Vs. Mrs Hirinder Sachdev, W/O Late Shri Sohan Lal Sachdev  INSC 46 (9 February 2000)
condoned. Leave granted.
core question that arises for determination in this case is whether use of premises
for the purpose of a guest house can be termed as domestic use for the purpose
of electricity charges by the New Delhi Municipal Council (NDMC)? The factual
backdrop of the case, shorn of unnecessary details, may be stated thus:
Sachdev, deceased, represented by legal representative, was the landlord of the
premises bearing No.49, Golf Links, New Delhi. He occupied the ground floor of the said premises. In the month of
September, 1981, he let out the first floor and the Barsati floor to Sachdeva
Guest House for running a guest house. When this fact was intimated to the
Corporation Authorities by the landlord, demands of electricity and water
charges were made according to non domestic rates with effect from 1-10-1981. The landlord protested against the demand stating
that the user of the premises for running a guest house cannot be said to be a
commercial use of the premises and therefore the demand is unsustainable.
Thereafter, the landlord filed a suit, Suit No.230 of 1982, seeking a decree of
injunction against the NDMC restraining it from raising demand on the basis of
commercial user of the premises on the ground as noted above.
case of the NDMC was that use of the premises (first floor and Barsati floor)
for running the guest house cannot be said to be domestic use; it is a
commercial user and therefore demand of electricity on that basis is justified.
The learned Trial Judge on the pleadings framed three main issues;
Whether the user of the premises for running a guest house can be termed as
commercial user ? (2) Whether the defendant is competent to charge the
electricity consumption on non domestic rates? (3) Whether the plaintiff is
entitled for the relief of injunction? Relying on Section 23 of the Indian
Electricity Act (the Act for short), the Trial Judge held that NDMC was
competent to convert the charges of electricity supply from one category to
another i.e. from domestic category to commercial category. She, however, did
not accept the contention of NDMC that the user of the premises in running
residential guest house can be termed as commercial user and answered issue
number one in favour of the plaintiff and against the defendant. The Trial
Judge further held that even if the running of a guest house at the suit
premises cannot be termed as commercial user, it cannot also be termed as
domestic user either. Therefore the NDMC had the right to charge rates at non
domestic rates for supply of electricity and water at the premises being used
for running the guest house. On the above finding the suit was dismissed.
appeal by the landlord the learned Senior Civil Judge, Delhi, concurred with the finding of the
trial court that NDMC was competent to vary the electricity charges of the suit
premises. The first Appellate Court further held that NDMC has the right to
charge non domestic rates for supply of electricity and water in the suit
premises as the same was being used for running the guest house. The first
Appellate Court dismissed the appeal.
landlord filed second appeal in the High Court of Delhi challenging the
judgment and decree of the first appellate court confirming the judgment of the
High Court reversed the concurrent decisions of the lower courts and decreed
the suit. The High Court took the view that user of the suit premises for
running the guest house without any kitchen facility is user for residential
purpose and, therefore, the NDMC is not entitled to charge electricity and
water charges on the basis of commercial use. Being aggrieved by the decision
of the High Court, the NDMC has filed this appeal challenging the judgment.
On 23-3-1998, this Court ordered : Notice to issue in the light
of the decision of this Court in the case of Municipal Corporation of Greater
Bombay v. Mafatlal Industries & ors. reported in (1996) 8 SCC 27. Notice
shall state that the SLP shall be disposed of finally at the notice stage.
Notice to issue on the application for condonation of delay also.
main thrust of the submissions of learned counsel for the appellant NDMC is
that user of the suit premises for running the guest house with arrangement for
boarding of guests on payment cannot be said to be private domestic user of the
premises. It is the further contention of the learned counsel that such user of
the premises can be appropriately classified as commercial user. The High
Court, according to the learned counsel, committed an error in holding that the
user of the suit premises is domestic.
learned counsel appearing for the respondent landlord on the other hand
supported the judgment of the High Court reiterating the reasons stated
therein. On the case of the parties and the rival contentions raised on their
behalf, the question formulated earlier arises for consideration. The two terms
domestic and commercial are not defined in the act or the rules. Therefore, the
expressions are to be given common parlance meaning and must be understood in
their natural, ordinary and popular sense.
interpreting the phrases the context in which they are used is also to be kept
in mind. In Strouds Judicial Dictionary (Fifth Edition) the term commercial is
defined as traffic, trade or merchandise in buying and selling of goods. In the
said dictionary the phrase domestic purpose is stated to mean use for personal
residential purposes. In essence the question is, what is the character of the
purpose of user of the premises by the owner or landlord and not the character
of the place of user. For example, running a boarding-house is a business, but
persons in a boarding-house may use water for domestic purposes. As noted
earlier the classification made for the purpose of charging electricity duty by
the NDMC sets out the categories domestic user as contra-distinguished from
commercial user or to put it differently non domestic user. The intent and
purpose of the classification, as we see it, is to make a distinction between
purely private residential purpose as against commercial purpose. In the case
of a guest house, the building is used for providing accommodation to guests who
may be travelers, passengers, or such persons who may use the premises
temporarily for the purpose of their stay on payment of the charges. The use
for which the building is put by the keeper of the guest house, in the context
cannot be said to be for purely residential purpose. Then the question is, can
the use of the premises be said to be for commercial purpose? Keeping in mind
the context in which the phrases are used and the purpose for which the
classification is made, it is our considered view that the question must be
answered in the affirmative. It is the user of the premises by the owner (not
necessarily absolute owner) which is relevant for determination of the question
and not the purpose for which the guest or occupant of the guest house uses electric
energy. In the broad classification as is made in the rules, different types of
user which can reasonably be grouped together for the purpose of understanding
the two phrases domestic and commercial is to be made. To a certain degree
there might be overlapping, but that has to be accepted in the context of
things. The High Court was not right in setting aside the order of the learned
senior Civil Judge merely on the ground that the use of electricity for running
the guest house does not come under the category of commercial use. The High
Court has not discussed any reason for holding that user in such a case comes
under the category of domestic use.
case of Municipal Corporation of Greater Bombay vs. Mafatlal Industries and
Others, 1996 (8), Supreme Court Cases, 27, this Court interpreted the
expression exclusively used as a private residential premises (In Bombay
Electricity Duty Act, 1958). To connote that the premises in question must be
exclusively used as a residential premises which in other words would mean
where the premises which is used by any person privately for his own residence
for a sufficient continued period and not a premises where a person can come
and spend a day or a night and then go back. This Court further held that guest
houses are maintained by company or commercial undertakings as a part of its
commercial venture. The test of profit making as well as the test of the work
private in contradiction to public have no relevance for interpreting the
expression exclusively used as a private residential premises. This court
concluded that in the case of a guest house category R which applies to
premises used as a private residential premises is not applicable and category
C would apply as a residuary category to premises which does not come within
the categories R, S, RC (LV) and SL.
the fact situation in the case and the question which was considered by this
Court therein are not the same as in the case on hand, the discussions in the
judgment throw light on the controversy raised in this case.
discussions made and the reasons stated in the foregoing paragraphs, we are
clearly of the view that the judgment of the High Court is unsustainable.
Accordingly, the appeal is allowed. The impugned judgment of the High Court of
Delhi is set aside. The New Delhi Municipal Council is entitled to charge for
use of electricity in Sachdeva Guest House at the rate applicable to commercial
use. No cost.