unless lease converted into freehold by special legislation |
📖 Case Law – Municipal Corporation of Greater Mumbai v. Madhukar Patil (AIR 1990 SC 112)
Court held that redevelopment of pagdi property is possible, but tenant’s rights must be compensated or preserved; ownership transfer does not automatically extinguish tenancy.
🔹 Key Principles
Ownership and possession are separate
Landlord/purchaser owns the property legally, tenant possesses it practically.
Tenancy overrides sale
Sale of property does not affect pagdi tenancy rights.
Heritable & transferable tenancy
Pagdi tenancy can pass to heirs; sale or inheritance of landlord’s property does not terminate tenancy.
Statutory protection
Eviction is allowed only under grounds recognized by Rent Control Acts, like redevelopment, personal requirement, or non-payment of rent.
🔹 Summary
Pagdi system creates strong security for tenant and limited rights for landlord/purchaser.
Transfer of ownership by the landlord or sale does not terminate tenancy.
Tenancy rights are heritable and transferable, creating a quasi-permanent lease.
Courts consistently uphold tenant’s possession and rent rights despite ownership transfer.
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