A separate regulatory framework will be created to free Mumbai from the ‘pagdi’ system, said Maharashtra Deputy CM Eknath Shinde in the state assembly, bringing relief to the landlords and tenants of the maximum city, who continue to face difficulties over the controversial system. The ‘pagdi’ system, popular in Mumbai, has been a constant pain for those coming from other cities, and have budget constraints. 

Addressing the issue in Maharashtra assembly on Thursday, Dy CM Eknath Shinde said that a separate regulatory framework will be created to free Mumbai from the decades-old ‘pagdi’ system and to ensure fair and proper redevelopment of ‘pagdi’ buildings. He also stated that the rights of both tenants and landlords will be protected.

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What is the ‘pagdi’ system?

‘Pagdi’ system is a kind of rule that dictates the landlord-tenant relationship, especially in Mumbai. Under this, the tenants act as part-owners, paying nominal rent for lifetime occupancy with rights to sell or sublet. But this can only happen with the consent of other owners only.

Making the announcement in the assembly, Shinde highlighted that more than 19,000 old rent-controlled buildings, constructed before 1960, are classified as pagdi buildings. 

“Some of these have already been redeveloped, some have deteriorated or collapsed, and more than 13,000 are still awaiting redevelopment,” he said, quoted TOI.

He said that these buildings are legally protected under the Maharashtra Rent Control Act, and the government has provided protection to tenants through the Rent Control Act. However, he reportedly said, landlords often complain that due to tenants’ rehabilitation rights and that they do not receive fair compensation for ownership. 

“Numerous disputes between tenants and landlords remain pending in small-cause courts, which have limited redevelopment efforts. Proper and fair redevelopment is necessary, and it is essential to protect the rights of both tenants and landlords,” Shinde further said.

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What does the new framework propose?

The new framework proposes to cut down the losses of landlords, granting FSI equal to the area occupied by tenants, the original FSI to landlords based on land ownership, and incentive FSI for the cost-free reconstruction of homes for economically weaker and low-income pagdi holders, the report mentioned.

“If, due to height restrictions or other limitations, all three types of FSI cannot be fully utilised, the remaining FSI will be provided in the form of TDR,” Shinde said.

Transactions made for ‘pagdi’ are usually heavy ones and hence, it involves the black-money circulation in the market. The old rule also don’t mention if the tenant would retain their space or will be given an equivalent flat during the redevelopment of the building.