1 Neutral Citation No. ( 2025:HHC:43900 ) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 320 of 2016 Reserved on: 11.12.2025 Date of decision: 16.12.2025 ________________________________________________ State of H.P. & another …..Appellants. Versus Bala Ram & others ……Respondents. ________________________________________________ Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting? For the appellants: Mr. Amandeep Sharma, Additional Advocate General. For the respondents/State: Mr. Varun Chauhan, Advocate, vice Mr. Vivek Sharma, Advocate. Sushil Kukreja, Judge. The instant appeal has been preferred by the appellants/State, who were the respondents before the learned Court below (hereinafter referred to as “the appellants”) under Section 54 of the Land Acquisition Act, 1894 (for short “the Act”), against award dated 02.01.2016, passed by learned Additional District Judge-II, Shimla, H.P. (hereinafter referred to as “the learned Reference Court”), in Land Reference RBT No. 31-S/4 of 2014/05, whereby the 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Neutral Citation No. ( 2025:HHC:43900 ) petition filed by the petitioners/claimants, under Section 18 of the Act was allowed and they were held entitled for enhanced compensation @ Rs.1060/- per square meter, irrespective of classification of the acquired land alongwith solatium, additional compensation, interest etc.. 2(a). The brief facts of the case are that State of Himachal Pradesh issued notification, dated 24.03.2004, under Section 4 of the Act qua acquisition of land of the petitioners/claimants measuring 0-02-16 hectares comprised in Khasra No 493, 3391 and 481, situated in village Gawahi Kalan, Tehsil and District Shimla, H.P. The above notification was published in H.P. Rajpatra on 27.03.2004 and in two daily news papers, i.e., Indian Express and Dainik Jagran on 15.04.2004. Wide publicity qua the above acquisition was also given in the locality and on 02.06.2004 notification under Section 6 read with Section 7 and 17(1) of the Act was issued, which was published in Rajpatra on 04.06.2004 and in two daily newspapers, i.e., Punjab Kesari and Hindustan Times on 14.06.2004. The aforesaid land was acquired for the purpose of construction of Rugra-Gawahi link road. Subsequently, acquisition proceedings under Section 8 of the Act were conducted by the Land Acquisition Collector and on 3 Neutral Citation No. ( 2025:HHC:43900 ) 30.06.2004 Award No. 13/2004 was made, wherein the market value of the acquired land was assessed @ Rs.5000/- per bigha, at uniform rate, irrespective of classification of the land. On the basis of such rates, total compensation of Rs.86,652/- was awarded to the petitioners/claimants, details whereof are as under: 1. Market value of land @ Rs.5000/- per bigha of land measuring 9,672 square meter (12 bigha 17 biswa) under Section 23(1) First Clause Rs.64,250.00 2. 12% additional amount on market value of land w.e.f. the last date of publication of notification u/s 4(1) to the date of award or possession, whichever is earlier u/s 23(1A) of the Act w.e.f. 15.4.2004 to 25.6.2004=72 days. Rs.1,516.72 3. 30% sum on market value of land u/s 23(2) of the Act as solatium Rs.19,275.00 A Total amount of compensation Rs.85,041.72 B Interest u/s 34 of the Act 1. 9% interest on the amount of compensation w.e.f. 15.4.2004 to 30.6.2004=77 days Rs. 1,610.21 Total amount of compensation (including interest) (A+B) Rs.86,651.93/- Or say Rs.86,652.00/- 3. The petitioners/claimants, feeling aggrieved with the award of the Land Acquisition Collector preferred a petition under Section 18 of the Act before the learned Reference Court for enhancement of the compensation mainly on the ground that the Land Acquisition Collector awarded meager compensation for the acquired land, whereas the market value of the acquired land was very high and not less than Rs.17,00,000/- per bigha. The 4 Neutral Citation No. ( 2025:HHC:43900 ) petitioners/claimants further averred that potential value of the acquired land was ignored by the Land Acquisition Collector and the award was passed only on the basis of surmises and conjectures. As per the petitioners/claimants, the acquired land was adjacent to Shimla town having facilities like school, dispensary, post office, telephone, electricity, drinking and irrigation water etc. 4. The learned Reference Court, allowed the petition of the petitioners/claimants and held them entitled for enhanced compensation @ Rs.1060/- per square meter, irrespective of the classification of the acquired land. The petitioners were also held entitled to solatium, additional compensation, interest on the enhanced amount of compensation etc.. Hence, the appellants/State preferred the instant appeal against the impugned award, dated 02.01.2016, passed by learned Reference Court, with a prayer to set-aside and impugned award. 5. I have heard the learned Additional Advocate General for the appellants/State, learned counsel for the respondents/claimants, and carefully examined the entire records. 6. The learned Additional Advocate General for the 5 Neutral Citation No. ( 2025:HHC:43900 ) appellants contended that the impugned award is wrong and illegal, as the learned Reference Court erred in calculating the correct market value of the acquired land. The learned Reference Court appreciated the documents on record in a slip shod and perfunctory manner and committed serious irregularity. He further contended that the impugned award is based on surmise and conjectures and the learned Reference Court abnormally enhanced the compensation by wrongly relying on one year average, Ex. PW-5/A. Lastly, he submitted that the appeal be allowed and impugned award dated 02.01.2016 passed by the learned Reference Court be set-aside. 7. Conversely, learned counsel for the respondents/claimants, supported the impugned award and prayed for dismissal of the instant appeal. 8. As per the settled principle of law, compensation for the land acquired has to be determined at market value. Market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when led out in most advantageous manner excluding any advantage due to carrying out of the 6 Neutral Citation No. ( 2025:HHC:43900 ) scheme for which the property is compulsorily acquired. The determination of market value is the prediction of an economic event viz. a price outcome of hypothetical sale expressed in terms of probabilities. For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. 9. In Mehta Ravindrarai Ajitrai (deceased) through his heirs and LRs & others vs. State of Gujarat (1989) 4 SCC 250, the Hon’ble Supreme Court held that the market value of a property for the purpose of Section 23 of the Act is the price at which the property changes hands from a willing seller to a willing purchaser, but not too anxious a buyer, dealing at arms length. The relevant portion of the aforesaid judgment reads as under: “4. ……….The market value of a piece of property for purpose of Section 23 of the Land Acquisition Act is stated to be the price at which the property changes hands from a willing seller to a willing, but not too anxious a buyer, dealing at arms length. Prices fetched for similar lands with similar advantages and potentialities under bona fide transactions of sale at or about the time of the preliminary notification are the usual and, indeed the best, evidences of market value.” 10. In Atma Singh & others vs. State of Haryana & another (2008) 2 SCC 568, the Hon’ble Supreme Court held 7 Neutral Citation No. ( 2025:HHC:43900 ) that the market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing conditions with all its existing advantages and its potential possibilities when led out in most advantages manner, excluding any advantage due to carrying out of the scheme for which the property is compulsorily acquired. In considering market value, disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded. The question whether a land has potential value or not, is primarily one of the facts depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like, water, electricity, possibility of their further extension, whether near about town is developing or has prospect of development have to be taken into consideration. The relevant portion of the aforesaid judgment reads as under: “4. ……The expression “market value” has been the subject-matter of consideration by this Court in several cases. The market value is the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when led out in most advantageous manner excluding any advantage due to carrying out of the scheme for which the property is compulsorily acquired. In considering market value disinclination of the vendor to part with his 8 Neutral Citation No. ( 2025:HHC:43900 ) land and the urgent necessity of the purchaser to buy should be disregarded. The guiding star would be the conduct of hypothetical willing vendor who would offer the land and a purchaser in normal human conduct would be willing to buy as a prudent purchaser in normal human conduct would be willing to buy as a prudent man in normal market conditions but not an anxious dealing at arm’s length nor façade of sale nor fictitious sale brought about in quick succession or otherwise to inflate the market value. 5. For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. It is well settled that market value of a property has to be determined having due regard to its existing condition with all its existing advantages and its potential possibility when led out in its most advantageous manner. The question whether a land has potential value or not, is primarily one of fact depending upon its condition, situation, user to which it is put or is reasonably capable of being put and proximity to residential, commercial or industrial areas or institutions. The existing amenities like water, electricity, possibility of their further extension, whether near about town is developing or has prospect of development have to be taken into consideration.” 11. For ascertaining market value of the acquired land, the Court can no doubt rely upon such sale transactions, which would offer a reasonable basis to fix the price, for which purpose, a sale transaction relating to a smaller parcel of land can be considered for the purpose of assessing the market value in respect of a large tract of land, after making appropriate deductions such as for development of land, for providing space for roads, sewers, drains, expenses involved in formation of a layout, lump- sum payments, as well as for the waiting period required for selling the sites that would be formed and other expenses 9 Neutral Citation No. ( 2025:HHC:43900 ) involved therein, but before doing so, the evidentiary value of such a sale deed is required to be carefully scrutinized. As held in the case of Land Acquisition Officer vs. Nookala Rajamallu reported as (2003) 12 SCC 334, in order to adopt the price reflected in the sale deed, the following conditions are required to be met: "9. It can be broadly stated that the element of speculation is reduced to a minimum if the underlying principles of fixation of market value with reference to comparable sales are made: (i) when sale is within a reasonable time of the date of notification under Section 4(1); (ii) it should be a bona fide transaction; (iii) it should be of the land acquired or of the land adjacent to the land acquired; and (iv) it should possess similar advantages 10. It is only when these factors are present, it can merit a consideration as a comparable case (see Special Land Acquisition Officer v. T. Adinarayan Setty AIR 1959 SC 429)." 12. In Union of India vs. Pramod Gupta (dead) by LRs & others, 2005 (12) SCC 1, the Hon’ble Supreme Court held that the best method, as is well-known, would be the amount which a willing purchaser would pay to the owner of the land. In the absence of any direct evidence, the Court, however, may take recourse to various other known methods. Evidence admissible therefor inter alia would be the sale deeds, judgments and awards passed in respect of acquisitions of lands made in the same village and/or 10 Neutral Citation No. ( 2025:HHC:43900 ) neighboring villages. Such a judgment/award in the absence of any other evidence like deed of sale, report of the expert and other relevant evidence would have only evidentiary value. The relevant portion of the aforesaid judgment reads as under: “24 While determining the amount of compensation payable in respect of the lands acquired by the State, the market value therefor indisputably has to be ascertained. There exist different modes therefor. 25. The best method, as is well known, would be the amount which a willing purchaser would pay to the owner of the land. In absence of any direct evidence, the court, however, may take recourse to various other known methods. Evidences admissible therefor inter alia would be judgments and awards passed in respect of acquisitions of lands made in the same village and/or neighboring villages. Such a judgment and award, in the absence of any other evidence like the deed of sale, report of the expert and other relevant evidence would have only evidentiary value.” 13. In the instant case, the petitioner/claimant Bala Ram, appeared in the witness-box as PW-1 and categorically stated that the village Gawahi Kalan was situated at a distance of half or quarter to one hour journey from Shimla City and modern facilities, like school, electricity, water and civil dispensary were available there. He, in his cross- examination denied that the road was constructed from the side of the acquired land. PW-2 Chet Ram deposed that village Gawahi Kalan was adjoining to Patwar Circle Ghandal (Shakra) and Patwar Circle Panesh. He, in his cross- 11 Neutral Citation No. ( 2025:HHC:43900 ) examination feigned ignorance that road was constructed from a single rakba. He denied that Patwar Circle Ghandal was situated at a distance of 10-12 kilometers. PW-3 Prem Lal deposed that the acquired land was cultivable land having irrigation facility. PW-4 Ramesh Chand was re- examined as PW-5 and proved one year average, Ex. PW- 5/A. He, in his cross-examination, admitted that there was a difference between one year average, Mark-X1, and one year average, Ex. PW-5/A. 14. On the other hand, the respondents examined Shri Surinder Sharma, the then Junior Engineer, as RW-1. He stated that village was situated at a distance of 25-30 kilometers. In his cross-examination he feigned ignorance that most part of the acquired land was cultivable with irrigation facility. He admitted that length and width of R.Ds were duly entered in the measurement book. RW-2 Bhajan Dass proved notification, copy of award and statements of parties. 15. The petitioners have tendered in evidence copies of jamabandi for the year 1997-98, 2001-02 and 1988-89, Ex. PW-1/A, Ex. PW-1/B, and Ex. PW-1/C, respectively. They have also tendered one year average, Ex. PW-5/A and Mark- 12 Neutral Citation No. ( 2025:HHC:43900 ) X1. On the other hand, respondents had placed on record notification, dated 24.03.2004, Ex. RW-2/A, copy of award dated 30.06.2004 Ex. RW-2/B, statement of Bala Ram Ex. RW-2/C, joint statement of Bala Ram and others Ex. RW- 2/D, statements of award Ex. RW-2/E and Ex. RW-2/F. 16. The Additional Advocate General for the appellants/State contended that the learned Reference Court has erred in awarding uniform rate for the entire land by ignoring the classification and nature of the land. However, this contention of the learned Additional Advocate General is devoid of any force. It is a settled law that where the entire area is similarly situated, the value of the land under acquisition is to be assessed as a single unit irrespective of its classification and nature ignoring the purpose to which it was being put prior to the acquisition, as well as to the one it is likely to be put thereafter. In Gulabi & etc. vs. State of H.P., AIR 1998 HP 9, it has been held as under: “As a result of this discussion it is held that the market value of the land on the date of acquisition is Rs.4,000/- per biswa. In this context it is further held that the value of the land under acquisition is to be assessed irrespective of its classification and nature ignoring the purpose to which it was being put prior to the acquisition, as well as to the one it is likely to be put thereafter, Consequently, the appellants are held entitled to compensation at the rate of Rs. 4,000/- per biswa uniformally for all qualities of land and it is ordered accordingly. In taking this view, we are guided by the judgment of the Hon''ble Apex Court reported in Bhagwathula Samanna and others Vs. Special Tahsildar and Land Acquisition Officer, Visakhapatnam 13 Neutral Citation No. ( 2025:HHC:43900 ) Municipality, and the relevant abstracts from the said judgment are as under (paras 7, 11, 13):-- “In awarding compensation in acquisition proceedings, the Court has necessarily to determine the market value of the land as on the date of the relevant Notification. It is useful to consider the value paid for similar land at the material time under genuine transactions. The market value envisages the price which a willing purchaser may pay under bona fide transfer to a willing seller. The land value can differ depending upon the extent and nature of the land sold. A fully developed small plot in a important locality may fetch a higher value than a larger area in an undeveloped condition and situated in a remote locality. By comparing the price shown in the transactions all variables have to be taken into consideration. The transaction in regard to smaller property cannot, therefore, be taken as a real basis for fixing the compensation for larger tracts of property. In fixing the market value of a large property on the basis of a sale transaction for smaller property, generally a deduction is given taking into consideration the expenses required for development of the larger tract to make smaller plots within that area in order to compare with the small plots dealt with under the sale transaction. The principle of deduction in the land value covered by the comparable sale is thus adopted in order to arrive at the market value of the acquired land. In applying the principle it is necessary to consider all relevant facts. It is not the extent of the area covered under the acquisition, the only relevant factor. Even in the vast area there may be land which is fully developed having all amenities and situated in an advantageous position. If smaller area within the large tract is already developed and suitable for building purposes and have in its vicinity roads, drainage, electricity, communications etc., then the principle of deduction simply for the reason that it is part of the large tract acquired, may not be justified. The proposition that large area of land cannot possibly fetch a price at the same rate at which small plots are sold is not absolute proposition and in given circumstances it would be permissible to take into account the price fetched by the small plots of land. If the larger tract of land because of advantageous position is capable of being used for the purpose for which the smaller plots are used and is also situated in a developed area with little or no requirement of further development, the 14 Neutral Citation No. ( 2025:HHC:43900 ) principle of deduction of the value for purpose of comparison is not warranted. In the instant case it has been satisfactorily shown on the evidence on record that the land has facilities of road and other amenities and is adjacent to a developed colony and in such circumstances it is possible to utilize the entire area in question as house sites. In respect of the land acquired for the road, the same advantages are available and it did not require any further development. Therefore, no deduction could be made on ground, that large tract of land is required.” 17. In Land Acquisition Officer vs. L Kamalamma (1998) 2 SCC 385, H.P. Housing Board vs. Ram Lal & others 2003(3) Sim.L.C. 64, Executive Engineer & Anr. vs. Dilla Ram Latest HLJ 2008 (HP) 1007) it was held that when the entire land acquired belongs to one block, classification of the same into different categories is not reasonable. In case acquired land is to be used/developed as a single unit for a purpose having no relevancy with quality of land, the classification of land completely loses its significance. 18. In the case on hand also as the land was acquired as the single unit for the public purpose, i.e., for construction of Rugra-Gawahi Link Road, therefore, the ld. Reference court had rightly assessed the market value of the land at the uniform rate irrespective of its classification. Hence, in view of the aforesaid authoritative 15 Neutral Citation No. ( 2025:HHC:43900 ) pronouncements of law, the contention of the learned Additional Advocate General that the learned Reference Court has erred in awarding uniform rate for the entire land by ignoring the classification and nature of the land deserves to be rejected. 19. The onus is upon the petitioner/claimant to prove the true and correct market value of the land at the time of the issuance of the notification under Section 4 of the Act. They are expected to lead cogent and satisfactory evidence in support of their claim. In Special Land Acquisition Officer vs. Karigowda & others, (2010) 5 SCC 708, it has been held that the onus to prove entitlement to receive higher compensation is upon the claimants but it cannot be said that there is no onus whatsoever upon the State in such reference proceedings. The court cannot lose sight of the facts and clear position of documents, that obligation to pay fair compensation is on the State in its absolute terms. The relevant portion of the aforesaid judgment reads as under: “29. It is a settled principle of law that the onus to prove entitlement to receive higher compensation is upon the claimants. In Basant Kumar v. Union of India [(1996) 11 SCC 542] this Court held that the claimants are expected to lead cogent and proper evidence in support of their claim. Onus primarily is on the claimants, which they can discharge while placing and proving on record sale instances and/or such other evidences as they deem 16 Neutral Citation No. ( 2025:HHC:43900 ) proper, keeping in mind the method of computation for awarding of compensation which they rely upon. In this very case, this Court stated the principles of awarding compensation and placed the matter beyond ambiguity, while also capsulating the factors regulating the discretion of the Court while awarding the compensation. This principle was reiterated by this Court even in Gafar v. Moradabad Development Authority [(2007) 7 SCC 614] and the Court held as under: (SCC p. 620, para 12) “12. As held by this Court in various decisions, the burden is on the claimants to establish that the amounts awarded to them by the Land Acquisition Officer are inadequate and that they are entitled to more. That burden had to be discharged by the claimants and only if the initial burden in that behalf was discharged, the burden shifted to the State to justify the award.” Thus, the onus being primarily upon the claimants, they are expected to lead evidence to revert the same, if they so desire. In other words, it cannot be said that there is no onus whatsoever upon the State in such reference proceedings. The court cannot lose sight of the facts and clear position of documents, that obligation to pay fair compensation is on the State in its absolute terms. Every case has to be examined on its own facts and the courts are expected to scrutinise the evidence led by the parties in such proceedings.” 20. In the instant case, admittedly the notification under Section 4 of the Act was published on 24.03.2004 and the petitioner had produced one year average of the land, Ex. PW-5/A, pertaining to Patwar Circle Ghandal, Mohal Sharawag, w.e.f. 01.06.2003 to 31.05.2004. As per one year average, Ex. PW-5/A, which has been prepared by the Revenue Officer, Rural, Shimla, the value of different types of 17 Neutral Citation No. ( 2025:HHC:43900 ) land was assessed as under: Classification of the land Rate per centare Bakhal abbal 2300.66 Bakhal dom 1164.19 Bakhal son 609.81 Ghasni 166.31 21. No evidence has been led by the respondents/State to establish the market value of the acquired land. The one year average Ex. PW-5/A, is the document prepared by the Public Official, i.e., the revenue official in discharge of his official duty. Hence, in the absence of any other direct evidence on record, the learned Reference Court has rightly placed reliance upon one year average, Ex. PW-5/A, by taking the average price of different rates of the land for different categories, and had assessed the market value of the land @ Rs.1060.24 or Rs.1060/- per square meter (2300.66+1164.19+609.81+166.31=Rs.4240.97÷4) at uniform rate for all categories of land, irrespective of its classification. The land owners have not preferred any appeal or cross-objection for the enhancement of amount of compensation. 22. Hence, in view of what has been discussed hereinabove, no fault can be found in the impugned award dated 02.01.2016, passed by the learned Reference Court. 18 Neutral Citation No. ( 2025:HHC:43900 ) Therefore, the instant appeal, being devoid of merits, deserves dismissal and is accordingly dismissed. Pending application(s), if any, shall also stand(s) disposed of. ( Sushil Kukreja ) Judge 16th December, 2025 (virender)