Pagri is a traditional rental system in Pakistan. Similar to other rent agreements, it involves a tenant and a landlord. However, in Pagri, the tenant pays a premium upfront and a very low monthly rent, while the property remains in the landlord’s name. The premium may be agreed upon orally.
The paperless pagri system still exists in old areas of Pakistan including Karachi, but it is not legally recognized. Recent cases provide insights into this matter. For example, in the case of Muhammad Raheel Kamran v Additional District Judge, Karachi (PLD 2022 Sindh 52), the court stated that the Sindh Rented Premises Ordinance, 1979 does not acknowledge any advance payment or pagri amount. Furthermore, in the case of Shamim Bango v Mrs. Nazeer Fatima (2001 SCMR 1552), the Supreme Court ruled that even if the pagri amount is considered a mutual agreement between the parties, it holds “no legal significance” and cannot be used to offset rent payments as specified in the tenancy agreement.
Moreover, in the case of Shakila Appa v Nadeem Ghani (2022 CLC 1146), the court allowed the landlord’s eviction petition, emphasizing that the pagri amount cannot protect the tenant from eviction. Similarly, in the case of Muhammad Ashraf v Ismail (2000 SCMR 498), the Supreme Court held that the landlord can file eviction proceedings against the tenant based on personal bona fide need, regardless of the plea of pagri.
While the pagri system does not provide absolute protection against eviction for tenants, the tenant can pursue legal action to reclaim the pagri amount, provided there is sufficient evidence to support their claim. The Supreme Court of Pakistan, in the case of Mirza Book Agency v Additional District Judge, Lahore (2013 SCMR 1520), clarified that the pagri amount alone does not establish a tenancy in perpetuity. However, this does not prevent the tenant from seeking redress and recovering the pagri amount from the party responsible, if permitted by law, through an independent legal action
Furthermore, it is important to note that the Punjab Rented Premises Ordinance of 2009 provides a clear definition of “pagri” under section 2(e) as any amount received by a landlord during the granting or renewal of a tenancy, except for advance rent or security deposits. In a significant case, Muhammad Ismail v Muhammad Aslam (2020 MLD 226), the Lahore High Court emphasized that under the 2009 Ordinance, the Rent Controller is obligated to address the issue of returning or confiscating the pagri amount when deciding a rent petition. However, unless stated otherwise in a specific agreement, the law, including the 2009 Ordinance, does not recognize an automatic increase in the pagri amount or its reimbursement based on the prevailing market value of the rented property when eviction orders are issued.
To summarize, it is crucial to understand that the pagri system lacks recognition within Pakistani law, and it does not act as a barrier for landlords seeking to file eviction cases. However, tenants who have paid pagri or a premium have the option to file a separate case against the paper owner or landlord to seek the return or recovery of the amount they have already paid as a premium.