The Delhi High Court has held that payment of pagri (one-time upfront amount to secure long-term tenancy rights) by a tenant does not make a tenancy non-terminable and does not alter the fundamental landlord-tenant relationship.

Justice Neena Bansal Krishna was dealing with the dispute concerning a shop which had been let out to the Appellant under a rent agreement dated January 1, 2001.

Appellant claimed that besides the rent agreement, the parties had executed a Memorandum of Understanding (MoU), under which the landlady had received Rs. 1.48 lakh as pagri, amounting to nearly three-fourths of the market value of the shop.

Relying on the rent agreement and the MoU, the tenant argued that the payment of pagri created a perpetual, non-terminable tenancy, preventing the landlord from seeking eviction.

Rejecting the contention, the High Court observed that there was no dispute that the landlady had received the pagri amount at the time of letting out the premises. However, the Court said the crucial issue was whether such payment transformed the nature of the tenancy.

"There is no denial to pagri amount being taken by the Plaintiff/Respondent at the time of letting out the Suit Shop. The question, which thus arises, is whether acceptance of pagri amount, would make the tenancy non-terminable... Inherently, this tenancy was not a non-terminable one," the Court held.

The Court further noted that the Rent Agreement itself gave a right to the tenant to terminate the tenancy by giving a two-monthNotice.

As such, the Court dismissed the appeal and upheld the eviction decree in favour of the landlady.

Appearance: Mr. Pankaj Vivek and Mr. NaveenMalik, Advocates for Appellant; Mr. Abhishek Grover, Advocate for Respondent

Case title: M/S Shyam Lal & Sons v. Smt. Mithlesh Devi

Case no.: RSA 136/2018

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