JUDGMENT : Vakiti Ramakrishna Reddy, J. This Appeal, filed by the Land Acquisition Officer & Revenue Divisional Officer, Nizamabad under Section 54 of the LAND ACQUISITION ACT , 1894 (for short, “the Act”), is directed against the judgment and award dated 22.06.2010 passed in O.P. No. 1147 of 2002 on the file of I Additional District Judge, at Nizamabad (hereinafter called as ‘Reference Court), whereby the Reference Court enhanced the compensation awarded by the Land Acquisition Officer (for short, “LAO”) in respect of the acquired lands. I . BRIEF FACTS 2. The lands situated in Survey Nos. 530 to an extent of Ac. 1-35 gts, Survey Nos. 530/1 extent of Ac. 0-37 ½ gts and Survey Nos. 530/1 extent of Ac. 0-02 ½ gts of Sirikonda Village and Mandal, Nizamabad District were acquired for the public purpose of providing house sites to the weaker sections of the society. A notification under Section 4(1) of the Act was published on 23.10.1999. 3. The LAO passed an award dated 16.04.2001 fixing the market value at Rs. 6000/- per acre. Not being satisfied with the said compensation, the claimants sought a reference under Section 18 of the Act before the Reference Court. II. ISSUES FRAMED BY THE REFERENCE COURT: 4. The following issues were framed for determination by the Reference Court: i. Whether market value fixed by the LAO is just and fair. ii. Whether the claimants are entitled for enhancement of the market value of the acquired lands. iii. To what result? III. EVIDENCE ON RECORD: 5. Before the Reference Court, the claimants examined PW.1 to PW.3 and marked Exs.A1 to A4, which included exemplar sale deeds and certified copies of awards relating to adjacent lands. On behalf of the respondent-State, RW.1 was examined and Ex. B1 was marked. IV. FINDINGS OF THE REFERENCE COURT: 6. The Reference Court, on a consideration of the evidence adduced by the claimants, observed that it stood established that the acquired lands were potential and suitable for house sites, which fact was also admitted by RW–1 in his cross-examination. The very purpose of acquisition itself indicates that the lands were intended for conversion into house plots. The LAO, however, ignored this potentiality and relied only upon the sales statistics of larger extents. Exs.A1 and A2 disclose that small plots were sold at Rs.75/- and Rs.80/- per sq. The very purpose of acquisition itself indicates that the lands were intended for conversion into house plots. The LAO, however, ignored this potentiality and relied only upon the sales statistics of larger extents. Exs.A1 and A2 disclose that small plots were sold at Rs.75/- and Rs.80/- per sq. yard, duly supported by the testimony of PWs 2 and 3. The sale exemplers of smaller extents cannot be discarded inasmuch as they constitute a relevant factor for arriving at a just market value. 7. The Reference Court further observed that it is also evident from Ex. B1 that the land in Sy.No.149 was sold at Rs.54,875/- per acre in 1997, which has relevance for determining the value of the present acquired lands of 1998. Having regard to the potentiality of the acquired lands for house sites, the sale transactions under Exs.A1 and A2 coupled with the sale of agricultural land in Sy.No.149 provide a sound basis for determination. Accordingly, the Reference Court deemed it appropriate to fix the market value at Rs.20/- per sq. yard after deducting 1/3rd towards developmental charges at Rs.10/- per sq. yard. The claimants were also held entitled to statutory benefits including 30% solatium, additional market value and interest as envisaged under the provisions of the LAND ACQUISITION ACT . 8. The Reference Court, upon appreciation of the said evidence, enhanced the market value, in respect of the acquired lands. 9. Being aggrieved by the order dated. 22.06.2010 passed by the Reference Court, the LAO has preferred the present Appeal. V. SUBMISSIONS OF THE PARTIES: a) Submissions on behalf of the Appellant: 10. The Learned Government Pleader for Appeals appearing for the appellant contends that the Reference Court has erred in enhancing the compensation by relying upon Exs.A1 and A2, which pertain only to small bits of land, instead of taking into account sale transactions relating to large extents. 11. It is further contended that the Reference Court ought to have seen that the LAO had rightly fixed the compensation on the basis of sale deeds available for the preceding three years, which pertain to large extents of land and were, therefore, more comparable. 12. Learned Government Pleader would further submit that the Reference Court has failed to see that the development of the vicinity that took place subsequent to the acquisition, could not have been a valid basis for enhancing the compensation. 12. Learned Government Pleader would further submit that the Reference Court has failed to see that the development of the vicinity that took place subsequent to the acquisition, could not have been a valid basis for enhancing the compensation. Further, the Reference Court enhanced the compensation without any proper basis, and without even resorting to permissible guesswork or applying any recognized formula. 13. It was further contended that the Reference Court ought to have appreciated that the lands acquired were agricultural in nature, and therefore, sales relating to small house plots could not form part of the comparable sales for fixing the market value. 14. On the basis of the aforesaid submissions, the Learned Government Pleader has prayed that, there being merit in the appeal, the same may be allowed. b) Submissions on behalf of the Respondents: 15. The learned counsel appearing for the respondents on the other hand submitted that no error not to speak any error of law could be said to have been committed by the Reference Court in passing the impugned Award. It is submitted that the Reference Court rightly relied upon Exs.A1 and A2, even though they relate to smaller extents, since they reflected the prevailing market conditions and the potentiality of the acquired lands for use as house sites. The value of small plots constitutes a relevant guiding factor, particularly when the acquired lands were abutting the main roads and located within a developed Mandal headquarters. 16. The respondents further contended that the LAO had erred in relying upon outdated sale deeds of large extents relating to agricultural lands, which did not reflect the true and fair market value. The Reference Court correctly rejected such sale instances as incomparable, since the acquired lands were centrally located, surrounded by schools, a cinema theatre, a rice mill, and other urban amenities. Further, the Reference Court was, therefore, justified in considering the surrounding developments, as the potentiality of the land for house sites existed even prior to the acquisition. The lands formed part of a growing township, and development in the vicinity was not subsequent in nature but contemporaneous with the acquisition. As such, the Reference Court fixed the compensation on a proper basis, supported by cogent evidence including oral testimony of PWs 1 to 3 and documentary evidence in Exs.A1 to A3. The lands formed part of a growing township, and development in the vicinity was not subsequent in nature but contemporaneous with the acquisition. As such, the Reference Court fixed the compensation on a proper basis, supported by cogent evidence including oral testimony of PWs 1 to 3 and documentary evidence in Exs.A1 to A3. Hence, the fixation was neither arbitrary nor without basis but rooted in reliable material on record. 17. The respondents further contended that although the lands were described as agricultural in revenue records, their true character was that of potential house sites, having regard to their advantageous location, access to roads, and availability of civic amenities. Therefore, the sale transactions of house plots were the proper comparables, and the Reference Court has rightly placed reliance upon them while enhancing the compensation. 18. In such circumstances referred to above, the learned Counsel for Respondents prayed that there being no merit in the present appeal, the same deserves to be dismissed. VI. ISSUES FOR CONSIDERATION: 19. Having heard the learned counsel appearing for the respective parties and having carefully examined the material placed on record, the following issues arise for determination in this Appeal: (i) Whether the Reference Court was justified in enhancing the market value of the acquired lands? (ii) Whether the enhancement granted is in accordance with law and supported by evidence on record? (iii) To what relief are the claimants entitled? VII. COMPARATIVE STATEMENT OF COMPENSATION 20. For better appreciation, the comparative chart of compensation awarded by the LAO and as enhanced by the Reference Court is tabulated below: Sl. No Survey No. / Property Extent Acquired Award by LAO (Rs. per unit) Total Compensation as per Award (Rs.) Enhanced Compensation by Reference Court (Rs. per Sq. yard) Total Compensation after Enhancement (Rs.) Difference (Enhanced – Award) 1 530 Dry/Ac. 1- 35 gts Rs. 6000/- Rs.11,250/- Rs. 20/- Rs.1,81,500/- Rs. 1,70,250/- 2 530/1 Dry/ Ac. 0-37½ gts Rs. 6000/- Rs. 5,625/- Rs. 20/- Rs. 90,750/- Rs. 85,125/- 3 530/1 Dry/Ac. 0- 02 ½ gts Rs. 6000/- Rs. 375/- Rs. 20/- Rs. 6,050/- Rs. 5,675/- 21. From the above tabulation and on a careful consideration of the evidence, it is manifest that the LAO had adopted a conservative approach in fixing the market value. The Reference Court, on the other hand, has taken into account: i. the location, surroundings and potentiality of the lands; and ii. 6000/- Rs. 375/- Rs. 20/- Rs. 6,050/- Rs. 5,675/- 21. From the above tabulation and on a careful consideration of the evidence, it is manifest that the LAO had adopted a conservative approach in fixing the market value. The Reference Court, on the other hand, has taken into account: i. the location, surroundings and potentiality of the lands; and ii. the sale exemplars of the proximate period. VIII. ANALYSIS: 22. The learned Government Pleader appearing on behalf of appellant submits that the Reference Court erred in enhancing the compensation considering Ex.Al and A2 which pertained only to small bits of land, whereas the LAO has relied upon the sales relating to larger extents. On the other hand, learned counsel for the Claimants submitted that the Reference Court was fully justified in placing reliance on Exs.A1 and A2. It was urged that although these documents related to smaller extents, their genuineness has been proved through the evidence of PW2, the vendor, and PW3, the attester. It was further submitted that since the very purpose of acquisition itself was for providing house-sites, transactions relating to house-site plots in the very same village and proximate in point of time constituted the most reliable indicators of market potentiality. It was contended that, the LAO had erred in discarding such evidence and relied solely upon large agricultural transactions situated away from habitation, without appreciating the true potential of the acquired lands. 23. Upon consideration, this court is of the view that it is a settled principle of law that when number of sale deeds are not available and documents relating to a smaller extents are proved to be genuine, such documents can validly be relied upon for fixing the market value of even a vast extent of acquired land. In the present case, the claimants have produced Exs.A1 and A2, which pertain to smaller extents, but their genuineness stands established through the testimony of PW.2, the vendor, and PW.3, the attester. These documents, therefore, cannot be disregarded merely on the ground of their limited extent. Therefore, in the absence of several comparable transactions of larger extents, the Reference Court was justified in treating Exs.A1 and A2 as relevant guiding factors, while harmonizing the same with the larger extent of transaction reflected in Ex. B1, before ultimately fixing the compensation at Rs.20/- per sq. yard. 24. Therefore, in the absence of several comparable transactions of larger extents, the Reference Court was justified in treating Exs.A1 and A2 as relevant guiding factors, while harmonizing the same with the larger extent of transaction reflected in Ex. B1, before ultimately fixing the compensation at Rs.20/- per sq. yard. 24. In Ravinder Kumar Goel v. State of Haryana and others , 2023 SCC OnLine SC 147 , the Hon’ble Supreme Court had an occasion to consider whether transactions relating to smaller extents of land could be relied upon for determining the market value of large acquired tracts. The Apex Court, while addressing this issue, observed as follows: “13. Therefore, since we have already indicated that the High Court was not justified in merely relying on the circular fixing the floor rates when other evidence was available on the record pursuant to the remand made, it is necessary for us to take note as to whether the Reference Court had committed an error in not relying on the sale exemplars produced by the respondents without analysing the comparability. The position of law is well settled that when large extent of lands is acquired and if the sale exemplar, also for the large extent is available on record it would be safer to rely on the same if they are comparable transactions. However, as already noted above, this Court in Atma Singh (supra) has also held that the sale instances of smaller extents cannot be ignored. Further, this Court has reiterated in many cases that the sale exemplars for smaller extent can be relied upon subject to appropriate deduction being provided towards development charges.” 25. The learned Government Pleader appearing on behalf of appellant, however, submits that the reference Court failed to see that LAO had rightly fixed the compensation on the basis of sale deeds pertaining to large extents of land within three years preceding the notification. On the other hand, learned counsel for the Claimants contended that the LAO adopted an erroneous method in fixing compensation. It was pointed out that though the LAO relied on sale deeds of larger extents within three years prior to the notification, such transactions related only to agricultural lands situated away from habitation and were unsuitable for assessing the true value of the acquired lands. It was pointed out that though the LAO relied on sale deeds of larger extents within three years prior to the notification, such transactions related only to agricultural lands situated away from habitation and were unsuitable for assessing the true value of the acquired lands. It was further submitted that, since the very purpose of acquisition in the present case was to provide house-sites to the weaker sections, transactions relating to small house-site plots in the same village, as reflected in Exs.A1 and A2, constitute the most relevant and reliable evidence. The claimants further argued that the acquired lands, being centrally located within a developing Mandal headquarters, abutting the main road and proximate to important towns, possessed high potentiality for residential use, and such potentiality was completely ignored by the LAO while fixing the compensation at a meagre amount of Rs.6,000/- per acre. 26. It is pertinent to note that Section 23 of the LAND ACQUISITION ACT , 1894 categorically lists out the matters to be considered in determining compensation, and reads as under: “23. 26. It is pertinent to note that Section 23 of the LAND ACQUISITION ACT , 1894 categorically lists out the matters to be considered in determining compensation, and reads as under: “23. Matters to be considered in determining compensation (1) In determining the amount of compensation to be awarded for land acquired under this Act, the Court shall take into consideration first, the market value of the land at the date of the publication of the [notification under section 4, sub-section (1)] [Substituted by Act 38 of 1923, Section 7, for " declaration relating thereto under section 6".]; secondly, the damage sustained by the person interested, by reason of the taking of any standing crops or trees which may be on the land at the time of the Collectors taking possession thereof; thirdly, the damage (if any) sustained by the person interested, at the time of the Collectors taking possession of the land, by reason of severing such land from his other land; fourthly, the damage (if any) sustained by the person interested, at the time of the Collectors taking possession of the land, by reason of the acquisition injuriously affecting his other property, movable or immovable, in any other manner, or his earnings; fifthly, if, in consequence of the acquisition of the land by the Collector, the person interested is compelled to change his residence or place of business, the reasonable expenses (if any) incidental to such change; and sixthly, the damage (if any) bona fide resulting from diminution of the profits of the land between the time of the publication of the declaration under section 6 and the time of the Collectors taking possession of the land. [(1-A) In addition to the market value of the land, as above provided, the Court shall in every case award an amount calculated at the rate of twelve per centum per annum on such market value for the period commencing on and from the date of the publication of the notification under section 4, sub- section (1), in respect of such land to the date of the award of the Collector or the date of taking possession of the land, whichever is earlier. Explanation. Explanation. In computing the period referred to in this sub-section, any period or periods during which the proceedings for the acquisition of the land were held up on account of any stay or injunction by the order of any Court shall be excluded.] [Inserted by Act 68 of 1984, Section 15 (w.e.f. 24.9.1984).] (2) In addition to the market value of the land as above provided, the Court shall in every case award a sum of [thirty per centum] [Substituted by Act 68 of 1984, Section 15, for " fifteen per centum" (w.e.f. 24.9.1984).] on such market value, in consideration of compulsory nature of the acquisition.” 27. The Honourable Supreme Court in Kapil Mehra v. Union of India , [ (2015) 2 SCC 262 ] laid down the method of determination of the market value and further observed that: “10. Market Value: First question that emerges is what would be the reasonable market value which the acquired lands are capable of fetching. While fixing the market value of the acquired land, the Land Acquisition Officer is required to keep in mind the following factors: (i) existing geographical situation of the land; (ii) existing use of the land; (iii) already available advantages, like proximity to National or State Highway or road and/or developed area and (iv) market value of other land situated in the same locality/village/area or adjacent or very near to the acquired land. 11. The standard method of determination of the market value of any acquired land is by the valuer evaluating the land on the date of valuation publication of notification Under Section 4(1) of the Act, acting as a hypothetical purchaser willing to purchase the land in open market at the prevailing price on that day, from a seller willing to sell such land at a reasonable price. Thus, the market value is determined with reference to the open market sale of comparable land in the neighbourhood, by a willing seller to a willing buyer, on or before the date of preliminary notification, as that would give a fair indication of the market value.” 28. It is pertinent to note that the PW.1, Dumala Venkanna, one of the claimants, categorically deposed that the acquired lands are centrally situated at Sirikonda, which is a Mandal headquarter, and strategically located between Vemulawada and other important towns. It is pertinent to note that the PW.1, Dumala Venkanna, one of the claimants, categorically deposed that the acquired lands are centrally situated at Sirikonda, which is a Mandal headquarter, and strategically located between Vemulawada and other important towns. He further stated that the village is endowed with all amenities on par with a developed town, and that the lands, being abutting both the main road and the village road, possess high potentiality for conversion into house-sites. The testimony of PW.1 is consistent with the pleadings and the submissions advanced by learned counsel for the claimants. 29. In order to substantiate their claim, the claimants relied upon Exs.A1 and A2. PW.2, the vendor under Ex.A1, has deposed that he sold 288 square yards in Sy.No.375 for a consideration of Rs.23,100/-, working out to about Rs.80/- per square yard. PW.3, the attestor to Ex.A2, has deposed that an extent of 66.66 square yards in Sy.No.387 was sold by the owners therein at Rs.75/- per square yard. 30. Considering the contention advanced on behalf of the appellant that Exs.A1 and A2 pertain only to small house-site plots and therefore cannot form the basis for determining the value of larger tracts, this Court is of the opinion that the argument is not sustainable. It is well settled that though transactions relating to small extents may not, by themselves, be safe exemplars for valuing extensive agricultural lands, such transactions cannot be wholly discarded, especially when the acquisition is for residential purposes. When the very object of acquisition is to provide house-sites, sale deeds of small house plots in the same village and of proximate period furnish valuable guidance for assessing the potentiality and the prevailing market trend. 31. On the other hand, the LAO placed reliance upon Ex.B1, which reflected a transaction in Sy.No.149 wherein 3½ acres of wet land was sold for Rs.64,875/- in the year 1997. The LAO, however, chose to discard the said transaction on the ground that the acquired lands were dry in nature. This Court finds such reasoning to be unsustainable. When the acquired lands are admittedly being converted into house-sites, the fertility or availability of irrigation facility ceases to be relevant. On the contrary, as observed by the Reference Court, dry lands with firm sub-soil are often more advantageous for building purposes, since they reduce the burden of construction expenditure by requiring lesser foundation costs. 32. When the acquired lands are admittedly being converted into house-sites, the fertility or availability of irrigation facility ceases to be relevant. On the contrary, as observed by the Reference Court, dry lands with firm sub-soil are often more advantageous for building purposes, since they reduce the burden of construction expenditure by requiring lesser foundation costs. 32. Further, the transaction in Sy.No.149 being of the year 1997, whereas the Section 4(1) notification in the present case was issued in October, 1999, there is every justification to account for the normal trend of escalation in land prices during the intervening period. It is a matter of common knowledge that land values tend to appreciate progressively over time, particularly in semi-urban areas like Sirikonda which functions as a Mandal headquarters. Therefore, if in the year 1997, wet lands in the village were fetching Rs.64,875/- per acre, the dry lands with potentiality for house-sites in the year 1999 would certainly command a higher value. 33. It is also significant to note that RW.1, who was examined on behalf of the State, conceded in his cross-examination that the acquired lands were fit and suitable for house-sites. Such an admission by the official witness of the acquiring authority itself demolishes the foundation of the award, wherein the lands were valued as if they were dry agricultural fields. When the very purpose of acquisition is for providing house-sites, the fertility or otherwise of the soil becomes immaterial. The acknowledgement of RW.1, therefore, corroborates the stand of the claimants and makes it abundantly clear that the LAO erred in disregarding the true potential of the acquired lands. 34. A perusal of the award of the Reference Court reveals that the Reference Court has consciously avoided adopting either the inflated values indicated in Exs.A1 and A2 or the meagre rate reflected in Ex. B1. Thus, the determination of Rs.20/- per sq. yard by the Reference Court represents a just and fair assessment of the market value. 35. This Court further finds that the Reference Court has correctly appreciated the relevant factors while determining the market value. It has not confined its consideration merely to the present agricultural use of the lands, but has rightly taken into account their future potential, particularly in light of the fact that the acquisition itself was for the purpose of providing house-sites. This Court further finds that the Reference Court has correctly appreciated the relevant factors while determining the market value. It has not confined its consideration merely to the present agricultural use of the lands, but has rightly taken into account their future potential, particularly in light of the fact that the acquisition itself was for the purpose of providing house-sites. The evidence of PW.1, corroborated by PWs.2 and 3, establishes that even at the relevant time, the lands were centrally located within Sirikonda Mandal headquarters, abutting the main road, and were eminently suitable for conversion into house-sites. Moreover, the acquired lands are situated within a developing Mandal headquarters, and enjoying proximity to important towns, thereby enhancing their value. The reliance placed upon proximate sale deeds, in conjunction with other material evidence, has enabled the Reference Court to arrive at a conclusion which is both reasoned and just. IX. CONCLUSION 36. In light of the foregoing discussion, this Court is of the considered view that the Reference Court has acted on sound principles, appreciated the evidence correctly, and determined a fair market value of Rs.20/- per sq. yard. The enhancement awarded cannot be characterized either as excessive or arbitrary. 37. Hence, for the reasons discussed hereinabove, this Court is of the considered view that the findings of the Reference Court are based on proper appreciation of both oral and documentary evidence, and are in consonance with the settled legal principles governing determination of compensation under the LAND ACQUISITION ACT . The Reference Court has maintained a fair balance between the exemplar sale deeds relied upon by the claimants and the material relied upon by the LAO, and has fixed the market value in a just and reasonable manner. The enhancement granted is neither excessive nor unsupported by the record. Therefore, the impugned order of the Reference Court warrants no interference by this Court and the appellant failed to establish any of the grounds urged in the memorandum of appeal and thereby the appeal is devoid of merits and liable to be dismissed. X. RESULT 38. In the light of the foregoing discussion, we find no merit in this appeal. The judgment of the Reference Court does not call for interference. In result, the appeal stands dismissed. The claimants shall be entitled to all statutory benefits under the Act, including solatium, additional value and interest. X. RESULT 38. In the light of the foregoing discussion, we find no merit in this appeal. The judgment of the Reference Court does not call for interference. In result, the appeal stands dismissed. The claimants shall be entitled to all statutory benefits under the Act, including solatium, additional value and interest. In the circumstances, there shall be no order as to costs As a sequel, miscellaneous applications pending if any in the appeal, shall stand closed.