What is a Pagri property in Pakistan, and how the law governs those situations where the property can be construed as Pagri Property?

Pagri is a traditional tenancy model in Pakistan. Akin to other rental arrangements, it involves a tenant and a landlord; however, the difference is that the tenant after paying a ‘Pagri’ or premium, pays an extremely nominal monthly rent and stays on the premises for years but the premises remains in the landlord’s name.  The Pagri amount or premium is given by way of a verbal/oral agreement. Besides, the tenant also enjoys additional rights of sub-letting and selling the premises. 


Paperless pagri system still exists in old areas of Pakistan, however, the pagri system is not recognized under the law in Pakistan. The recent jurisprudence in this area could be viewed from the following cases for instance in the cas of Muhammad Raheel Kamran v Additional District Judge, Karachi (East) (PLD 2022 Sindh 52) the court held that Section 8 of the Sindh Rented Premises Ordinance, 1979 does not recognize any advance payment or pagri amount. In addition, the Supreme Court in the case Shamim Bango v Mrs. Nazeer Fatima (2001 SCMR 1552) held that “even if the said amount is treated as ‘Pagri’ being mutual agreement between the parties, having no legal sanctity behind it could not be adjusted against rent which has to be paid in accordance with the terms and conditions as stipulated in the tenancy agreement.  Moreover, the court in the case of Shakila Appa (Late) v Nadeem Ghani  (2022 CLC 1146) allowed the eviction petition by the landlord where the premises was rented out on pagri and held that the pagri amount cannot save tenant from eviction. Moreover, the Supreme Court in the case of Muhammad Ashraf v Ismail (2000 SCMR 498) held that the “Plea of pagri would not disentitle the landlord to file ejectment proceedings against the tenant on the ground of personal bona fide need.’ 


Although the pagri system is not valid to immune the tenant from eviction but the tenant can sue for the return of pagri amount if the same can be substantiated. The Supreme Court in the case Mirza Book Agency v Additional District Judge, Lahore (2013 SCMR 1520) held that the pagri amount would by itself not make the tenancy in perpetuity, but this shall not foreclose the right and remedy, if any available, to the appellants for the recovery of the same amount of pagri from the person who is liable to return if permissible under the law, for which the appellant may bring an independent legal action.  


Furthermore, the Punjab Rented Premises Ordinance 2009 defines the term pagri under section 2(e) as any amount received by a landlord at the time or grant or renewal of a tenancy except advance rent or security. Thus, in the case Muhammad Ismail v Muhammad Aslam (2020 MLD 226) the Lahore High Court held that “now under Ordinance of 2009, the rent Tribunal while deciding the rent petition is bound to decide the issue of return or confiscation of the amount of Pagri. However, in absence of any agreement to contrary, the law including Ordinance of 2009 does not recognize any automatic increase in the amount of Pagri or its return at the prevailing market value of the rented property when eviction orders are passed.”    

In conclusion, pagri system is not recognized under the Pakistani law and it does not prevent the landlord from filing eviction case. However, the tenant who has paid the pagri/premium can file an independent case against the paper owner/landlord for the return/recovery of the amount already paid as premium.