Can You Make a Will for a Pagdi Property in Mumbai? Tenancy, Redevelopment and Inheritance Explained

Can Pagdi property be included in a Will? Pagdi properties create a unique estate-planning problem in Mumbai. A person may have occupied the same premises for decades, paid nominal rent, acquired valuable tenancy rights and then entered into a redevelopment agreement under which a new flat is proposed to be allotted. The question then becomes: what exactly can that person leave behind through a Will?

Navigating succession involving a Pagdi tenancy requires understanding the intersection of historical rent laws and modern real estate contracts.

1. What Is a Pagdi Tenancy?

The Pagdi system historically involved payment of a premium to the landlord in addition to relatively low rent, with the tenant acquiring protected tenancy rights under the applicable legal framework, primarily the Maharashtra Rent Control Act.

While the landlord retains the underlying ownership of the land and building structure, the tenant's rights can nevertheless have substantial economic value. In practice, the transfer of Pagdi tenancy interests can involve consideration and the landlord's consent or participation, depending on the nature of the tenancy, the applicable documents, and the law. The financial arrangement is not governed by a universal statutory formula.

2. Is a Pagdi Property the Same as Owning a Flat?

No. A conventional leave-and-license arrangement generally gives the licensee a contractual right to occupy premises for the agreed period and does not confer ownership. A tenancy, by contrast, creates a legally protected right to occupy and use the premises, with the precise rights determined by the tenancy arrangement and applicable rent-control legislation.

Understanding who holds what rights is critical for a Will for Pagdi property in Mumbai:

3. What Happens to a Pagdi Tenancy When the Tenant Dies?

Understanding Pagdi tenant rights after death is crucial. A Pagdi tenancy is not the same as ownership of the underlying property. On the tenant's death, Section 7(15)(d) of the Maharashtra Rent Control Act sets out rules for transmission of the tenancy to a qualifying family member who was residing with the tenant at the time of death, subject to the circumstances set out in the Act. In the absence of such a member, an heir may be determined by the court if there is no agreement.

A Will cannot override the statutory rules governing the Pagdi tenancy inheritance. Therefore, naming a non-residing heir in a Will does not, by itself, guarantee that the named person will become the tenant after the testator's death. The statutory transmission provision gives importance to the family member who was residing with the deceased tenant at the time of death, rather than allowing the tenant to freely nominate any person to become the statutory tenant.

Example: Suppose Mr. A has lived in a Pagdi flat in Mumbai for 30 years and his daughter lives with him. Mr. A's Will says that the flat should go to his son, who lives elsewhere. The Will does not automatically make the son the statutory tenant. The legal consequences after Mr. A's death will depend on Section 7(15)(d), the family circumstances and the applicable tenancy documents. If the premises are already under redevelopment, however, the analysis may also involve Mr. A's contractual rights under the redevelopment documents.

4. What Changes When the Building Goes Into Redevelopment?

Pagdi property and redevelopment often go hand-in-hand in South and Central Mumbai. In eligible redevelopment schemes under Regulation 33(7) of the Development Control and Promotion Regulations (DCPR)—often applicable to cessed buildings in Mumbai's Island City—existing occupants may be rehabilitated in the new building on an ownership basis.

However, the precise rights of an individual occupant depend on the applicable redevelopment scheme, eligibility determination, sanctioned plans, MHADA/MCGM requirements, and the agreements executed with the landlord or developer.

The ownership and rehabilitation consequences can differ depending on the location, classification of the building, applicable redevelopment regulation, and the contractual structure of the project. Therefore, the DCPR 33(7) framework should not automatically be assumed to apply to every Pagdi property in Mumbai.

5. Can a Will Cover Redevelopment Rights?

Yes, potentially—but the Will must describe the actual rights held by the testator at the time of execution, rather than casually calling the entire thing "my property."

Estate planning for Pagdi property redevelopment requires distinguishing between three distinct phases:

• Before a redevelopment agreement: The testator holds protected tenancy rights governed by statutory transmission rules.

• After execution of a redevelopment agreement (such as a PAAA): The testator may hold contractual and redevelopment-related rights against the developer and/or other parties, depending on the agreement.

• After allotment/possession and completion of the relevant transfer and society documentation: The testator may hold ownership rights in the rehabilitation premises and/or rights represented by shares in the cooperative housing society, depending on the redevelopment structure.

6. What Should the Will Mention?

A legally robust Will covering a Pagdi property in transition should utilize contingency drafting to address three distinct categories of rights:

A. Existing Tenancy Rights

If the building has not yet been demolished, the Will should document the current status of the tenancy. It is prudent to identify and document in the Will which family member is residing with the testator, although the legal entitlement to transmission will ultimately depend on the facts and applicable law at the time of death.

B. Redevelopment/PAAA Rights

Once the Permanent Alternate Accommodation Agreement (PAAA) has been executed, the testator may have valuable contractual and redevelopment-related rights that should be specifically identified in the Will. Depending on the project, these may include rights relating to the permanent alternate premises, transit accommodation or rent, corpus or compensation, and other contractual entitlements, where applicable.

If the PAAA or allotment documents identify specific future premises, the Will should describe that premises consistently with those documents, including the building or project name, proposed flat number, floor, carpet area, and relevant agreement details.

C. Litigation and Monetary Claims

If the property is subject to a pending dispute in the Small Causes Court or the High Court, identify the pending proceedings by their suit/petition number, court, and parties. Clearly state which beneficiary is intended to receive the deceased's transferable interest in the subject matter of the proceedings. The beneficiary may then take appropriate steps before the relevant court to be recognized as the legal representative, where legally permissible.

The Will should clearly address the testator's transferable rights, claims, and monetary entitlements arising from the proceedings, to the extent legally capable of being transferred or bequeathed.

7. Documents to Keep With the Will

Because a Will must accurately reflect the specific legal interests held by the testator, the family must have access to the underlying paperwork. Ensure the following documents are securely stored alongside the Will:

• Original tenancy or rent receipts

• Old tenancy agreement (if available)

• Landlord details and correspondence

• Past succession or transmission documents

• Redevelopment consent forms

• Registered PAAA (Permanent Alternate Accommodation Agreement)

• Allotment letter from the developer

• MHADA/MCGM eligibility documentation, including Annexure II where applicable

• Society documents or share certificates (once issued)

• Transit rent and corpus fund documents

• Litigation papers and court orders

• Family NOCs, declarations or family arrangements, where applicable

Important Legal Disclaimer: Pagdi tenancies and redevelopment arrangements can differ significantly depending on the building's status, location, tenancy documents, redevelopment scheme, and court proceedings. A Will should not be drafted on the assumption that every Pagdi tenancy automatically becomes an ownership flat on redevelopment. The specific tenancy and redevelopment documents should be reviewed by a qualified Mumbai property lawyer before drafting.