1 Neutral Citation No. ( 2025:HHC:40941 ) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 422 of 2015 Reserved on: 24.11.2025 Date of decision: 01.12.2025 ________________________________________________ The Executive Engineer, B&R, HPPWD & another …..Appellants. Versus Jeet Ram & others ……Respondents. ________________________________________________ Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting? For the appellants: Mr. Balwinder Singh, Deputy Advocate General. For the respondents: Mr. Rajiv Rai, Advocate. Sushil Kukreja, Judge. The instant appeal has been preferred by the appellants/State, who were 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 09.10.2014, passed by learned District Judge, Bilaspur, H.P. (hereinafter referred to as “the learned Reference Court”), in Land Reference Petition No. 7/4 of 2011, whereby the learned Reference Court enhanced the compensation. 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Neutral Citation No. ( 2025:HHC:40941 ) 2. The brief facts of the case are that State of H.P., issued notification under Section 4 of the Act on 15.06.2006 for acquisition of land comprised in Khasra No. 85/58/1, measuring 1-18 bigha for construction of Kuthera-Ghodi road in village Sarag, P.o. Kuthera, Tehsil Ghumarwin, District Bilaspur H.P. The aforesaid notification was published in H.P. Rajpatra on 09.07.2006 and in news papers, i.e., Punjab Kesari and Indian Express on 10.07.2006. A declaration under Sections 6 and 7 of the Act was issued, which was published in H.P. Rajpatra on 04.04.2007 and in news papers, i.e., Amar Ujala and Indian Express on 13.04.2007. Consequent upon the notification issued under Section 9 of the Act, compensation of Rs.14,59,263/- which included compensation, additional market value and interest under Section 23(1A) of the Act, was awarded in favour of the claimants. 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 had not awarded adequate compensation by ignoring that the 3 Neutral Citation No. ( 2025:HHC:40941 ) acquired land was well connected to hospital, school town, government offices and other basic facilities, like water electricity etc. As per the petitioners, no compensation was awarded for the trees, which were cut, and also for improvements made over the acquired land. Lastly, the petitioners sought enhanced compensation alongwith all the statutory benefits, as provided under Section 23 of the Act. 4. The learned Reference Court, allowed the petition of the petitioners/claimants and held them entitled for enhanced compensation at the rate of Rs.35,000/- (rupees thirty five thousand) per biswa qua the acquired land. In addition to the above, the petitioners were also held entitled to solatium at the rate of 30% on the market value of the land, they were also held entitled to amount at the rate of 12% per annum on the enhanced compensation w.e.f. 09.07.2006, the date of notification till the date of the award, interest on the enhanced compensation at the rate of 9% per annum from the date of taking possession or the date of award, whichever was earlier for a period of one year and thereafter at the rate of 15% per annum till the date of payment/deposit of the amount of compensation, as assessed above. Hence, the appellants/State preferred the 4 Neutral Citation No. ( 2025:HHC:40941 ) instant appeal under Section 54 of the Act with a prayer to quash and set-aside the impugned award dated 09.10.2014, passed by the learned Reference Court. 5. I have heard the learned Deputy Advocate General for the appellants, learned Counsel for the respondents and also carefully examined the records. 6. Learned Deputy Advocate 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 learned Reference Court failed to correctly calculate the market value of the acquired land and granted the award excessively and arbitrarily without any sufficient reason. Lastly, he submitted that the appeal be allowed and impugned award dated 09.10.2014, passed by the learned Reference Court be quashed and set-aside. 7. Conversely, learned Counsel for the respondents supported the impugned award. He contended that the 5 Neutral Citation No. ( 2025:HHC:40941 ) learned Reference Court had rightly held the petitioner/claimants entitled for enhanced compensation at the rate of Rs.35,000/- per biswa qua the acquired land. He further contended that the acquired land was valuable, as such 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. 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) 6 Neutral Citation No. ( 2025:HHC:40941 ) 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.” 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 7 Neutral Citation No. ( 2025:HHC:40941 ) 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 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 8 Neutral Citation No. ( 2025:HHC:40941 ) 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 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; 9 Neutral Citation No. ( 2025:HHC:40941 ) (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 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 10 Neutral Citation No. ( 2025:HHC:40941 ) 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 case on hand, the perusal of impugned award shows that the petitioners have relied upon sale deeds, Ex. PW-1/B, Ex. PW-1/C and Ex. PW-1/D, whereas the respondents have relied upon sale deeds, Ex. R-1 and Ex. R-2. The details of the aforesaid sale deeds, relied upon by the petitioners and respondents, for the sake for ready reference, are as under: Sale deeds Date Village where the land was sold Area Sale consideration Ex. PW-1/B 11.09.2002 Kuthera 0.2 Rs.80,000/- Ex.PW-1/C 23.04.2004 Kuthera 0.1 Rs.35,000/- Ex.PW-1/D 29.01.2002 Kuthera 0.1 Rs.35,000/- Ex.R-1 08.03.2004 Kuthera 0.4 Rs.12,000/- Ex.R-2 26.02.2002 Kuthera 0.10 Rs.30,000/- 14. The perusal of the aforesaid sale deeds show that the same pertain to village Kuthera, but the acquired land was in village Sarag. The patwari of the area, who was examined by the petitioners, appeared in the witness-box as PW-4 and deposed that no sale transaction took place in village Sarag between 2002 to 15.06.2007. Therefore, the market value of the adjoining area, having same advantages and dis-advantages, have to be considered to determine the 11 Neutral Citation No. ( 2025:HHC:40941 ) value of the acquired land. 15. The perusal of the sale deeds relied upon by the parties makes it further clear that sale deeds, Ex. PW-1/B, Ex. PW-1/D and Ex. R-2 were executed in the year 2002, i.e., about four years prior to issuance of Notification under Section 4 of the Act for acquisition of land in question, therefore, the same cannot be taken as an exemplar. Sale deeds, Ex. PW-1/C and Ex. R-1, were executed in the year 2004, therefore the same being close to the date of notification, can be considered for determining the market value of the acquired land. 16. However, the perusal of sale deed, Ex. R-1, further shows that the land was sold at a meager rate of Rs.3,000/- per biswa and it has not been taken into consideration by the learned Reference Court as the District Collector has assessed the rate of Andarli Aval at the rate of Rs.6,76,426/- per bigha. Therefore, in the absence of any other direct evidence on record, sale deed, Ex. PW-1/C, wherein sale was carried out at the rate of Rs.35,000/- per biswa, executed in the year 2004 and closer to the date of notification, has rightly been taken into consideration by the learned Reference Court as an exemplar to assess the 12 Neutral Citation No. ( 2025:HHC:40941 ) market value of the acquired land at the rate of Rs.35,000/- per biswa. 17. Hence, in view of what has been discussed hereinabove, no fault can be found in the impugned award dated 09.10.2014, passed by the learned Reference Court. 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 1st December, 2025 (virender)