• Sale of commercial place under pagdi system

My private limited company has a commercial place under pagdi system. 

I want to sell my place.

As per my understating (under pagdi system), at the time of sale certain percentage to goes to building owner. But in my case can I avoid that by selling shares of my company to the buyer. 

In this scenario whole company is transferred along with the commercial place.

What is my liability towards a new buyer or building owner after completion of this transaction.

What action building owner can take on above mentioned scenario?
Asked 7 years ago in Property Law
Religion: Hindu

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4 Answers

1.In that event you will have to resign fromthe Directorship of the compnay.

2. Then you will have to transfer all your shares along with shares of other directors who would also resign from the company.

3.Then apart from buyer any of his relatives will have become director and shareholder to make the transfer smooth.

4. Since the company remains same the rent receipt would be issued in the name of the company.

5.Howeevr this is possible only if the company is holding the tenancy and not you in your individual capacity.

Devajyoti Barman
Advocate, Kolkata
22920 Answers
498 Consultations

5.0 on 5.0

1) tenancy is in favour of private limited company

2) if you sell the commercial premises landlord would deduct 33 per cent from the sale price

3) you can transfer your shares in the company if there is no clause in tenancy agreement that prior consent of landlord is necessary for transfer of shares

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

under pagdi system a person can lease out his property on pagdi for a certain period. in your case after transfer of title or right to the buyer through transfer of share, the buyer shall bear all the liabilities. according to section 53 of the t p act, after transfer of right in the property buyer shall bear all liabilities.

Shivendra Pratap Singh
Advocate, Lucknow
5127 Answers
78 Consultations

4.9 on 5.0

Actually there is no hard and fast rules on selling of pagdi system property

Lease and License Agreements are prepared for sale of property under Pagdi System in Mumbai. The Lease and License Agreements are designed to escape restrictive regulations; all terms are governed by agreement between landlord and tenant. Aside from the most basic condition that the tenancy is only for 11 months, everything must be stated in the contract. Typical contracts include a provision that, if either party wishes to prematurely terminate the contract, three month’s notice must be given. The typical agreement also prohibits subleasing.

The fact that a tenant is a tenant till the end is to be understood.

Under the pagdi system or any tenancy a tenant is protected by tenancy rights.

However it is unofficial that a portion of the selling amount has to be given to owner otherwise he will not execute a rental agreement to the new tenant.

Practical procedures are different to the legal position.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

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