1 Neutral Citation No. ( 2025:HHC:42034) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 31 of 2015 Reserved on: 17.11.2025 Date of decision: 05.12.2025 ________________________________________________ Dev Raj & another. …..Appellants. Versus Union of India & others. ……Respondents. ________________________________________________ Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting? For the appellants: Ms. Shashi Kiran, Advocate. For respondents No. 1 to 3/ Union of India: Mr. Kunal Thakur, Central Government Counsel. For respondent No. 4/State: Mr. Manoj Chauhan and Mr. Amandeep Sharma, Additional Advocates General, with Mr. Ankush Thakur and Mr. Balvinder Singh Ballu, Deputy Advocates General. For respondents No. 5 to 9: Mr. K.S. Dhaulta and Ms. Bhavya, Advocates. Sushil Kukreja, Judge. The instant appeal has been preferred by the appellants, who were petitioners No. 1 and 2 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 13.09.2013, 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Neutral Citation No. ( 2025:HHC:42034) passed by learned District Judge, Sirmaur District at Nahan, H.P. (hereinafter referred to as “the learned Reference Court”), in LAC Petition No. 08-LAC/4 of 2010, whereby the petition filed by the petitioners/claimants, (appellants and proforma respondents No. 5 to 9 herein) under Section 18 of the Act was allowed and they were held entitled for enhanced compensation at the flat rate of Rs.350/- per square meter irrespective of the classification of the land alongwith solatium, additional compensation, interest etc.. 2. The brief facts of the case are that the land of the petitioners/claimants was acquired for the public purpose, i.e., for construction of Kala Amb-Nahan-Paonta Sahib- Dehradun National Highway. Notification under Section 4 of the Act, qua the acquisition of the land, was issued on 25.07.2007 and the same was published in Rajpatra on 18.08.2007 and also in two daily news papers, i.e., Divya Himachal on 12.08.2007 and Times of India on 12.08.2007. The Land Acquisition Collector, after inviting the objections and hearing the parties, announced the award considering one year average sale price, as was prevalent in the area prior to the publication of the aforesaid Notification under Section 4 of the Act. The Land Acquisition Collector awarded 3 Neutral Citation No. ( 2025:HHC:42034) the following rates for various categories of the land: Sr. No. Classification of the land Rate per bigha 1. Obed Abbal Rs.4,53,315.00 2. Obed Doem Rs.3,27,930.00 3. Obed Somyam Rs.1,83,255.00 4. Banjar Kadeem Rs.77,170.00 5. Nakabil Rs.19,290.00 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 did not consider that the land was situated within the Municipal area of Paonta Sahib which is an industrial area coupled with the fact that Tehsil Headquarter and its boundaries touches Uttrakhand. 4. The learned Reference Court, allowed the petition of the petitioners/claimants and held them entitled for enhanced compensation at the rate of Rs.350/- (rupees three hundred fifty) per square meter, irrespective of the classification of the land. In addition to the above, the petitioners were also held entitled to solatium, additional compensation, interest on the enhanced amount of 4 Neutral Citation No. ( 2025:HHC:42034) compensation. Feeling still aggrieved, appellants Dev Raj and Paramjeet Kaur, who were petitioners No. 1 and 2 before the learned Reference Court, preferred the instant appeal under Section 54 of the Act with a prayer to allow the instant appeal by modifying the impugned award, dated 13.09.2013, and to determine the market value of the acquired land @ Rs.498/- per square meter, i.e., Rs.4,24,296/- per bigha wilh all other statutory benefits. 5. I have heard the learned counsel for the appellants, learned Central Government Counsel for respondents No. 1 to 3/Union of India, learned Additional Advocate General for respondent No. 4/State and learned counsel for proforma respondents No. 5 to 9. 6. Learned counsel for the appellants contended that the learned Reference Court had wrongly appreciated the material on record and wrongly assessed the market value of the acquired land @ Rs.350/- per square and had erred in giving discount to the extent of 30% while assessing the market value of the acquired land, as no deduction was permissible since the land had been acquired for a public purpose, i.e., for construction of a road. She, therefore, submitted that the appeal be allowed and impugned award 5 Neutral Citation No. ( 2025:HHC:42034) dated 30.09.2009 passed by the learned Reference Court be modified and the market value of the acquired land be determined @ Rs.498/- per square meter, i.e., @ Rs.4,24,296/- per bigha with all other statutory benefits. 7. Conversely, learned Central Government Counsel and learned Additional Advocate General for respondent No. 1 to 3/Union of India and respondent No. 4/State, respectively, supported the impugned award. They prayed for dismissal of the instant appeal. 8. In order to prove its case, the petitioners examined Shri Guman Singh, the then Senior Assistant in the office of N.H. Sub Division, Dhaulakuan, as PW-1, who deposed that road situated in village Bhatanwali was previously recorded in the possession of PWD and it was transferred in favour of the National Highway by way of notification in the year 1999. PW-2, Shri Mumtar Ali, the then Patwari, Patwar Circle, Bhatanwali, appeared in the witness- box as PW-2 and deposed that the acquired land was mutated in favour of the National Highway on 18.11.2021. As per this witness, Hotel Kanishka and petrol pump are situated in village Bhatanwali by the side of national highway and adjoining to mauza Bhatanwali, commercial buildings 6 Neutral Citation No. ( 2025:HHC:42034) are situated from Bhatanwali to Badripur. PW-3 Shri Singha Ram (one of the petitioners) tendered in evidence his affidavit, Ex. PW-3/A and claimed that the market value of the acquired land be assessed between Rs.10 to 20 lacs per bigha. 9. On the other hand, the respondents had examined Shri Surya Kant, the then Junior Engineer, N.H. Sub Division Dhaulakuan, as RW-1 and tendered in evidence sale deeds, Ex. RW-1/A to Ex. RW-1/E. 10. 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. For ascertaining the market value of the land, the potentiality of the acquired land should also be taken into consideration. Potentiality means 7 Neutral Citation No. ( 2025:HHC:42034) capacity or possibility for changing or developing into state of actuality. 11. In Mehta Ravindrarai Ajitrai (deceased) through his heirs and LRs & 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.” 12. 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 8 Neutral Citation No. ( 2025:HHC:42034) 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 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 9 Neutral Citation No. ( 2025:HHC:42034) 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.” 13. 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: 10 Neutral Citation No. ( 2025:HHC:42034) "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)." 14. 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 11 Neutral Citation No. ( 2025:HHC:42034) 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.” 15. In the case on hand, the learned Reference Court has assessed the market value of the land @ Rs.350/- per square meter on the basis of the sale deed, Ex. RW-1/A, placed on record by the respondents, whereby land measuring 401.75 square meters was sold for consideration of Rs.2,00,000/-, i.e., Rs.498/- per square meter. The acquired land was 968.55 square meters and the plot sold through the above sale deed measured 401.75 square meters. However, the learned Reference Court gave discount to the extent of 30% while assessing the market value of the acquired land viz-a-viz sale instance (Ex. RW- 1/A) pertaining to small extent of land. Ultimately, the learned Reference Court assessed the market value of the acquired land @ Rs.350/- per square meter, irrespective of the classification of the land. 16. However, the learned counsel for the appellants 12 Neutral Citation No. ( 2025:HHC:42034) contended that the learned Reference Court had erred in giving discount to the extent of 30% while assessing the market value of the acquired land, as deduction was not permissible since the land had been acquired for a public purpose, i.e., for construction of a road. 17. This Court in number of judgments has consistently taken a view that the deduction will not be permissible where the purpose of acquisition of land is the construction of road, railway track or any other purpose relatable to the public at large, without any component of profit or loss. 18. Reference can be made to 2017 (Suppl.) SLC 263 titled Jaswant Singh &others vs. State of H.P. & other. The relevant portion of the aforesaid judgment reads as under:- "21. Plea of the appellants on this issue is misconceived. In present case, acquisition is not for the purpose of developing a Housing Colony, setting up a commercial unit or any other purpose of like nature which may have resulted development of area on the cost of the State. In the judgments relied upon by the appellants, the deductions were allowed for two purposes i.e. (a) deduction for providing development infrastructure and (b) deduction for development expenditure/expenses and these deduction have been explained by the Apex Court in case titled Chandrashekar (dead) by LRs and others Vs. Land Acquisition Officer, reported in (2012)1 SCC 390, which is as under:- "19. Based on the precedents on the issue referred to above it is seen, that as the legal proposition on the point crystallized, this Court divided the quantum of deductions (to be made from the market value determined on the basis of the developed exemplar transaction) on account of development into two components. 13 Neutral Citation No. ( 2025:HHC:42034) 19.1 Firstly, space/area which would have to be left out, for providing indispensable amenities like formation of roads and adjoining pavements, laying of sewers and rain/flood water drains, overhead water tanks and water lines, water and effluent treatment plants, electricity sub stations, electricity lines and street lights, telecommunication towers etc. Besides the aforesaid, land has also to be kept apart for parks, gardens and playgrounds. Additionally, development includes provision of civic amenities like educational institutions, dispensaries and hospitals, police stations, petrol pumps etc. This "first component", may conveniently be referred to as deductions for keeping aside area/space for providing developmental infrastructure. 19.2 Secondly, deduction has to be made for the expenditure/expense which is likely to be incurred in providing and raising the infrastructure and civic amenities referred to above, including costs for levelling hillocks and filling up low lying lands and ditches, plotting out smaller plots and the like. This "second component" may conveniently be referred to as deductions for developmental expenditure /expense. 20. It is essential to earmark appropriate deductions, out of the market value of an exemplar land, for each of the two components referred to above. This would r be the first step towards balancing the differential factors. This would pave the way for determining the market value of the undeveloped acquired land on the basis of market value of the developed exemplar land.” 19. Further, in Nelson Fernades Vs. Special Land Acquisition Officer 2007 (9) SCC 447 while dealing with the case where the land was acquired for laying a Railway line, the Court held that no deduction by way of development charges was permissible as there was no question of any development thereof. 20. In The Land Acquisition Collector vs. Bangalu @ Daulat Ram, 2025 (1) Shim. LC 146, it has been held by 14 Neutral Citation No. ( 2025:HHC:42034) this Court that the deduction will not be permissible where the purpose of acquisition of land is for the construction of road, rail track or any other purpose relatable to the public at large, without any component of profit or loss. The relevant portion of the aforesaid judgment is as under: “11. The contention of the learned Deputy Advocate General that standard deduction was required to be made from the flat rate of Rs.8,50,000/- per bigha, is devoid of any merits. This Court in number of judgments has consistently taken a view that the deduction will not be permissible where the purpose of acquisition of land is for the construction of road, rail track or any other purpose relatable to the public at large, without any component of profit or loss.” 21. Thus, in view of the aforesaid pronouncements of law, deduction will not be permissible where the purpose of acquisition of the land is for the construction of road, railway track or any other purpose relatable to the public at large, without any component of profit or loss. In the instant case also, even though, reliance upon Ex. RW1/A by the learned Reference Court below, is not misplaced, in as much, as it fulfilled the relevant enshrined legal parameter for its invocation/applicability, yet the learned Reference Court had committed an error in giving discount to the extent of 30% while assessing the market value of the acquired land as the same has been acquired for a public purpose, i.e., for 15 Neutral Citation No. ( 2025:HHC:42034) construction of Kala Amb-Nahan-Paonta Sahib-Dehradun National Highway, relatable to the public at large and every inch of acquired land was put to the same use for which it was acquired. 22. 22. Hence, in view of what has been discussed hereinabove and also considering the above stated settled principles of law, by taking sale deed, Ex.RW-1/A, as an exemplar sale transaction, the market value of the acquired land is determined @ Rs.498/- per square meter, irrespective of the classification of the land. Accordingly, the impugned award, dated 13.09.2013, passed by the learned Reference Court stands modified, as above, and rest of the award remains unchanged and the appeal stands disposed of accordingly. It goes without saying that the compensation will be calculated only on the basis of the land value, as fixed by this Court Pending application(s), if any, shall also stand(s) disposed of. ( Sushil Kukreja ) Judge 5th December, 2025 (virender)