1 Neutral Citation No. ( 2026:HHC:41501 ) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFAs No. 608, 609 and 686 of 2012 Reserved on: 24.08.2026 Date of decision: 28.09.2026 Date of uploading on website: 28.09.2026 ________________________________________________ 1. RFA No. 608 of 2012: Land Acquisition Collector & another …..Appellants. Versus Joosaf ……Respondent. 2. RFA No. 609 of 2012: Land Acquisition Collector & another …..Appellants. Versus Masoom ……Respondent 3. RFA No. 686 of 2012: The State of H.P. & another …..Appellants. Versus Firoz Deen ……Respondent ________________________________________________ Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting? For the appellants: Mr. Balvinder Singh Ballu, Deputy Advocate General. None for the respondents. Sushil Kukreja, Judge. The instant appeals have been preferred by the appellants/State, under Section 54 of the Land Acquisition Act, 1894 (for short “the Act”) against award dated 01.12.2011, passed by learned Additional District Judge-II, 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Neutral Citation No. ( 2026:HHC:41501 ) Kangra at Dharamshala, District Kangra, H.P. (hereinafter referred to as “the learned Reference Court”), in Reference Cases No. 31-J/2011/2006, 30-J/2011/2006 and 29- J/20112006, whereby the reference petitions filed by the petitioners/claimants (respondents herein), were allowed. 2. The facts giving rise to the instant appeal are that the vide Notification, dated 04.03.2003, issued under Section 4 of the Act, which was published in H.P. Rajpatra on 29.03.2003 and in news papers, i.e., Amar Ujala, dated 08.04.2003 and Dainik Bhaskar, dated 27.03.2003, the land of the petitioners/claimants, situated at Mohal Bella, Thakran Mauza and Tehsil Fatehpur, District Kangra, H.P., was intended to be acquired for the purpose of construction of Shah Nehar Project to be constructed by Irrigation & Public Health Department. Subsequently, notification under Sections 6 and 7 of the Act was published and ultimately the Land Acquisition Collector had passed the award. However, the petitioners/claimants, being dissatisfied with the award of the Land Acquisition Collector preferred reference petitions, under Section 18 of the Act, before the learned Reference Court seeking enhancement of the compensation amount. 3. The Reference Court, after hearing the learned 3 Neutral Citation No. ( 2026:HHC:41501 ) counsel for the parties and after examining the entire record, allowed the reference petitions, and held them entitled to enhanced compensation of the acquired land @Rs.7,50,000/- per hectare alongwith all the statutory benefits. 4. Feeling aggrieved, the appellants/State of H.P. preferred the instant appeals against the impugned award with a prayer to set-aside the same. 5. I have heard the learned Deputy Advocate General for the appellants/State and carefully examined the entire records. 6. 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 4 Neutral Citation No. ( 2026:HHC:41501 ) 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. 7. 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.” 8. 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 5 Neutral Citation No. ( 2026:HHC:41501 ) 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 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 6 Neutral Citation No. ( 2026:HHC:41501 ) 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.” 9. 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 7 Neutral Citation No. ( 2026:HHC:41501 ) 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." 10. In the instant case, the petitioners had examined Shri Joosaf as PW-1, who deposed that the lands of the petitioners were situated in Mauza Bella Thakran, Tehsil Fatehpur and the same were acquired for construction of Shah Nehar, but adequate compensation was not given. He further deposed that the value of the acquired lands was Rs.10,00,000/- per kanal. The petitioner has also tendered in evidence copy of award, Ex. PX, qua the lands acquired for same Shah Nehar Project Fatehpur, District Kangra, H.P.. 8 Neutral Citation No. ( 2026:HHC:41501 ) 11. On the other hand, respondents had examined Shri Jai Singh, the then Kanungo, who tendered in evidence copies of notification under Section 4 of the Act, Ex.RW-1/A, notification under Section 6 of the Act, Ex.RW-1/B, and annual average value of land, Ex.RW-1/C. He also placed on record copy of area of land acquired, Ex.RW-1/E, and tendered in evidence copy of notification under Section 9 of the Act, Ex.RW-1/G, notice sent to the land owners under Section 12(2) of the Act, Ex.RW-1/H. This witness also tendered in evidence copy of award, Ex.RW-1/J. 12. The perusal of the award reveals that the learned Reference Court has relied upon award Ex. PX, while determining the market value of the land in question. The learned Deputy Advocate General contended that the market value of the land during the year 2003 was much less then the market value of the acquired land assessed in the award, Ex.PX. However, this contention of the learned Deputy advocate General deserves to be rejected as in the absence of any direct evidence, judgments and awards passed in respect of acquisitions of lands made in the same village and/or neighboring villages can be taken into consideration for determination of the market value. 9 Neutral Citation No. ( 2026:HHC:41501 ) 13. 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.” 14. Thus, in absence of any direct evidence, the court, 10 Neutral Citation No. ( 2026:HHC:41501 ) may take recourse to judgments and awards passed in respect of acquisitions of lands made in the same village and/or neighboring villages. In the instant case, while assessing the market value of the land under acquisition, the learned Reference court had relied upon the copy of award, Ex. PX, which pertains to Mohal and Mauza Chabbar, Tehsil Fatehpur, and their lands were also acquired for the construction of same Shah Nehar Project Fatehpur, District Kangra, wherein compensation to the tune of Rs.7,50,000/- per hectare was granted for the acquired land. Therefore, in this view of the matter, the learned Reference Court has rightly relied upon award, Ex.PX, and had rightly held the petitioners entitled for enhanced compensation @ Rs.7,50,000/- per hectare. 15. The learned Deputy Advocate General for the appellant/State lastly 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 Deputy Advocate General is also 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 11 Neutral Citation No. ( 2026:HHC:41501 ) 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 uniformly 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 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 12 Neutral Citation No. ( 2026:HHC:41501 ) 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 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.” 16. 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 13 Neutral Citation No. ( 2026:HHC:41501 ) quality of land, the classification of land completely loses its significance. 17. In the case on hand also as the land was acquired as the single unit for the public purpose, i.e., for construction of Shah Nehar, Project, therefore, the value of the land under acquisition is to be assessed as a single unit irrespective of its nature and classification 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 18. Therefore, in view of the aforesaid authoritative pronouncements of law, the contention of the learned Deputy Advocate General for the appellants that the learned Reference Court had erred in awarding uniform rate for the entire land by ignoring the classification and nature of the land deserves to be rejected, as in the instant case also the land has been acquired as the single unit for the public purpose, i.e., for construction of Shah Nehar Project. 19. Hence, in view of what has been discussed hereinabove, no interference is required in the impugned award dated 01.12.2026, passed by the learned Reference Court. Therefore, the instant appeals, being devoid of merits, deserve dismissal and are accordingly dismissed. 14 Neutral Citation No. ( 2026:HHC:41501 ) Pending application(s), if any, shall also stand(s) disposed of. ( Sushil Kukreja ) Judge 28th September, 2026 (virender)