Tenants under Pagri system being exploited as law does not recognise British-era lease mode

Forming a group, Goodwill Tenants Relief Committee (GTRC), to protect themselves from what they said ‘Old Building Mafia’, local traders and residents from Karachi’s Old City Area and surrounding neighbourhoods have started a campaign against a group of investors who have allegedly been exploiting tenants living in old buildings of the area for more than 70 years.

According to the GRTC, the mafia, which comprises investors, has been playing on the fact that many tenants are residing in flats of old buildings on a goodwill basis, popularly known as ‘Pagri’, which the law does not recognise. The investors who have purchased such buildings are now making offers to the tenants to purchase such flats and shops at prices which often the latter cannot afford. As many tenants decline such offers, they are being threatened with eviction despite the fact that after entering into the Pagri agreement, they were entitled to live in such flats forever.

The Pagri system, which has been in place since pre-independence era across various urban centres of Pakistan and India, is a rental model. Though it looks similar to most of the lease models, there is a crucial difference that makes Pagri a different model altogether. Whereas, in other modes of lease the property is finally transferred to the buyer, in the Pagri arrangement, the tenants do not get the land transferred to their possession; instead, after paying the initial amount they are entitled to use the property forever against a nominal monthly rent.

In Pakistan, the Pagri system exists in Karachi and Hyderabad, which were once a part of Bombay Presidency during the British Raj. As many investors have bought such old and dilapidated buildings where tenants have been living for several decades on Pagri, they are now exploiting the fact that the law does not recognise Pagri.

Since its inception, the GTRC has called for the protection of Pagri tenants from exploitation and organised several protests, some of which was also held outside the Supreme Court’s Registry Office. Mehmood Hamid, the GTRC convener, said the committee was formed by dozens of local residents and traders who became victims of traps of the mafia.

“People have been living in the Old City Area for over seventy years on Pagri and now investors have been evicting them after trapping them through sale offers,” said Hamid, who also heads the All Pakistan Organisation of Small Traders.

It was revealed during interviews with shopkeepers and residents of the area that exploiters – who are mainly local investors – first buy some old building in the area, which are often cheap because of their dilapidated state, and then approach tenants of flats or shops to offer 'sub-lease'. They mint a sum of an amount varying from Rs200,000 to Rs500,000 if the tenants accept their offer.

However, if the tenants refuse to walk into their traps or show their inability to pay such a huge amount, the new owners of the buildings stop delivering slips of monthly rents to them. “They do it for implicating the occupants in default cases in court, eventually leading to eviction orders,” said Usman Sharif, a tenant. He added that the law does not recognise the Pagri system of British era while police and government officials have been favouring the investors in return of monetary benefits.

Hamid also referred to several recent cases of aggrieved tenants. In one of such cases, a 75-year old person, who had entered into a Pagri agreement for a shop on Shahrah-e-Liaquat after paying Rs4.5 million in 1991, refused to agree to the new ‘sub-lease’ offer. “The investors stopped sending the monthly rent receipts and now a court has ordered him to vacate the shop after he was proved a defaulter,” he said.

The GTRC leaders have been demanding that the federal and provincial governments legislate to protect the rights of tenants living for more than 70 years under the Pagri system and investigate the transfers of such buildings in the past 25 years.