( 2026:HHC:17080 ) IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA RFA No.129 of 2016 a/w Cross-Objections No.10 of 2022 Reserved on : 23.04.2026 Date of decision: 14.05.2026 _____________________________________________________ Land Acquisition Collector and others ....Appellants Versus Gajjan Singh and others …Respondents _____________________________________________________ Coram Hon'ble Mr. Justice Sushil Kukreja, Judge 1 Whether approved for reporting? For the appellants: Mr. Balwinder Singh Ballu, Deputy Advocate General. For the respondents/ Cross-objectors : Mr. R.K. Gautam, Senior Advocate, with Mr. Sahil Dixit, Advocate, Sushil Kukreja, Judge (Oral) The instant appeal has been preferred under Section 54 of the Land Acquisition Act, 1894 (for short, ‘the Act’) by the appellants- State against the award dated 16.01.2015 passed by the learned District Judge, Solan, District Solan, HP, Camp at Nalagarh (hereinafter referred to as the Reference Court), with a prayer to set aside the impugned award. On the other hand, the respondents/cross-objectors have also preferred cross objections in the instant appeals under 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 ( 2026:HHC:17080 ) Section XLI, Rule 22 of CPC, for enhancement of the amount of compensation to the tune of Rs.48.00 lacs per bigha. 2. Briefly sated the facts of the case are that the land of petitioners, situated in Village Baddi-Sultanpur, Tehsil Baddi, District Solan, HP, was acquired by the respondents for widening of road leading to the site for setting-up Inland Container Depot (ICD) by the Department of Industries. In this regard, notification under Section 4 of the Act was issued on 31.03.2009, which was given wide publicity as per mandate of the Act. After complying with all codal formalities of Sections 6 and 7 of the Act, the Land Acquisition Collector passed Award No.1/2010 on 18.07.2011 and assessed the market value of the land. As per the petitioners, they had filed objections about acquisition of their land, whereby it was prayed that in lieu of the acquired land, they may be given some other land on the National Highway from Baddi up to Manpura in lieu of acquired land, however, their prayer for exchange of land was rejected by the Collector on the ground that no land was available on National Highway between Baddi to Manpura. The petitioners also averred that the potential value of their land had not been considered by the Land Acquisition Collector and the remaining land had become useless after acquisition of the acquired land as no commercial activity could be carried out thereon because the area of the remaining land was lesser. 3 ( 2026:HHC:17080 ) 3. Feeling aggrieved and dissatisfied with the said award, the petitioners preferred a reference petition under Section 18 of the Land Acquisition Act, with a prayer that the matter be referred to the learned District Judge for enhancement of the amount of compensation. 4. The learned Reference Court partly allowed the reference petition, vide the impugned award dated 16.01.2015 and held the petitioners entitled to additional compensation @ 12% per annum under Section 23(1A) of the Act on the market value of the land assessed by the Collector w.e.f. 31.03.2009, the date of notification under Section 4 of the Act, till the date of award made by the Collector i.e. 18.07.2011, alongwith solatium and interest on the enhanced amount of compensation. Hence, the appellants/State preferred the instant appeal under Section 54 of the Act with the prayer that to quash and set aside the impugned award dated 16.01.2015, passed by the learned Reference Court. 5. Learned Deputy Advocate General contended that the impugned award is based on surmises and conjectures, therefore, the same is liable to be quashed and set-aside. He further contended that the compensation at the rate of Rs.25.00 lacs per bigha, which has been awarded to the petitioner, is much higher than the compensation calculated on the basis of market value and the learned Reference Court has also wrongly granted the statutory benefits. 4 ( 2026:HHC:17080 ) 6. Conversely, learned Senior Counsel for the respondents/ cross-objectors contended that the impugned award passed by the learned Reference Court is on a very lower side and the value of the land was Rs.1 crore per bigha. He further contended that the respondents/cross-objectors were not interested for acquisition of their land, therefore, they had requested for grant of other similar land. He also contended that the learned Reference Court has failed to take into consideration that in Khasra No.850, out of the total 5.08 bighas, only 2.03 bighas have been acquired, hence, the rest of the land has become useless. It is submitted that the amount of compensation awarded by the learned Reference Court be enhanced to the tune of Rs.48 lacs per bigha. 7. 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 5 ( 2026:HHC:17080 ) potentiality of the acquired land should also be taken into consideration. Potentiality means capacity or possibility for changing or developing into state of actuality. 8. 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.” 9. 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 6 ( 2026:HHC:17080 ) 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 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 7 ( 2026:HHC:17080 ) about town is developing or has prospect of development have to be taken into consideration.” 10. 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." 8 ( 2026:HHC:17080 ) 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. In the instant case, petitioner No.1 Gajjan Singh, while appearing in the witness-box as PW-3, tendered in evidence his affidavit as Ext.PW3/A, copy of award Ext. PA, copy of Jamabandi Ext.PB, copy of Aksh Latha Ext.PC, copy of Jamabandi Ext. PD and 9 ( 2026:HHC:17080 ) copy of objection Ext. PE. He categorically stated that the the value of the acquired land was Rs.1 crore per bigha at the time of issuance of notification under Section 4 of the Act as the acquired land was situated in highly developed area, adjoining to National Highway. There were many industries, hospital, school, colony of housing board and the Collector had not considered the potential value of the acquired land. He further deposed that one Ajay Punia had purchased land measuring 1-10 bigha in village Sandoli @ Rs.48 lacs per bigha and the value of the acquired land was much more than the land in village Sandoli. The petitioners also examined PW-1 O.P. Bhant, who stated that sale-deed Ext. PW1/A was drafted by him and PW-2 Nirmal Kumar was examined to prove that certified copy of sale-deed Ext. PW1/A was registered before the Sub Registrar, Baddi. PW-4 Ajay Punia, who was a partner in Dhruv Hotel and Resort, deposed that they had purchased land measuring 1-10 bigha adjoining to Pinjore-Nalagarh road in village Sandoli for a consideration of Rs.72 lac, vide sale-deed Ext. PW1/A. 13. On the other hand, the respondents examined four witnesses. RW-1 Janak Raj, who was posted as Reader to Land Acquisition Collector, Nalagarh, proved on record copy of the impugned award Ext. R-1. RW-2 Sudhir Kumar, Deputy Director, office of Director of Industries, deposed that the Department of Industries was having no piece of land in its possession near National Highway between Baddi to 10 ( 2026:HHC:17080 ) Manpura, which could be given in exchange to the petitioners. In his cross-examination, he admitted that the acquired land was situated adjoining to the main road. He also admitted that the acquired land was situated in BBNDA, which was an industrial area. RW-3 Basant Lal, Office Kanungo, deposed that though in copy of Jamabandi for the year 2004-05, nature of the acquired land was recorded as Bagicha Chahi, but there was no orchard situated over the land and it was having no trees. He further deposed that he prepared average cost of the land in Baddi Shittalpur, which was forwarded to the Land Acquisition Collector, Nalagarh. RW-4 Chandermani, proved on record copy of average value of land Ext.R-2 and copy of Jamabandi Ext. R-3. 14. The onus is upon the petitioners/claimants to prove the true and correct market value of the land at the time of the issuance of the notification under Section 4 of the Act. They are expected to lead cogent and satisfactory evidence in support of their claim. In Special Land Acquisition Officer vs. Karigowda & others, (2010) 5 SCC 708, it has been held that the onus to prove entitlement to receive higher compensation is upon the claimants but it cannot be said that there is no onus whatsoever upon the State in such reference proceedings. The court cannot lose sight of the facts and clear position of documents, that obligation to pay fair compensation is on the State in its absolute terms. The relevant portion of the aforesaid judgment reads as under: 11 ( 2026:HHC:17080 ) “29. It is a settled principle of law that the onus to prove entitlement to receive higher compensation is upon the claimants. In Basant Kumar v. Union of India [(1996) 11 SCC 542] this Court held that the claimants are expected to lead cogent and proper evidence in support of their claim. Onus primarily is on the claimants, which they can discharge while placing and proving on record sale instances and/or such other evidences as they deem proper, keeping in mind the method of computation for awarding of compensation which they rely upon. In this very case, this Court stated the principles of awarding compensation and placed the matter beyond ambiguity, while also capsulating the factors regulating the discretion of the Court while awarding the compensation. This principle was reiterated by this Court even in Gafar v. Moradabad Development Authority [(2007) 7 SCC 614] and the Court held as under: (SCC p.620, para 12) “12. As held by this Court in various decisions, the burden is on the claimants to establish that the amounts awarded to them by the Land Acquisition Officer are inadequate and that they are entitled to more. That burden had to be discharged by the claimants and only if the initial burden in that behalf was discharged, the burden shifted to the State to justify the award.” Thus, the onus being primarily upon the claimants, they are expected to lead evidence to revert the same, if they so desire. In other words, it cannot be said that there is no onus whatsoever upon the State in such reference proceedings. The court cannot lose sight of the facts and clear position of documents, that obligation to pay fair compensation is on the State in its absolute terms. Every case has to be examined on its own facts and the courts are expected to scrutinise the evidence led by the parties in such proceedings.” 15. In the instant case, the petitioners have placed reliance upon sale-deed Ext. PW1/A, which has admittedly been executed on 04.02.2010 and is not pertaining to the village where the acquired land is situated, but the same is pertaining to village Sandoli, whereby 1-10 bighas of land was sold for Rs.72 lacs, whereas notification under Section 4 of the Act was issued on 31.03.2009. 16. In Horrmal (deceased) through his LRs and others Vs. State of Haryana and others, 2024 SCC Online SC 2990, the Hon’ble 12 ( 2026:HHC:17080 ) Supreme Court has held as under:- “23. As discussed above, post-notification sales can only be considered when better evidence is not available on record and when the party relying on it can convincingly demonstrate that there has been no upward trend in market prices due to the acquisition.7 Consequently, in light of this analysis, the sale deeds numbered P9, P76, R15 and RW1/C-H, which were executed after the date of the issuance of the Section notification, will invariably have to be excluded from any further consideration, save and except for exceptional and compelling circumstances. 24. Apart from these sale deeds that were not proximate temporally, we also deem it appropriate to exclude the sale deeds that are not comparable geographically. It is now a firmly entrenched principle of law that, in the ordinary course, sale exemplars of lands located in the surrounding villages should generally not be relied upon, as land valuation may vary significantly by locality. In the landmark decision of Kanwar Singh vs. Union of India, this Court held that sale exemplars of lands situated in an adjacent village cannot be used to determine the market value of the acquired land since such lands may differ in terms of quality and other attributes. On this ground, the sale deeds enumerated Ex. R8 to Ex. R16 and Ex. R18 shall also have to be excluded from consideration, as they pertain to a different village, namely Gwarka, whereas the acquired land is situated in village Tauru. 25. ----- ----- ------ -------- 26. However, there is no bar in law against considering sale exemplars of smaller plots, provided they are subjected to adequate developmental charges. The rationale behind applying such cuts lies in the fact that smaller plots often command higher prices due to their developed nature, whereas a larger tract of land which is acquired for development may require significant allocation for creating roads, parks, essential services, etc.10 Accordingly, these sale exemplars can be relied upon only after applying appropriate cuts. This Court in Chimanlal Hargovinddas v. LAO, authoritatively ruled that when valuing a large block of land, appropriate deduction must 13 ( 2026:HHC:17080 ) be made for setting aside areas for roads, open spaces and dividing the land into smaller plots suitable for the construction of buildings.” 17. Therefore, in view of the aforesaid decision of the Hon’ble Supreme Court in Horrmal’s case, since the aforesaid sale-deed is pertaining to the period much after the issuance of the notification under Section 4 of the Act, hence, it cannot be taken into consideration for determining the market value of the acquired land. It is also to be noted that there is no satisfactory and convincing evidence of the petitioners on record to establish that the nature, value and potentiality of the land which is subject matter of the sale-deed, is similar to that of the acquired land. No other sale instance has been placed on record by the petitioners to prove their plea that the Collector has not assessed the value of the acquired land properly as such on the basis of the sale- deed Ex.PW1/A, it cannot be held that the market value of the acquired land as assessed by the Collector is inadequate Thus, the petitioners cannot be held entitled for enhancement of compensation on the basis of sale-deed Ex.PW1/A. 18. On the other hand, no sale-instance has been placed on record by the respondents, but they have placed relied upon Ext.R-2, copy of average value of land from 01.01.2008 to 31.12.2008 in Mauja Baddi Shittalpur, wherein the acquired land is situated which has been proved by RW-4 Chander Mani, Patwari. It is a settled law that where 14 ( 2026:HHC:17080 ) there are various sale deeds, then highest of the sale exemplars has to be taken into consideration and not by averaging of different types of sale transactions. In State of Punjab & another vs. Hans Raj (dead) by LRs Sohan Singh & others, (1994) 5 SCC 734, the Hon’ble Supreme Court has held as under: “4.Having given our anxious consideration to the respective contentions, we are of the considered view that the learned Single Judge of the High Court committed a grave error in working out average price paid under the sale transactions to determine the market value of the acquired land on that basis. As the method of averaging the prices fetched by sales of different lands of different kinds at different times, for fixing the market value of the acquired land, if followed, could bring about a figure of price which may not at all be regarded as the price to be fetched by sale of acquired land. One should not have, ordinarily recourse to such method…..….” 19. In the instant case, the respondents have not placed on record any sale-deeds which are the subject matter of this document Ext.R-2. Moreover, in view of the aforesaid judgment of the Hon’ble Apex Court, the average value of the land Ext. R2 cannot be taken into consideration and the same also cannot be made basis for determining the market value of the acquired land. There is no other evidence on record led by the respondents for assessing the market value of the land. 20. It may be pertinent to mention here that in his award Ext.PA, the Land Acquisition Collector had assessed the market value of the land at the rate of Rs.25,00,000/- per bigha on the basis of an 15 ( 2026:HHC:17080 ) agreement made by the interested persons and the State Government, through Industries Department. The relevant portion of the award Ext.PA reads as under:- “With regard to the compensation amount all the interested persons who appeared before this office stated that they have reached an agreement with Deputy Director Industries Department Baddi to receive compensation at the rate of Rs 25,00,000/- per Bigha, and that they have no objection if their land is acquired at this rate. This agreement was reached on the basis of negotiations held between the District administration on behalf of the Department of Industries and the interested persons……” 21. Therefore, in view of the facts and circumstances of the present case and also in the absence of any cogent and satisfactory evidence led by the parties on record, the learned reference court has rightly held that the value of the land has been properly assessed by the land acquisition collector. 22. Thus, in view of aforesaid reasons, the only conclusion which can be drawn is that both the parties have failed to establish on record that the Land Acquisition Collector has not assessed the market value of the acquired land adequately by taking into consideration all the relevant factors. The learned Reference Court has also rightly held the petitioners entitled to additional compensation @ 12% per annum under Section 23(1A) of the Act on the market value of the land assessed by the Collector w.e.f. 31.03.2009, the date of notification under Section 4 of the Act till the date of award made by the Collector, 16 ( 2026:HHC:17080 ) i.e. 18.07.2011, solatium @ 30% on the market value of the land assessed by the Collector and they were also held entitled to interest on the market value assessed by the Collector, additional compensation worked out under Section 23(1A) of the Act and solatium @ 9% per annum from 31.03.2009 for a period of one year and thereafter @ 15% per annum till the date of payment/deposit of the amount of compensation. 23. Therefore, in view of the above, no interference is required in the impugned award dated 16.01.2015, passed by the learned District Judge, Solan, camp at Nalagarh, HP. Consequently, the instant appeal as well as the cross objections, being devoid of merits, deserve dismissal and are accordingly dismissed. Pending application(s), if any, shall also stand disposed of.. (Sushil Kukreja) May 14, 2026 Judge (V.Himalvi)