Judgment : Sushil Kukreja, J. The instant appeal has been preferred by the appellant-Union of India (hereinafter referred to as “the appellant”) under Section 54 of the LAND ACQUISITION ACT , 1894 (for short “the Act”) against award dated 22.08.2015, passed by learned District Judge, Kullu, District Kullu, H.P. (hereinafter referred to as “the learned Reference Court”), whereby the learned Reference Court enhanced the compensation. 2. The brief facts of the case are that Government of Himachal Pradesh issued Notification, dated 04.01.2011, under Section 4 of the Act and consequent thereto acquired land, measuring 1-11-0 bighas situated in Phati Shamshi, Kothi Khokhan, Tehsil and District Kullu, H.P., of respondent No. 1-Shri Mool Chand (claimant), who was petitioner before the learned Reference Court, for construction of Training Center, Sashastra Seema Bal (SSB), Shamshi. The publication of the notification under Section 4 of the Act was made in daily news paper Divya Himachal on 25.01.2011, in The Tribune on 03.02.2011 and Mushtri Munadi was done through Revenue Field Agency, vide rapat No. 229, dated 17.01.2011. Subsequently, the Land Acquisition Collector had assessed the market value of the land at Rs.33,154/- per biswa and awarded additional 12% compensation from the date of notification under Section 4 of the Act, till the date of award and solatium @ 30% on value of land, as per award, dated 18.06.2011. 3. The petitioner/claimant, 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 did not consider that the land was situated just adjacent to National Highway-21 at Shamshi, which is the business center of Kullu. 4. The learned Reference Court, allowed the petition of the petitioner/claimant and held him entitled for enhanced compensation at the rate of Rs.30,36,000/- (rupees thirty lac thirty six thousand) per bigha. In addition to the above, the petitioner was also held entitled to solatium, additional compensation etc.. Hence, the appellant-Union of India preferred the instant appeal under Section 54 of the Act with a prayer to quash and set-aside the impugned award dated 22.08.2015, passed by the learned Reference Court. 5. In addition to the above, the petitioner was also held entitled to solatium, additional compensation etc.. Hence, the appellant-Union of India preferred the instant appeal under Section 54 of the Act with a prayer to quash and set-aside the impugned award dated 22.08.2015, passed by the learned Reference Court. 5. I have heard the learned Deputy Solicitor General of India for the appellant, learned Senior Advocate for respondent No. 1, learned Additional Advocate General for respondents No. 2 and 3 and also carefully examined the records. 6. Learned Deputy Solicitor General contended that the impugned award is based on conjectures and surmises and the findings so recorded by the learned Reference Court are not supported by the evidence on record. He further contended that the learned Reference Court had ignored the material evidence on record and granted excessive amount of compensation arbitrarily without any reason. He also contended that the acquired land was out of market and situated by the side of Beas river and the same had very less value and the learned Reference Court had granted the award excessively and arbitrarily without any sufficient reason. Lastly, he submitted that the appeal be allowed and impugned award dated 22.08.2015 passed by the learned Reference Court be quashed and set-aside. 7. Conversely, learned Senior Counsel for respondent No. 1-petitioner/claimant contended that the learned Reference Court had rightly held him entitled for enhanced compensation at the rate of Rs.30,36,000/- per bigha. He further contended that the acquired land was situated adjacent to National Highway-21 at Shamshi, which is the business center of Kullu. He supported the impugned award and prayed that the instant appeal, being devoid of merits, be dismissed. 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 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. 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 and others v. 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 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 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 land and the urgent necessity of the purchaser to buy should be disregarded. The guiding star would be the conduct of pypothetical 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. 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. 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 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.” 12. 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.” 12. 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 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 )." 13. In the instant case, the petitioner had placed on record the sale deeds, Ex. P3, Ex. P5, Ex. P7, Ex. P9 and Ex. P11, which are as under: 15. However, the learned Reference Court has assessed the market value of the acquired land on the basis of the sale deed dated 23.06.2009, Ex. P3, being the highest exemplar. In the instant case, the petitioner had placed on record the sale deeds, Ex. P3, Ex. P5, Ex. P7, Ex. P9 and Ex. P11, which are as under: 15. However, the learned Reference Court has assessed the market value of the acquired land on the basis of the sale deed dated 23.06.2009, Ex. P3, being the highest exemplar. The Hon’ble Apex Court in Mehrawal Khewaji Trust vs. State of Punjab & others, (2012) 5 SCC 432 while considering whether highest exemplar should have been relied upon in place of averaging the prices, has held that when there are several exemplars with reference to similar lands, it is the general rule that the highest of the exemplars, if it is satisfied, that it is a bona fide transaction has to be considered and accepted. The relevant portion of the aforesaid judgement reads as under: “17. It is clear that when there are several exemplars with reference to similar lands, it is the general rule that the highest of the exemplars, if it is satisfied, that it is a bona fide transaction has to be considered and accepted. When the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition. In our view, it seems to be only fair that where sale deeds pertaining to different transactions are relied on behalf of the Government, the transaction representing the highest value should be preferred to the rest unless there are strong circumstances justifying a different course. It is not desirable to take an average of various sale deeds placed before the authority/court for fixing fair compensation.” 16. In the wake of law laid down by the Hon'ble Apex Court in a recent judgement titled as Horrmal (since deceased) through. LRs. & ors. vs. State of Haryana & others, reported as 2024 INSC 797 , it has been settled that for the purpose of determination of market value of the acquired land with respect to landowner, the highest of the sale deeds of bonafide transactions relating to similar nature and location of land was required to be taken into consideration. The relevant portion of the aforesaid judgment is reproduced as under: “27. The relevant portion of the aforesaid judgment is reproduced as under: “27. In the instant case, there are multiple sale deeds of smaller plots, and these represent the best available evidence for estimating compensation. Since there is no legal impediment to considering such sale deeds, the logical progression in the compensation estimation process would be to identify the most suitable sale deed(s) for determining the market value and subsequently, to apply adequate deductions on the same. The solution to this state of flux may thus be found in the case of Mehrawal Khewaji Trust v. State of Punjab, (2012) 5 SCC 432 . where this Court laid down as follows: "It is clear that when there are several exemplars with reference to similar lands, it is the general rule that the highest of the exemplars, if it is satisfied that it is a bona fide transaction, has to be considered and accepted. When the land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bona fide transaction entered into between a willing purchaser and a willing seller near about the time of the acquisition." [Emphasis supplied] 28. This view has been reiterated in Sh. Himmat Singh v. State of M.P. (2013) 16 SCC 392 where a three-judge bench of this Court consolidated various precedents to affirm that in circumstances where there are multiple sale deeds available for consideration, the Court shall rely on the highest valued exemplars unless the prices fall within a narrow range, in which case calculating an average of the values therein may be more congruous.” 17. In the instant case, the sale deed Ex.P3, is the highest examplar and is dated 23.06.2009, whereas the Notification under Section 4 of the Act was issued on 04.01.2011.Therefore by applying the above principles of law to the case on hand, no fault can be found with the findings of the learned Reference Court below while taking sale deed, Ex.P3, into consideration for determining the market value of the acquired land, which was the highest exemplar. As per the sale deed Ex. P3, five biswas of land was purchased for Rs.8,25,000/-, meaning thereby that the value of the land at that time was Rs.1,65,000/- per biswa. 18. As per the sale deed Ex. P3, five biswas of land was purchased for Rs.8,25,000/-, meaning thereby that the value of the land at that time was Rs.1,65,000/- per biswa. 18. The Hon'ble Apex Court in the case of General Manager, Oil and Natural Gas Corporation Limited vs. Rameshbhai Jivanbhai Patel and Another reported in (2008) 14 SCC 745 observed that taking recourse to the mode of determining the market value by providing appropriate escalation over the proved market value of nearby lands in previous years, where there is no evidence of any contemporaneous sale transactions or acquisitions of comparable lands in the neighbourhood, is a reasonably safe method only if applied for a period of four to five years. "14. On the other extreme, in remote rural areas where there was no chance of any development and hardly any buyers, the prices stagnated for years or rose marginally at a nominal rate of 1% or 2% per annum. There is thus a significant difference in increases in market value of lands in urban/semi-urban areas and increases in market value of lands in the rural areas. Therefore if the increase in market value in urban/semi-urban areas is about 10% to 15% per annum, the corresponding increases in rural areas would at best be only around half of it, that is about 5% to 7.5% per annum. This rule of thumb refers to the general trend in the nineties, to be adopted in the absence of clear and specific evidence relating to increase in prices. Where there are special reasons for applying a higher rate of increase, or any specific evidence relating to the actual increase in prices, then the increase to be applied would depend upon the same. 16. Much more unsafe is the recent trend to determine the market value of acquired lands with reference to future sale transactions or acquisitions. To illustrate, if the market value of a land acquired in 1992 has to be determined and if there are no sale transactions/acquisitions of 1991 or 1992 (prior to the date of preliminary notification), the statistics relating to sales/acquisitions in future, say of the years 1994-95 or 1995-96 are taken as the base price and the market value in 1992 is worked back by making deductions at the rate of 10% to 15% per annum. How far is this safe? How far is this safe? One of the fundamental principles of valuation is that the transactions subsequent to the acquisition should be ignored for determining the market value of acquired lands, as the very acquisition and the consequential development would accelerate the overall development of the surrounding areas resulting in a sudden or steep spurt in the prices. Let us illustrate. Let us assume there was no development activity in a particular area. The appreciation in market price in such area would be slow and minimal. But if some lands in that area are acquired for a residential/commercial/industrial layout, there will be all round development and improvement in the infrastructure/ amenities/facilities in the next one or two years, as a result of which the surrounding lands will become more valuable. Even if there is no actual improvement in infrastructure, the potential and possibility of improvement on account of the proposed residential/commercial/ industrial layout will result in a higher rate of escalation in prices. As a result, if the annual increase in market value was around 10% per annum before the acquisition, the annual increase of market value of lands in the areas neighbouring the acquired land, will become much more, say 20% to 30%, or even more on account of the development/proposed development. Therefore, if the percentage to be added with reference to previous acquisitions/sale transactions is 10% per annum, the percentage to be deducted to arrive at a market value with reference to future acquisitions/sale transactions should not be 10% per annum, but much more. The percentage of standard increase becomes unreliable. Courts should therefore avoid determination of market value with reference to subsequent/future transactions. Even if it becomes inevitable, there should be greater caution in applying the prices fetched for transactions in future. Be that as it may.” 19. In a somewhat similar situation in the case of Udho Dass vs. State of Haryana , reported in (2010) 12 SCC 51 , the Hon'ble Apex Court has held as under: "18. Even if it becomes inevitable, there should be greater caution in applying the prices fetched for transactions in future. Be that as it may.” 19. In a somewhat similar situation in the case of Udho Dass vs. State of Haryana , reported in (2010) 12 SCC 51 , the Hon'ble Apex Court has held as under: "18. Concededly, the Act also provides for the payment of the solatium, interest and an additional amount but we are of the opinion, and it is common knowledge, that even these payments do not keep pace with the astronomical rise in prices in many parts of India, and most certainly in North India, in the land price and cannot fully compensate for the acquisition of the land and the payment of the compensation in driblets. The 12% per annum increase which Courts have often found to be adequate in compensation matters hardly does justice to those land owners whose land have been acquired as judicial notice can be taken of the fact that the increase is not 10 or 12 or 15% per year but is often upto 100% a year for land which has the potential of being urbanized and commercialized such as in the present case. Be that as it may, we must assume that the landowners were entitled to the compensation fixed by the High Court on the date of the award of the Collector and had this amount been made available to the landowners on that date, it would have been possible for them to rehabilitate their holdings in some other place. This exercise has been defeated for the simple reason that the payment of compensation has been spread over almost two decades." 20. In the case on hand, since the land was acquired after a gap of one and half years from the date of execution of sale deed Ex. P3, the learned Reference Court had assessed the value of the land @ Rs.1,89,750/- per biswa by adding 10% annual increase. Taking note of the location of the acquired land which is adjacent to National Highway-21 at Shamshi, and the same being acquired for the purpose of construction of Training Center, Sashtastra Seema Bal (SSB), Shamshi, 10% per annum increase which the learned Reference Court has taken cannot be said to be on a higher side. 21. Taking note of the location of the acquired land which is adjacent to National Highway-21 at Shamshi, and the same being acquired for the purpose of construction of Training Center, Sashtastra Seema Bal (SSB), Shamshi, 10% per annum increase which the learned Reference Court has taken cannot be said to be on a higher side. 21. Insofar as the question whether rates fixed for small plots of land can form the basis for fixation of the rate for larger plots of land is concerned, no absolute bar has been laid down in the judicial pronouncements that the said rates cannot form the basis for fixation of the rates of larger plots of land, as a determining factor for deciding the market value thereof. Rather, in the case of Land Acquisition Officer, Revenue Divisional Officer, Chittor vs. Smt. L. Kamalamma (Dead) by LRs & Ors. K. Krishnamachari & Others reported as (1998) 2 SCC 385 , the Supreme Court held that when no sales of comparable land were available where large chunks of land had been sold, even land transactions in respect of smaller extent of land could be taken note of as indicative of the price that may be fetched in respect of large tracts of land, by making appropriate deductions. The relevant portion of the aforesaid judgment reads as under: “6. … … … Further when no sales of comparable land were available where large chunk of land had been sold, even land transactions in respect of smaller extent of land could be taken note of as indicating the price that it may fetch in respect of large tracts of land by making appropriate deductions such as for development of the land by providing enough space for roads, sewers, drains, expenses involved in formation of a layout, lump sum payment as also the waiting period required for selling the sites that would be formed.” 22. In the case on hand, as the sale deed, Ex. P3, pertains to a small portion of the land, the learned Reference court did not commit any error while allowing deduction @ 20% of the amount and thereby assessing the market value of the acquired land @ Rs.1,51,800/- per biswa which comes to Rs.30,36,000/- per bigha. 23. In the case on hand, as the sale deed, Ex. P3, pertains to a small portion of the land, the learned Reference court did not commit any error while allowing deduction @ 20% of the amount and thereby assessing the market value of the acquired land @ Rs.1,51,800/- per biswa which comes to Rs.30,36,000/- per bigha. 23. Therefore, in view of the aforesaid authoritative pronouncements of law, the contention of the learned Deputy Solicitor General that the learned Reference Court has erred in enhancing the compensation deserves to be rejected. 24. Hence, in view of what has been discussed hereinabove and also considering the above stated settled principles of law, no interference is required in the impugned award, dated 22.08.2015, passed by learned District Judge, Kullu, District Kullu, H.P.. 25. The instant appeal, being devoid of merits, deserves dismissal and is accordingly dismissed. Pending application(s), if any, shall also stand(s) disposed of.