1 Neutral Citation No. ( 2026:HHC:6939 ) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No. 384 of 2014 Reserved on: 07.03.2026 Date of decision: 12.03.2026 ________________________________________________ The Collector Land Acquisition HPPWD & others …..Appellants. Versus Bansi Ram & others ……Respondents. ________________________________________________ Coram The Hon'ble Mr. Justice Sushil Kukreja, Judge. 1 Whether approved for reporting? For the appellants: Mr. B.N. Sharma, Additional Advocate General. Respondents No. 1(a) to 1(d) ex parte. For respondents No. 1 to 4: Mr. Surya Chauhan, 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 19.08.2011, passed by learned Additional District Judge, Mandi, H.P. (hereinafter referred to as “the learned Reference Court”), in Land Reference Petition No. 55 of 2003 (alongwith other reference 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 Neutral Citation No. ( 2026:HHC:6939 ) petitions), whereby the learned Reference Court enhanced the compensation. 2. The brief facts of the case are that State of H.P., issued notification under Section 4 of the Act on 08.07.1992 for acquisition of land situated in village Alyana, Tehsil Sarkaghat, District Mandi, H.P., for construction of Sarori – Rissa Road and the said notification was published in HP Rajpatra on 01.08.1992 and also in newspapers ‘Dainik Tribune’ and Jansata on 08.08.1992. On 06.04.1993 wide publicity in the locality was made and on 24.07.1993 notification under Section 6 and 7 of the Act was published in HP Rajpatra and the same was also published in newspapers, i.e., ‘Dainik Tribune’ and Hindi ‘Milap’ on 21.08.1993 and 22.08.1993, respectively. On 14.12.1993 wide publicity was made in the locality. Ultimately, the Land Acquisition Collector determined the true area of the acquired land as 0-41-23 hectares and awarded compensation on the following rates: Sr. No. Nature of the land Compensation warded 1. Dhani abbal Rs.87,000/- per hect. 2. Kulau abbal Rs.66,000/- per hect. 3. Barani abbal Rs.52,000/- per hect. 4. Banjar kandim and khatetar/gair mumkin Rs.26,000/- per hect 3 Neutral Citation No. ( 2026:HHC:6939 ) 3. The Land Acquisition Collector, after determining the true area of the acquired land and the rates of the acquired land, awarded total compensation of Rs.1,23,976/-. 4. The petitioners/claimants alongwith others, 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 on the basis of the market value of the acquired land, as it was situated on the boundadry of N.A.C.. As per the petitioners/claimants, the measurement was not done properly and more area than shown in the notification was acquired. The upper and lower area of the acquired land was rendered unfit, as debris was thrown in the lower area and upper area was cut. Possession was taken earlier and the date shown in the award was wrong. Lastly, the claimants prayed that the compensation be enhanced. 5. The learned Reference Court allowed the petition of the petitioners/claimants and held them entitled for enhanced compensation at the rate of Rs.31.30 per square meter qua the acquired land. In addition to the above, the 4 Neutral Citation No. ( 2026:HHC:6939 ) 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. 08.08.1992, 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 instant appeal under Section 54 of the Act with a prayer to quash and set-aside the impugned award dated 19.08.2011, passed by the learned Reference Court. 6. I have heard the learned Additional Advocate General for the appellants/State, learned counsel for respondents No. 2 to 4 and also carefully examined the records. 7. Learned Additional 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 5 Neutral Citation No. ( 2026:HHC:6939 ) 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 19.08.2011, passed by the learned Reference Court be quashed and set-aside. 8. Conversely, learned counsel for respondents No. 2 to 4 supported the impugned award. He contended that the learned Reference Court had rightly held the petitioners/claimants entitled for enhanced compensation at uniform rate of Rs.31.30 per square meter qua the acquired land. He further contended that the acquired land was valuable, as such the instant appeal, being devoid of merits, be dismissed. 9. 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 6 Neutral Citation No. ( 2026:HHC:6939 ) 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. 10. 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 7 Neutral Citation No. ( 2026:HHC:6939 ) the usual and, indeed the best, evidences of market value.” 11. 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 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 8 Neutral Citation No. ( 2026:HHC:6939 ) 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 near about town is developing or has prospect of development have to be taken into consideration.” 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- 9 Neutral Citation No. ( 2026:HHC:6939 ) 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 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 10 Neutral Citation No. ( 2026:HHC:6939 ) 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. In the case on hand, the perusal of impugned award shows that the petitioners have relied upon sale deeds, Ex. PW-1/A, Ex. PW-2/A and Ex. PW-2/B, whereas the respondents (appellants herein) have relied upon sale deed, Ex. RX. 15. Apparently, sale deed, Ex. RX, was executed on 11.04.1989 and notification under Section 4 of the Act for the acquisition of the land in question was issued on 01.08.1992, 11 Neutral Citation No. ( 2026:HHC:6939 ) thus sale was executed three years prior to the notification. Sale deed, Ex. RX, pertained to illaqua Anantpur and the same does not pertain to the acquired land in village Alyana. Therefore, sale deed, Ex. RX, cannot be considered as an exemplar for determining the market value of the acquired land. Sale deeds, Ex. PW-2/A and Ex. PW-2/B pertain to muhal Jansai, however, no map has been placed on record to establish that village Jansai and Alyana are situated adjacent to each other. Thus, sale deeds, Ex. PW-2/A and Ex. PW-2/B, also cannot be taken as exemplars for determining the market value of the acquired land. Sale deed, Ex. PW-1/A, was executed on 26.08.1993, wherein the sold and purchased land was 0-2-13 hectares and the market value of the land was Rs.46.94 per square meter. Therefore, in the absence of any other direct evidence on record, sale deed, Ex. PW-1/A, wherein sale was carried out at the rate of Rs.46.94 per square meter, executed in the year 1993 and closer to the date of notification, has rightly been taken into consideration by the learned Reference Court as an exemplar to assess the market value of the acquired land. The learned Reference Court has also made deduction of Rs.15.64 per square meter @ 33.33% and the 12 Neutral Citation No. ( 2026:HHC:6939 ) value of the acquired land was assessed at Rs.31.30 per square meter. 17. 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, 18. In the instant case, since the land was acquired for the purpose of construction of Sarori – Rissa Road, therefore, the classification of the land loses its significance, as such, the learned Reference Court has rightly held that the petitioners are entitled to enhanced compensation at the uniform rate of Rs.31.30 per square meter qua the acquired land. Further, the land owners have not preferred any appeal or cross-objection for the enhancement of the amount of compensation. Hence, in view of what has been 13 Neutral Citation No. ( 2026:HHC:6939 ) discussed hereinabove and also considering the above stated settled principles of law, no interference is required in the impugned award dated 19.08.2011, 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 12th March, 2026 (virender)