Interest Act notice absence bars recovery of interest; unrebutted market rent evidence supports damages for use and occupation.

Plaintiffs' claim for rent arrears was negated by the admitted deposit in related proceedings, so no arrears are recoverable from Defendant No.1. For the post expiry period, the court accepted unrebutted evidence of prevailing market rent to assess use and occupation damages, holding Defendant No.1 liable for damages from 01.05.1998 to 31.10.1998 and awarding a net decretal sum after adjustments. On interest, absence of any contractual or customary basis and failure to serve the statutory notice under the Interest Act prevented any award of interest on the sums claimed.

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Issues: (i) Whether the Defendant is liable to the Plaintiffs for any arrears of rent? If so, the extent thereof? (ii) Whether the Plaintiffs are entitled to any damages for the period post expiry of lease? If so, the extent thereof? (iii) Whether the Plaintiffs are entitled to any interest? If so, on what amount, for which period and at what rate?

Issue (i): Whether the Defendant is liable to the Plaintiffs for any arrears of rent and, if so, the extent thereof.

Analysis: The court noted that the arrears of rent for the period up to 30.04.1998 had been deposited in CS(OS) No. 735/1997 and therefore stood paid. The pleaded claim for arrears was examined in light of the admitted deposit and the evidence on record.

Conclusion: The Plaintiffs are not entitled to recover any amount from Defendant No.1 towards arrears of rent.

Issue (ii): Whether the Plaintiffs are entitled to any damages for the period post expiry of lease and, if so, the extent thereof.

Analysis: The lease expired by afflux of time on 30.04.1998 making Defendant No.1 liable for damages for use and occupation from 01.05.1998 to 31.10.1998. Neither party produced documentary proof of prevailing rents; the Plaintiffs' witness deposed that comparable premises fetched Rs.6,50,000 per month, and that testimony remained unrebutted on cross-examination. The defendant's sole witness could not contradict the claimed market rate. The court therefore accepted the unchallenged evidence and computed damages after adjusting amounts already deposited and withdrawn.

Conclusion: The Plaintiffs are entitled to damages for use and occupation at Rs.6,50,000 per month for the period 01.05.1998 to 31.10.1998, and, after adjustments, a decretal amount of Rs.33,79,500 is payable by Defendant No.1 to the Plaintiffs.

Issue (iii): Whether the Plaintiffs are entitled to any interest and, if so, on what amount, for which period and at what rate.

Analysis: There was no agreement, usage or custom pleaded or proved for payment of interest. Crucially, no notice as required by Section 3 of the Interest Act, 1978 was given by the Plaintiffs to Defendant No.1. In absence of the statutory notice and of any contractual or customary basis, entitlement to interest under the Interest Act could not be established.

Conclusion: The Plaintiffs are not entitled to any interest on the arrears of rent under Section 3 of the Interest Act, 1978.

Final Conclusion: The net legal effect is that the plaintiffs' claim for arrears and for interest is rejected, while their claim for post-termination damages succeeds, resulting in a monetary decree in their favour for the calculated sum of Rs.33,79,500 after adjustments; consequential directions regarding court fee and realization were also issued by the Court.

Ratio Decidendi: In the absence of contractual provision, customary usage, or the statutory notice mandated by Section 3 of the Interest Act, 1978, interest cannot be awarded; unrebutted testimony as to prevailing market rent, if unchallenged, can be accepted to assess damages for use and occupation where no contrary evidence is produced.

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