Fair rent, not mesne profits, applies where occupation continues under judicial permission and valuation ignores material factors.

Where occupation continues under judicial permission, the occupier's presence is not wrongful trespass and damages should be assessed as fair rent rather than mesne profits. The text also states that an arbitral valuation is unsustainable if it ignores material factors such as existing fair rent, the building's age and condition, municipal valuation, maintenance and tax burdens, and the absence of reliable expert or comparable-sale evidence. On that basis, the award and the High Court judgment were set aside and the matter remitted for fresh disposal.

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Issues: (i) Whether the appellant's use and occupation of the property after 10.3.1987 was wrongful and in the nature of trespass so as to justify assessment of mesne profits. (ii) Whether the arbitrator failed to take into account relevant factors while assessing damages.

Issue (i): Whether the appellant's use and occupation of the property after 10.3.1987 was wrongful and in the nature of trespass so as to justify assessment of mesne profits.

Analysis: The occupation after 10.3.1987 could not be treated as unlawful trespass because the appellant had been permitted to remain in possession up to 31.3.1993. In such a situation, the owner's claim was not for mesne profits based on wrongful possession, but for fair rent for unauthorised retention under judicial permission.

Conclusion: The appellant's possession after 10.3.1987 was not wrongful trespass, and damages were not to be assessed as mesne profits.

Issue (ii): Whether the arbitrator failed to take into account relevant factors while assessing damages.

Analysis: The award ignored material considerations relevant to valuation, including the fair rent previously accepted, the dilapidated condition and age of the buildings, municipal valuation, maintenance and tax burdens, and the absence of reliable expert evidence or comparable sale instances. Even on an income/profit approach, these factors had to be weighed, and the evidence of lay witnesses was insufficient to support the quantum awarded.

Conclusion: The damages award was vitiated for failure to apply proper valuation principles and for ignoring relevant material factors.

Final Conclusion: The appeal succeeded, the award and the High Court's judgment were set aside, and the matter was remitted for fresh disposal in accordance with law.

Ratio Decidendi: Where occupation continues under judicial permission, damages must be assessed on fair rent rather than mesne profits, and an arbitral award on valuation is liable to be interfered with if it ignores material factors essential to a legally sound assessment.

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