Himachal Pradesh High Court
Surinder Singh vs Collector Land Acquisition & Another on 6 April, 2026
Author: Sushil Kukreja
Bench: Sushil Kukreja
1 Neutral Citation No. ( 2026:HHC:10214-DB )
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA
RFA No. 3 of 2012 with RFAs No. 622,
623 & 624 of 2011 with Cross
.
Objections No. 1000 to 1003 of 2012
Reserved on:12.03.2026
Decided on: 06.04.2026
1. RFA No. 03 of 2012 & Cross Objection No. 1003 of 2012:
Surinder Singh ….Appellant/Non-objector.
of
Versus
Collector Land Acquisition & another
…Respondents/Cross Objectors.
2. RFA No. 622 of 2011 & Cross Objection No. 1000 of
rt
2012:
Biri Singh & another ….Appellants/Non-objectors.
Versus
Collector Land Acquisition & another
…Respondents/Cross Objectors.
3. RFA No. 623 of 2011 & Cross Objection No. 1001 of
2012:
Ravi Singh ….Appellant/Non-objector.
Versus
Collector Land Acquisition & another
…Respondents/Cross Objectors.
4. RFA No. 624 of 2011 & Cross Objection No. 1002 of
2012:
Geeta Devi & another ….Appellants/Non-objectors.
Versus
Collector Land Acquisition & another
…Respondents/Cross Objectors.
Coram:
The Hon’ble Mr. Justice Sushil Kukreja, Judge.
Whether approved for reporting?1 Yes.
1 Whether reporters of Local Papers may be allowed to see the judgment?
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2 Neutral Citation No. ( 2026:HHC:10214-DB )
_________________________________________________
For the appellant(s): Mr.V.S. Chauhan, Senior
Advocate, with Ms. Bhavani Negi,
Advocate, in RFA No. 03 of 2012.
and Mr. Deepak Kaushal, Senior
Advocate, with Mr. Aditya
Chouhan and Mr. G.R. Palsra,
Advocates, in RFAs No. 622 to
624 of 2011.
For the respondent/State: Mr. B.N. Sharma, Mr. Manoj
Chauhan and Mr. Raj Negi,
of
Additional Advocates Genera, with
Mr. Ankush Thakur, Mr. Balvinder
Singh Ballu and Ms. Archna Negi,
rt Deputy Advocates General.
For the cross-objectors: Mr. Bhupinder Gupta, Senior
Advocate, with Mr. Ajeet Singh
Pal, Advocate, in all the Cross
Objections.
Sushil Kukreja, Judge.
Since all these appeals and cross objections are
the offshoots of award, dated 16.08.2011, passed by learned
Additional District Judge, Mandi, H.P. (hereinafter referred to as
“the learned Reference Court”), the same are taken up together
and being disposed of by a common judgment.
2. The instant appeals have been preferred by the
appellants, who were petitioners/claimants before the learned
Reference Court, under Section 96 of the Code of Civil
Procedure read with Section 54 of the Land Acquisition Act (for
short “the Act”) against award dated 16.08.2011, passed by
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3 Neutral Citation No. ( 2026:HHC:10214-DB )
learned Reference Court, with a prayer that the appeals be
allowed by setting-aside the impugned award, passed in their
.
petitions and the market value of their acquired land be
assessed and declared as not less than Rs.35,000/- per biswa,
irrespective of the classification. On the other hand, Himachal
Pradesh Housing and Urban Development Authority
of
(respondent No. 2 before the learned Reference Court)
preferred cross objections in all the appeals under Section 41
rt
Rule 22 CPC against the impugned award with a prayer that
the cross objection(s) be allowed and impugned award passed
by the learned Reference Court be suitably modified so as to
bring the same in conformity with the provisions of the Act.
3. The facts giving rise to the instant appeals and
cross objections are that Government of Himachal Pradesh
issued notification for acquisition of land measuring 37-16-01,
situated in Muhal Sanyard, Tehsil and District Mandi, H.P., and
the said notification was published in Rajpatra on 17.08.1999
and also in news-papers, i.e., Divya Himachal and Virpartap on
10.09.1999. Subsequently, notification under Sections 6 and 7
of the Act was issued on 26.07.2000 and the same was
published in Rajpatra on 07.08.2000 and also in two daily
newspapers, i.e., Dainik Virpartap and Ajit Samachar on
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4 Neutral Citation No. ( 2026:HHC:10214-DB )
14.08.2000. Ultimately, the Land Acquisition Collector
determined the value of various types of land as under:
.
Classification of the land Rate per bigha
Barani bagicha phaldar Rs.4,05,280/-
Barani abal Rs.3,09,026/-
Barani doam Rs.2,53,300/-
of
Banjar kadeem Rs.75,990/-
Karater Rs.60,792/-
4.
rt
On the basis of the above valuation, the Land
Acquisition Collector awarded compensation of Rs.81,740/- for
forest trees and Rs.2,47,876/- for fruit trees. The total
compensation awarded to the petitioners/claimants was to the
extent of Rs.1,24,59,550/-.
5. The petitioners/claimants feeling aggrieved filed
present reference petitions under Section 18 of the Act before
the learned Reference Court below for enhancement of the
compensation and the learned Reference Court, after
considering all the material, passed the impugned award, dated
16.08.2011, whereby the petitioners/claimants were held
entitled for enhanced compensation at the rate of Rs.12,741/-
per biswa qua the acquired land alongwith solatium, additional
amount of compensation and interest etc..
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5 Neutral Citation No. ( 2026:HHC:10214-DB )
6. The petitioners/claimants still feeling dissatisfied,
preferred the instant appeals with a prayer that the appeals be
.
allowed by modifying the impugned award, passed in their
petitions and the market value of their acquired land be
assessed as not less than Rs.35,000/- per biswa, irrespective
of the classification. Conversely, cross-objector, i.e., H.P.
of
Housing & Urban Development Authority, preferred cross-
objections in all the appeals with a prayer that the cross
rt
objection(s) be allowed and impugned award passed by the
learned Reference Court be suitably modified so as to bring the
same in conformity with the provisions of the Act.
7. The learned Senior Counsel for the appellants
contended that the impugned award is wrong, illegal and
against the material placed and proved on record and the
learned Reference Court gravely erred in assessing the market
value @ Rs.19,111/- per biswa as the market value of the
acquired land was not less than Rs.35,000/- per biswa. They
further contended that the learned Reference Court had also
erred in deducting 33â…“ from the market value of the land, thus,
arising at payable price of Rs.12,741/- per biswa. They also
contended that the learned Reference Court had grossly
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6 Neutral Citation No. ( 2026:HHC:10214-DB )
misread and mis-appreciated the oral as well as documentary
evidence on record and cogent evidence was ignored.
.
8. Conversely, learned Senior Counsel for the cross-
objector(s) contended that the impugned award suffers from
legal infirmities. He contended that the learned Reference
Court also gravely erred in law in directing the payment of
of
interest from the date of award, i.e., 26.07.2002, whereas
interest, as per the provisions of the Act, was payable from the
rt
date of taking of possession. The possession was taken over
by respondent No. 2/cross-objector on 09.12.2002, thus the
interest was payable w.e.f. 09.12.2002 under Section 34 of the
Act and not from 26.07.2002, i.e., the date of award.
9. I have heard the learner Senior Counsel for the
appellants, learned Additional Advocate General for the
respondent No. 1/State, learned Senior Counsel for respondent
No. 2/cross-objector(s) and carefully examined the entire
records.
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
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7 Neutral Citation No. ( 2026:HHC:10214-DB )
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
of
potentiality of the acquired land should also be taken into
consideration. Potentiality means capacity or possibility for
rt
changing or developing into state of actuality.
11. In Mehta Ravindrarai Ajitrai (deceased) through
his heirs & 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
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8 Neutral Citation No. ( 2026:HHC:10214-DB )
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
of
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
rt 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 excludingany 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 starwould 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 aprudent man in normal market conditions but
not an anxious dealing at arm’s length nor
façade of sale nor fictitious sale brought aboutin 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
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9 Neutral Citation No. ( 2026:HHC:10214-DB )
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
of
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.
rt 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).”
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.
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10 Neutral Citation No. ( 2026:HHC:10214-DB )
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.
of
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
rt 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 theabsence 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 instant case, the petitioners/claimants as well
as the respondents have produced on record various sale
deeds, details whereof are as under:
Sr. Sale deed Dated Khasra No. Area in Price Price per
No. bigha biswa
1. Ex.PW- 26/12/1998 687/15/3/1, 0-5-4 Rs.156000/- Rs.30000/-
2/A 158/2/1 bigha
2. Ex.PW- 24/12/1999 48 0-0-15 Rs.33000/- Rs.44,000/-
3/A bigha
3. Ex.PW- 23/10/2000 780/73 0-3-0 Rs.89,000/- Rs.29,667/-
5/A bigha
4. Ex.PA 23/10/2000 814/743/161 0-4-0 Rs.135000/- Rs.33750/-
bigha
5. Ex.PB 28/08/2000 136/1 0-5-10 Rs.175000/- Rs.31818/-
bigha
6. Ex.PC 31/03/2000 724/355, 0-2-0 Rs.52000/- Rs.26000/-
726/356, bigha
660/342
7. Ex.PD 15/02/1999 73 0-2-0 Rs.50000/- Rs.25000/-
bigha
8. Ex.RW- 10/12/1998 744/161, 0-10-11 Rs.40000/- Rs.3791/-
2/A 747/162 bigha
9. Ex.R1 12/08/1999 658/334 0-4-10 Rs.66000/- Rs.15000/-
bigha
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11 Neutral Citation No. ( 2026:HHC:10214-DB )
10. Ex.R2 22/07/1999 814/743/161 0-4-0 Rs.60000/- Rs.15000/-
bigha
11. Ex.R3 15/02/1999 73 0-4-0 Rs.60000/- Rs.15000/-
bigha
12. Ex.R4 01/01/1999 73 0-4-0 Rs.60000/- Rs.15000/-
.
bigha
13. Ex.R5 11/11/1998 45 & 49 0-0-13 Rs.4000/- Rs.6185/-
bigha
14. The perusal of the sale deeds Ex.PW-5/A, PA, PB
and PC relied upon by the petitioners clearly shows that these
of
were executed in the year 2000 and sale deed, Ex. PW-3/A,was executed on 24.12.1999. Admittedly, notification under
Section 4 of the Act was published in Rajpatra on 17.08.1999.
rt
Since the aforesaid sale deeds have been executed after the
issuance of notification, therefore, the same cannot be taken
into consideration for ascertaining the market value of the
acquired land.
15. The respondents have relied upon sale deed, Ex.
RW-2/A, executed on 10.12.1998, however, RW-2 Shri Amar
Singh, who was examined to prove the aforesaid sale deed,
admitted that the land under the aforesaid sale deed was
located at a distance of about 500 meters from the acquired
land and there was no approach to his land, as such, sale
deed, Ex. RW-2/A, also cannot be taken into consideration, as
the position and location of the acquired land are different. The
respondents have also produced on record sale deeds, Ex.R1,
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12 Neutral Citation No. ( 2026:HHC:10214-DB )
which was executed on 12.08.1999 for Rs.14,667/- per biswa,
Ex.R2, executed on 22.07.1999 for Rs.15,000/- per biswa,
.
Ex.R3, executed on 15.02.1999 for Rs.15,000/- per biswa, Ex.
R4, executed on 01.01.1999 for Rs.15,000/- per biswa and
Ex.R5, executed on 11.11.1998 for Rs.6185/- per biswa,
whereas, the petitioners/claimants have produced sale deed,
of
Ex. PD, which was executed on 15.02.1999, for Rs.25,000/-
per biswa, and sale deed, Ex. PW-2/A, which was executed on
rt
26.12.1998, for Rs.30,000/- per biswa. All these sale deeds
have been executed prior to the issuance of notification issued
under Section 4 of the Act.
17. It was contended by the learned Senior Counsel for
the appellants that the learned Reference court had committed
an error in taking into consideration the average value of the
different sale transactions. It is a settled law that where 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.InState 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::: Downloaded on – 06/04/2026 20:34:24 :::CIS
13 Neutral Citation No. ( 2026:HHC:10214-DB )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 recourseto such method. … … … … …”
18. In Anjani Molu Dessai vs. State of Goa &
another, (2010) 13 SCC 710, the Hon’ble Supreme Court has
held as under:
of
“20. The legal position is that even where there are several
exemplars with reference to similar lands, usually the
highest of the exemplars, which is a bona fide
transaction, will be considered. Where however there
are several sales of similar lands whose prices range in
rt
a narrow bandwidth, the average thereof can be taken,
as representing the market price. But where the values
disclosed in respect of two sales are markedly different,it can only lead to an inference that they are with
reference to dissimilar lands or that the lower value sale
is on account of under-valuation or other price
depressing reasons. Consequently averaging cannot be
resorted to. We may refer to two decisions of this Court
in this behalf.
21. In M. Vijayalakshmamma Rao Bahadur v. Collector,
(1969) 1 MLJ 45 (SC), a three-Judge Bench of this Court
observed that the proper method for evaluation of
market value is by taking the highest of the exemplarsand not by averaging of different types of sale
transactions. This Court held:
“It seems to us that there is substance in the first
contention of Mr. Ram Reddy. After all, when the
land is being compulsorily taken away from a
person, he is entitled to say that he should be
given the highest value which similar land in thelocality is shown to have fetched in a bona fide
transaction entered into between a willing
purchaser and a willing seller near
about the time of the acquisition. It is not disputed
that the transaction represented by Exhibit R-19
was a few months prior to the notification under
section 4, that it was a bona fide transaction and
that it was entered into between a willing
purchaser and a willing seller. The land comprised
in the sale deed is 11grounds and was sold at
Rs.1,961 per ground. The land covered by Exhibit-
27 was also sold before the
notification, but after the land comprised in
ExhibitR-19 was sold. It is true that this land was
sold atRs.1,096/- per ground. This, however, is
apparently because of two circumstances. One is
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14 Neutral Citation No. ( 2026:HHC:10214-DB )be paid by the vendee and the other that the land
comprised in it is very much more extensive, that
is about 93 grounds or so.Whatever that may be, it
seems to us to be only fairthat where sale deed,
pertaining to different.
transactions are relied on behalf of the
Government, that representing the highest valueshould be preferred to the rest unless there are
strong circumstances justifying a different course.
In any case we see no reason why an average of
two sale deeds should have been taken in thiscase.”
22. In State of Punjab v. Hans Raj, (1994) 5 SCC 734, this
Court held:
of
“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
rton that basis. As the method of averaging the
prices fetched by sales of different lands of
different kinds at different times, for fixing themarket 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. It is well
settled that genuine and bonafide saletransactions in respect of the land under
acquisition or in its absence the bona fide sale
transactions proximate to the point of acquisition
of the lands situated in the neighborhood of the
acquired lands possessing similar value or utilitytaken place between a willing vendee and the
willing vendor which could be expected to reflect
the true value, as agreed between reasonableprudent persons acting in the normal
market conditions are the real basis to determine
the market value.”
23. Therefore, we are of the view that the averaging of
the prices under the two Sale Deeds was not justified.
The Sale Deed dated 31.1.1990 ought to have been
excluded for the reasons stated above. That means
compensation for the acquired lands had to be fixed
only with reference to the Sale Deed dated30.8.1989
relied upon by the Land Acquisition Collector which will
be Rs.57.50 per sq.m. As the said market value has been
fixed with reference to comparable bharad land with
fruit trees, the question of again separately awarding
any compensation for the trees situated in the acquired
land does not arise.”
19. In the case on hand,since sale deed, Ex. PW-2/A,
is the highest of the exemplars, therefore, in view of the
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15 Neutral Citation No. ( 2026:HHC:10214-DB )
aforesaid judgments, the sale deed, Ex. PW-2/A has to be
taken into consideration for determining the market value of the
.
land under acquisition. As observed earlier, sale deed, Ex.
PW-2/A, executed 26.12.1998 is for Rs.30,000/- per biswa and
the land situated therein is comprised of Khasra No.
687/15/3/1, 158/2/1, measuring 0-5-4 bigha.
of
20. The learned Senior Counsel for the cross-objector
contended that since sale deed, Ex. PW-2/A, pertains to a
rt
small piece of land, therefore, some amount of compensation
has to be deducted out of the amount of compensation payable
for the acquired land towards the development charges.
21. It is settled position of law that normally deduction
is to be applied on account of carrying out development
activities like providing roads or civic amenities such as
electricity, water, etc. when the land has been acquired for
construction of residential, commercial or institutional projects.
In Lal Chand v. Union of India, 2009 15 SCC 769, the
Supreme Court indicated that percentage of deduction for
development to be made for arriving at market value of large
tracts of undeveloped agricultural land with potential for
development can vary between 20 and 75 per cent of the price
of developed plots and observed:
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16 Neutral Citation No. ( 2026:HHC:10214-DB )
“14. The ‘deduction for development’ consists of two
components. The first is with reference to the area
required to be utilized for developmental works and
the second is the cost of the development works.
For example, if a residential layout is formed by DDA
.
or similar statutory authority, it may utilize around
40% of the land area in the layout, for roads, drains,
parks, playgrounds and civic amenities (community
facilities), etc.
15. The development authority will also incur
considerable expenditure for development of
undeveloped land into a developed layout, which
includes the cost of leveling the land, cost of
providing roads, underground drainage and sewage
facilities, laying water lines, electricity lines and
of
developing parks and civil amenities, which would
be about 35% of the value of the developed plot. The
two factors taken together would be the “deduction
for development” and can account for as much as
75% of the cost of the developed plot.
16.
rt On the other hand, if the residential plot is in an
unauthorized private residential layout,
percentage of “deduction for development” may be
the
far less. This is because in an unauthorized layout,
usually no land will be set apart for parks,
playgrounds and community facilities. Even if any
land is set apart, it is likely to be minimal. The roads
and drains will also be narrower, just adequate for
movement of vehicles. The amount spent on
development work would also be comparatively less
and minimal. Thus the deduction on account of the
two factors in respect of plots in unauthorized
layouts, would be only about 20% plus 20% in all
40% as against 75% in regard to DDA plots.
17. The “deduction for development” with reference to
prices of plots in authorized private residential
layouts may range between 50% to 65% depending
upon the standards and quality of the layout.
18. The position with reference t industrial layouts will
be different. As the industrial plots will be large (say
of the size of one or two acres or more as contrasted
with the size of residential plots measuring 100 sq m
to 20 sq m), and as there will be very limited civic
amenities and no playgrounds, the area to be set
apart for development (for roads, parks, playgrounds
and civic amenities) will be far less; and the cost to
be incurred for development will also be marginally
less, with the result the deduction to be made from
the cost of an industrial plot may range only
between 45% to 55% as contrasted from 65% to 75%
for residential plots.
19. If the acquired land is in a semi-developed urban
area, and not an undeveloped rural area, then the
deduction for development may be as much less,
that is, as little as 25% to 40%, as some basic
infrastructure will already be available. (note the
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17 Neutral Citation No. ( 2026:HHC:10214-DB )
percentages mentioned above are tentative
standards and subject to proof to the contrary.)
20. Therefore the deduction for the ‘development factor’
to be made with reference to the price of a small plot
.
in a developed layout, to arrive at the cost of
undeveloped land, will be for more than the
deduction with reference to the price of a small plot
in an unauthorized private layout or an industrial
layout. It is also well known that the development
cost incurred by statutory agencies is much higher
than the cost incurred by private developers, having
regard to higher overheads and expenditure.”
22. In the case of Trishala Jain & another vs. State of
of
Uttaranchal & another, reported in (2011) 6 SCC 47, the
Hon’ble Supreme Court held that deduction on account of
rt
expenses of development of the sites could vary from 10% to
86.33% depending on the nature of the land, its situation, the
purpose and stage of development. Their lordships further held
that the cases where the acquired land itself is fully developed
and has all essential amenities, before acquisition, for the
purpose for which it is acquired requiring no additional
expenditure for its development, falls under the purview of
cases of `no deduction’. It has been held as follows:
“41. The cases where the acquired land itself is fully
developed and has all essential amenities, before
acquisition, for the purpose for which it is acquired
requiring no additional expenditure for its development,
falls under the purview of cases of `no deduction’.
Furthermore, where the evidence led by the parties is of
such instances where the compensation paid is
comparable, i.e. exemplar lands have all the features
comparable to the proposed acquired land, including
that of size, is another category of cases where
principle of `no deduction’ may be applied. These may
be of the cases where least or no deduction could be
made. Such cases are exceptional and/or rare as
normally the lands which are proposed to be acquired
for development purposes would be agricultural lands
and/or semi or haphazardly developed lands at the time::: Downloaded on – 06/04/2026 20:34:24 :::CIS
18 Neutral Citation No. ( 2026:HHC:10214-DB )of issuance of notification under Section 4(1) of the Act,
which is the relevant time to be rt taken into
consideration for all purposes and intents for
determining the market value of the land in question.
.
44. It is thus evident from the above enunciated principle
that the acquired land has to be more or less developedland as its developed surrounding areas, with all
amenities and facilities and is fit to be used for the
purpose for which it is acquired without any further
expenditure, before such land could be considered forno deduction. Similarly the sale instances even of
smaller plots could be considered for determining the
market value of a larger chunk of land with some
deduction unless, there was comparability in potential,
utilization, amenities and infrastructure with hardly anyof
distinction. On such principles each case would have to
be considered on its own merits.
45. This Court, depending on the facts and circumstances of
each given case, has taken the view that deduction on
account of expenses of development of the sites could
rt
vary from 10% to 86.33% depending on the nature of the
land, its situation, the purpose and stage of
development. Reference can be made to the cases of
K.S. Shivadevamma v. Assistant Commissioner andLand Acquisition Officer [(1996) 2 SCC 62], Ram Piari v.
Land Acquisition Collector, Solan [(1996) 8 SCC 338],
Chimanlal Hargovinddas v. Special Land Acquisition
Officer, Poona [(1988) 3 SCC 751], Hasanali Walim
Chand (Dead) by L` v. State of Maharashtra [(1998) 2
SCC 388].”
23. Hon’ble Supreme Court in the case of Union of
India vs. Raj Kumar Baghal Singh &ors., reported in (2014)
10 SCC 422, has held that deduction towards development
costs depends on individual fact situations and in this case their
lordships have upheld deduction of 20%. It has been held as
follows:
“9. We have considered the rival submissions. Before
considering the merits of the rival contentions, we
consider it appropriate to refer to the discussion on the
issue by the High Court which is as follows:- “In the
present case, situation is altogether different. While
deciding issue regarding cut, referred to above,
argument of counsel for the Union of India that cut
imposed is required to be enhanced is also liable to be
rejected. In view of situation the land under acquisition,::: Downloaded on – 06/04/2026 20:34:24 :::CIS
19 Neutral Citation No. ( 2026:HHC:10214-DB )as referred to above, cut imposed to the extent of 20%
was perfectly justified. Counsel for the Union of India
has tried to support his argument by citing various
judgments but no benefit of those judgments can be
extended to Union of India because at the time when.
matter was argued before Additional District Judge, no
serious dispute was raised by Union of India regardingpotential value of the land under acquisition. No
evidence was led to show that the land acquired had no
potential for developing it into residential or
commercial area. Argument to impose higher cut wasrightly rejected by the learned Single Judge, after taking
note of evidence on record.
Argument of counsel for the Union of India that since
the land was situated at a distance of 1 to 1-1/2 kms ofof
municipal limits, as such, higher cut be imposed, is not
justified, in view of evidence on record. It had come in
evidence that the land under acquisition was situated
next to the municipal limits and was situated very near
to golf course. In view of this, no case is made out for
further cut as prayed for.”
rt
24. In the instant case, it has come on record that the
acquired land is quite adjacent to muhal Tarna, i.e., a thickly
populated residential colony which is quite adjacent to Mandi
town and it has great potential value. From the statements of
PW-2,PW-4,PW-5 andPW-6, it has become clear that the
acquired land is situated adjacent to the Mandi town and all
facilities, viz., road, water, sewerage and electricity were
already there. It has also come on record that some of the
petitioners have developed the plots by leveling it after
spending considerable amount. Therefore, least expenditure
was required on account of development charges and other
possible expenditures.Hence, having regard to the entire facts
and circumstances of the case,this Courtis of the opinion that a
deduction of 20% from the market value of the land will be
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20 Neutral Citation No. ( 2026:HHC:10214-DB )
appropriate by way of development charges to meet the ends
of justice. Since sale deed, Ex. PW-2/A, is for Rs.30,000/- per
.
biswa, therefore, after deducting 20% of the amount, the
market value of the acquired land, for the of purpose of
payment of compensation to the landowners,comes to
Rs.24,000/- per biswa.
of
25. In H.P. Housing Board vs. Ram Lal & others
alongwith connected matter, 2003 (3) Shimla Law Cases
rt
64, it has been held that when the land is being developed for a
housing colony, classification completely loses its significance.
The relevant portion of the aforesaid judgment is extracted
hereunder for ready reference:
“27. When the land is being developed for a housing colony,
as in the present case, classification completely looses
significance. Reason being that it has to be developedas a single unit i.e. for housing colony. Similarly
allowing higher price for land near the road and for the
one which is at a distance from the road also does notprovide any reasonable, muchless rational basis to
allow less price for the area. Reason being that a
person may be interested to reside near the road side in
a developed colony for so many reasons. Whereasanother, may like to live in the vicinity which is away
from the road to avoid hustle and bustle of being near
the roadside and for many other reasons. In these
circumstances it cannot be said that location of the
land and its distance from the road is good criteria
and/or for that matter classification for the assessment
of compensation. In my view entire land under
acquisition should have been assessed at Rs.200 per
sq. meter irrespective of its classification and/or
distance from the road.”
26. In the instant case also, admittedly, the land has
been acquired for the purpose of residential colony, therefore,
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21 Neutral Citation No. ( 2026:HHC:10214-DB )
in the present case also, the classification loses its significance.
Hence the appellants are entitled for compensation at the
.
market value of the acquired [email protected],000/- per biswa
irrespective of its classification.
27. The contention of the learned Senior Counsel for
the cross-objector that the learned Reference Court erred in
of
law in directing the payment of interest from the date of award,
whereas the interest, as per the provisions of the Act was
rt
payable from the date of taking of possession, is not devoid of
any force. The perusal of the material available on record
reveals that the possession was taken over by respondent No.
2/cross-objector on 09.12.2002, whereas the award was
passed by the learned Land Acquisition Collector on
26.07.2002.
28. At this stage, it would be relevant to reproduce Section
34 of the Act, which reads as under:
“34. Payment of interest.- When the amount of such
compensation is not paid or deposited on or before
taking possession of the land, the Collector shall pay
the amount awarded with interest thereon at the rate of
[nine per centum] per annum from the time of so taking
possession until it shall have been so paid or
deposited:
[Provided that if such compensation or any part
thereof is not paid or deposited within a period of
one year from the date on which possession is
taken, interest at the rate of fifteen per centum per
annum shall be payable from the date of expiry of
the said period of one year on the amount of
compensation or part thereof which has not been::: Downloaded on – 06/04/2026 20:34:24 :::CIS
22 Neutral Citation No. ( 2026:HHC:10214-DB )paid or deposited before the date of such
expiry.]”
29. In Kapil Mehra & Ors vs Union Of India & Anr.,
.
(2015)2 SCC262 the Hon’ble Apex Court held that Section 34
of the Act fastens liability on the Collector to pay interest on the
amount of compensation to be worked out in accordance with
provisions of Section 23(1) and the sub-section thereof, at the
of
rate of 9% per annum from the date of taking possession until
the amount is paid or deposited. The relevant portion of the
rt
aforesaid judgment readsas under:
“43. Land Acquisition Act, 1894, provides for payment
of interest to the claimants either under Section 34 or
under Section 28 of the Act. Section 34 of the Act
fastens liability on the Collector to pay interest on the
amount of compensation to be worked out in
accordance with provisions of Section 23(1) and thesub-section thereof, at the rate of 9% per annum from
the date of taking possession until the amount is paid
or deposited. As per proviso to Section 34, if the
compensation amount or any part thereof is not paid or
deposited within a period of one year from the date oftaking over possession, interest shall be payable at the
rate of 15% per annum from the date of expiry of the
said period of one year on the amount of compensationor part thereof which has not been paid or deposited
before the date of such expiry.
44. Section 28 empowers the courts, if it was enhancing
the compensation awarded by the Collector, to award
interest on the sum in excess of what the Collector had
awarded as compensation. Both in terms of Section 34
and Section 28, interest at 9% per annum is payable for
the first year of taking possession and 15% per annum
thereafter, if the amount of compensation was not paid
or deposited within a period of one year or deposited
thereafter.
45. Award of interest under Section 34 is mandatory in
as much the word used in the Section is ‘shall’. The
scheme of the Act and the express provisions thereof
establish that the interest payable under Section 34 is
statutory. The claim for interest under Section 28 of the
Act proceeds on the basis that due compensation not
having been paid, the claimant should be allowed
interest on the enhanced compensation amount. The::: Downloaded on – 06/04/2026 20:34:24 :::CIS
23 Neutral Citation No. ( 2026:HHC:10214-DB )award of interest under Section 28 is discretionary
power vested in the Court and it has to be exercised in
a judicious manner and not arbitrarily. The use of the
word “may” in Section 28 does not confer any arbitrary
discretion on the Court to disallow interest for no valid.
or proper reasons. Normally, Court awards interest if it
enhances the compensation in excess of the amountawarded by the Collector, unless there are exceptional
circumstances.
46. A Constitution Bench of this Court in Gurpreet
Singh vs. Union of India, (2006) 8 SCC 457, considering
the scope of Section 34 and Section 28 of the Act, has
held as under:-
“44. Section 34 of the Act fastens liability on the
of
Collector to pay interest on the amount of
compensation determined under Section 23(1)
with interest from the date of taking possession
till date of payment or deposit into the court to
which reference under Section 18 would be made.
On determination of the excess amount of
rt
compensation, Section 28 empowers the court, if
it was enhancing the compensation awarded by
the Collector, to award interest on the sum in
excess of what the Collector had awarded ascompensation. The award of the court may also
direct the Collector to pay interest on such
excess or part thereof from the date on which he
took possession of the land to the date of
payment of such excess into court at the rates
specified thereunder. The Court stated: [PremNath Kapur vs. National Fertilizers Corporation of
India Ltd., (1996) 2 SCC 71, SCC p. 77, para 10] “In
other words, Sections 34 and 28 fasten the
liability on the State to pay interest on the amount
of compensation or on excess compensationunder Section 28 from the date of the award and
decree but the liability to pay interest on the
excess amount of compensation determined bythe Court relates back to the date of taking
possession of the land to the date of the payment
of such excess ‘into the court’.”
45. The Court concluded: (Prem Nath Kapur case,
SCC p. 78, para 12) “12. It is clear from the
scheme of the Act and the express language used
in Sections 23(1) and (2), 34 and 28 and now
Section 23(1-A) of the Act that each component is
a distinct and separate one. When compensation
is determined under Section 23(1), its
quantification, though made at different levels,
the liability to pay interest thereon arises from the
date on which the quantification was so made
but, as stated earlier, it relates back to the date of
taking possession of the land till the date of
deposit of interest on such excess compensation
into the court. … The liability to pay interest is
only on the excess amount of [pic] compensation
determined under Section 23(1) and not on the
amount already determined by the Land
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24 Neutral Citation No. ( 2026:HHC:10214-DB )
Acquisition Officer under Section 11 and paid to
the party or deposited into the court or
determined under Section 26 or Section 54 and
deposited into the court or on solatium under
Section 23(2) and additional amount under
.
Section 23(1-A).”
30. Thus, in view of the aforesaid judgment of the
Hon’ble Supreme Court, Section 34 of the Act fastens liability
on the Collector to pay interest on the amount of compensation
of
from the date of taking of possession till the date of the
payment or deposit of the amount and not from the date of the
award. In the case on hand, admittedly the possession was
rt
taken over by respondent No. 2/cross-objector on 09.12.2002
whereas the award was passed by the Land Acquisition
Collector on 26.07.2002 as such the interest was payable w.e.f.
09.12.2002 under Section 34 of the Act and not from
26.07.2002, i.e., the date of award. Therefore, interest @ 9%
per annum on the market value assessed shall be awarded
from the date of taking of possession for one year and
thereafter @ 15% per annum till the date of payment/deposit of
the amount of compensation in accordance with Section 34 of
the Act.
31. Hence, in view of what has been discussed
hereinabove, the impugned award is modified to the extent that
the petitioners shall be held entitled to enhanced compensation
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25 Neutral Citation No. ( 2026:HHC:10214-DB )
@ Rs.24,000/- per biswa in respect of the acquired land,
irrespective of its classification. In addition, the petitioners are
.
also entitled for following reliefs:
(i) Solatium @ 30% on the market value of
the land assessed, as mentioned above;
(ii) additional compensation @ 12% per
annum under Section 23(1-A) of the Act
w.e.f. 10.09.1999, i.e., the date of
publication of notification till the date ofof
the award of the Collector, i.e.,
26.07.2002; &
(iii) interest under Section 28 of the Act on
the market value assessed under sub-
rt
section(1) of Section 23 of the Act, the
additional compensation worked out
under sub-section (1-A) of Section 23 of
the Act, plus, solatium awarded under
sub-section 23 of the Act, @ 9% per
annum on the market value assessed
from the date of taking over of
possession by respondent No. 2/cross-
objector, i.e., 09.12.2002, for one year
and thereafter @ 15% per annum till the
date of payment/deposit of the amount of
compensation in accordance with Section
34 of the Act.
32. In view of the aforesaid discussion, the appeals as
well as the cross-objections are disposed of.
Pending application(s), if any, shall also stand(s)
disposed of.
( Sushil Kukreja )
Judge
6th March, 2026
(virender)
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