Dear Anu

          I go through your prblem and I am in view that if there is space between your walland hill than do the plaster on the wall towords hillside and also apply waterproof mebrance on the plaster. Also see there should be no any pocket where water is collected,if any than make proper slope to drain the water

For low level room, in this case both the walls as well as the ground are liable to get damp due to capillary rise of moisture from ground.
 In such situation, it is necessary to provide damp proof of flexible material like bitumen felt over the entire area of the ground including wall thickness .This felt is also laid on vertical faces of the wall.
The horizontal & vertical surfaces should be finished smooth. This should be protected from the damages. After the treatment lay the floor topping of any type which you need.