Post-lease occupation damages may follow lease expiry, but arrears and interest fail without subsisting liability or statutory basis.

After expiry of a lease by efflux of time, continued occupation attracts liability for damages for use and occupation at the prevailing market rent proved on record; on the unrebutted evidence, the Court accepted the claimed rate and adjusted amounts already deposited. The claim for arrears of rent failed because that liability had already been discharged and no further recovery remained due. The claim for interest on rent arrears also failed because there was no contractual basis, no proved usage, and no statutory notice under the Interest Act, 1978. Monetary relief was therefore confined to post-lease occupation damages, with arrears and interest rejected.

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Issues: (i) whether the defendant was liable to pay arrears of rent; (ii) whether the plaintiffs were entitled to damages for use and occupation after expiry of the lease, and if so at what rate; (iii) whether the plaintiffs were entitled to interest on the arrears of rent.

Issue (i): Whether the defendant was liable to pay arrears of rent.

Analysis: The arrears of rent had already been paid, and no subsisting liability for further recovery on that account remained.

Conclusion: The issue was decided against the plaintiffs and in favour of the defendant.

Issue (ii): Whether the plaintiffs were entitled to damages for use and occupation after expiry of the lease, and if so at what rate.

Analysis: The lease expired by afflux of time, so the occupant became liable to pay damages for continued use and occupation. In the absence of documentary evidence of prevailing rents, the Court accepted the unrebutted testimony that similar premises in the locality would have fetched the claimed market rent, and adjusted the amounts already deposited and withdrawn.

Conclusion: The plaintiffs were entitled to damages for use and occupation at Rs. 6,50,000 per month, subject to adjustment of amounts already paid.

Issue (iii): Whether the plaintiffs were entitled to interest on the arrears of rent.

Analysis: No agreement or proved usage entitled the plaintiffs to interest, and no notice under Section 3 of the Interest Act, 1978 was served so as to invoke statutory interest.

Conclusion: The plaintiffs were not entitled to interest on the arrears of rent.

Final Conclusion: Monetary relief was awarded to the plaintiffs for damages for use and occupation after expiry of the lease, while the claims for arrears of rent and interest were rejected.

Ratio Decidendi: Where a lease has expired by efflux of time, continued occupation attracts damages based on the prevailing market rent proved by the unrebutted evidence on record, but interest on unpaid rent cannot be awarded absent contractual basis, established usage, or compliance with the statutory notice requirement.

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