M.P. Electricity Board & Ors Vs. Shiv Narayan and Anr  Insc 437 (24 August 2005)
Pasayat & H. K. Sema Arijit Pasayat, J.
interesting question is raised in this appeal i.e. whether the legal profession
is a commercial activity or is it a trade or business. The Madhya Pradesh
Electricity Board (hereinafter referred to as the 'Board') and its
functionaries charged the respondent No.2-Advocate for electricity consumption
at the rate applicable for commercial consumers. The demand was questioned by
filing a writ petition before the Madhya Pradesh High Court which by the
impugned judgment held that the legal profession does not involve a commercial
activity and, therefore, the rate applicable to commercial consumers was not
applicable to him. The judgment is questioned by the Board in this appeal.
is not much dispute on the factual aspect.
no.1 was at the relevant point of time the landlord of the house where
respondent No.2-G.D. Padraha, Advocate was staying as a tenant. He was
occupying the tenanted premises till 1981. Thereafter, he shifted to his own
house, but he maintained his office in the tenanted premises. There was an
electricity service line in that house and it was in the name of the landlord
who was paying at the rate applicable to domestic consumers. In January, 1986
some officials of the Board inspected the service meter and served a notice to
the landlord alleging that he is using the service connection for commercial
purposes instead of domestic purposes. The landlord replied stating that he had
never used the premises for commercial purposes.
the respondent No.2 had his office in the premises.
of demand was raised after considering the reply and it was held that the rate
applicable to the commercial consumers was applicable, on the basis of a
circular issued by the Board laying down different types of connections for
domestic purposes and commercial purposes. The validity of the circular
classifying office of an advocate as a commercial establishment was questioned
in the writ petition. The High Court as noted above held that the office of a
lawyer or a firm of lawyers is not a 'commercial establishment' and therefore
rates applicable to commercial consumers cannot be charged.
counsel for the appellant-Board and its functionaries submitted that the High
Court has not considered the relevant aspects. When a lawyer has his
office-cum-residence in particular premises the domestic rate is applicable.
Where however only the chamber is functioning, clearly commercial activities
are being carried out and therefore commercial rate was rightly applied.
to him, the two categories of consumers have to be classified as domestic
consumers and non domestic consumers.
who are not domestic consumers fall to the second category and merely because
for the sake of convenience the description has been given as
"commercial" it does not make a difference. When one is not a
domestic consumer, as a natural consequence the rate applicable to the other
category has to be charged. Nobody appears on behalf of the respondents.
circulars on which reliance was placed by the Board clearly show that a
distinction was made between domestic consumers and commercial consumers. There
is no substance in the plea that the classification was domestic and non
domestic as the residual category. The Board's notification which formed the
foundation for the Board's action reads as follows:
Pradesh Electricity Board Rampur: Jabalpur No.5/GA/44/126/23256/356 dated 30th November,76 To, The Divisional Engineer, M.P.
is invited to this office circulars No. 5/121/5/111/49-A dated 21.7.1971 and
5/11/5/111/49-A/54/4506 dated 8.7.1975 wherein the categories of consumers
which could be classified as 'Commercial' were indicated. Points have been
raised in regard to the tariff which shall be applied to the consumption in the
house a part of which is used for professional purpose by Advocate, Doctors,
Board has considered the matter and has decided that the energy consumed in the
residential premises of following persons, shall be treated as domestic
purposes, even though these persons carry out some professional work in the
Writers, poets and artists.
consumption in the premises which are away from the residential premises and
are exclusively used for the professional purposes even by the Advocate, Vakils,
Doctors, Writers, Poets and Artists and shall be billed at Board L.T. Tariff
Commercial M.P. Electricity Board Jabalpur." List of consumers who are treated as belonging to the commercial
category clearly shows that there is an element of commerce involved in them as
would be evident from the Notification dated 8th July, 1975.
word 'commerce' is a derivative of the word 'commercial'. The word 'commercial'
originates from the word 'commerce' which has been defined in Black's Law
Dictionary- Sixth Edition as under:
exchange of goods, productions, or property of any kind, the buying, selling,
and exchanging of articles. Anderson v.
Humble Oil and Refining Co.226 Ga.252, 174 S.E.2d 415, 417. The transportation
of persons and property by land, water and air. Union Pacific R.Co. v. State
Tax Commissioner, 19 Utah 2d 236, 429 p.2d 983, 984.
by way of trade and traffic between different people or States and the citizens
or inhabitants thereof, including not only the purchase, sale, and exchange of
commodities, but also the instrumentalities and agencies by which it is
promoted and the means and appliances by which it is carried on, and
transportation of persons as well as of goods, both by land and sea. Brennan v.
Titusville, 153 U.S. 289, 14 S.Ct.829, 38 L.Ed.719; Railroad Co. v. Fuller, 84 U.S. (17 Wall.) 568, 21 L.Ed. 710; Hoke vs. United States, 227 U.S. 308, 33 S.Ct 281, 57 L.Ed.523. Also interchange of ideas,
sentiments, etc. as between man and man.
term 'commerce' means trade, traffic, commerce, transportation or communication
among the several States, or between the District of Columbia or any Territory
of the United States and any State or other Territory, or between any foreign
country and any State, Territory, or the District of Columbia, or within the
District of Columbia or any territory, or between points in the same State but
through any other State or any Territory or the District of Columbia or any
Labour Relations Act 2......" The word 'commercial has been defined to mean:
Relates to or is connected with trade and traffic or commerce in general; is
occupied with business and commerce. Anderson vs. Humble Oil & Refining Co. 226 Ga.252, 174 S.E. 2d 415, 416. Generic term for
most all aspects of buying and selling." The expression 'commerce' or
'commercial' necessarily has a concept of a trading activity. Trading activity
may involve any kind of activity, be it a transport or supply of goods. Generic
term for most all aspects is buying and selling. But in legal profession, there
is no such kind of buying or selling nor any trading of any kind whatsoever.
to compare legal profession with that of trade and business is far from correct
approach and it will totally be misplaced.
in the Advanced Law Lexicon 3rd Edition 2005, Volume 1 at page 878 by P. Ramanatha
Aiyar, word 'commerce' has been defined as under:
is a term of the largest import. It comprehends intercourse for the purposes of
trade in any and all its forms, including transportation, purchase, sale, and
exchange of commodities between the citizens of one country and the citizens or
subjects of other countries, and between the citizens of different provinces in
the same State or country. Walton v. Missoury, 91 US 275; 23 L Ed.347.
and selling together, exchange of merchandise especially on a large scale
between different countries or districts; intercourse for the purpose of trade
in any and all its forms (S.2 (13), Income Tax Act).' The word 'profession' has
been defined in Black's Law Dictionary- Sixth Ed. as under:
A vocation or occupation requiring special, usually advanced education,
knowledge, and skill; e.g. law or medical professions. Also refers to whole
body of such profession.
and skill involved in a profession in predominantly mental or intellectual,
rather than physical or manual.
term originally contemplated only technology, law and medicine, but as
applications of science and learning are extended to other departments of affairs,
other vocations also receive the name, which implies professed attainments in
special knowledge as distinguished from mere skill.
professing; a public declaration respecting something. Profession of faith in a
religion." The word 'profession' has also been defined in the Advanced Law
Lexicon Volume-3 at page 3764 which reads as under:
A 'profession' involves the idea of an occupation requiring either purely
intellectual skill or any manual skill, as in painting and sculpture or
surgery, skill controlled by the intellectual skill of the operator, as
distinguished from an occupation which is substantially the production or sale
or arrangements for the production of sale of commodities. C.I.T. v. Manmohan Das
(1966) 59 ITR 699, 710 (SC) Income Tax Act, 1961.
At page 3765 it has been further stated as follows :
definition of a profession is an employment, especially an employment requiring
a learned education, as those of law and physics (Worcest Dict.). In the Century
Dictionary the definition of profession is given, among others, as a vocation
in which a professional knowledge of some department of science or learning is
used by its practical application to the affairs of others, either in advising,
guiding, or teaching them, or in serving, their interest or welfare in the
practice of an art founded on it." "The word implies professional
attainment in special knowledge as distinguished from mere skill; a practical
dealing with affairs as distinguished from mere study or investigation; and an
application of such knowledge to use for others as a vocation as distinguished
from its pursuits for its own purposes." "The term is applied to an
occupation or calling which requires learned and special preparation in the
acquirement of scientific knowledge and skill.
occupation which one professes to be skilled in and to follow; any calling or
occupation by which a person habitually earns his living (S.2(36), Income Tax
Act and S.150, Indian Evidence Act); 2. S.7, North Eastern Hill University
Act." "An activity to be a profession must be one carried on by an
individual by his personal skill, intelligence and an individual by his
personal skill, intelligence and dependent on individual characteristics. Sakharam
Narayan Kherdekar v. City of Nagpur Corporation, (AIR 1964 Bom 200, 210 (Bombay Shops and Establishment Act (79 of
1948, S. 2 (4)).
multifarious functions call for the exercise of integrity; intelligence and
personal skill by the Chartered Accountant in the service of his client and so
the preamble of the Chartered Accountant Act, 1949 describes the avocation of a
chartered accountant as a profession. N.E. Merchant v. State. (AIR 1968 Bom
283, 287. Bombay Shops and Commercial Establishment Act (76 of 1048)"
"A profession or occupation is carried on for the purpose of earning a
livelihood and a profit motive does not underline such carrying of profession
or occupation. L.M. Chitala vs. Commissioner of Labour. (AIR 1964 Mad.131, 133
(Constitution of India, Art.
"Profession as distinguished with 'commercial' means a person who enters
into a profession. It involves certain amount of skill as against commercial
activity where it is more of a matter of things or business activity. In
profession, it is purely use of skill activity. Therefore, two are distinct
concepts in commercial activity one works for gain or profit and as against
this, in profession, one works for his livelihood." This Court in V. Sasidharan
v. M/s Peter and Karunakar (AIR 1984 SC 1700) held as under:
does not require any strong argument to justify the conclusion that the office
of a lawyer or a firm of lawyers is not a 'shop' within the meaning of Section
2(15). Whatever may be the popular conception or misconception regarding the
role of today's lawyers and the alleged narrowing of the gap between a
profession on one hand and a trade or business on the other, it is trite that,
traditionally, lawyers do not carry on a trade or business nor do they render
services to 'customers'. The context as well as the phraseology of the
definition in Section 2(15) is inapposite in the case of a lawyer's office or
the office of a firm of lawyers." In Harendra H. Mehta & Ors. v. Mukesh
H. Mehta & Ors. (1999 (5) SCC 108) it was noted as follows:
Of, engaged in, or concerned with, commerce.
Having profit as a primary aim rather than artistic etc. value;
Concise Oxford Dictionary). In the Black's Law
Dictionary, "commercial" is defined as: "Relates to or is
connected with trade and traffic or commerce in general; is occupied with
business and commerce. Anderson v. Humble Oil 7 Refining Co., (226 Ga
252: 174 SE 2d 415), "A broad and not a restricted construction should be
given to the word "commercial" appearing in Section 2 of the Foreign
Awards Act. In R.M. Investment and Trading Co.
(P) Ltd. (1994 (4) SCC 541), the terms of the agreement required the petitioner
to play an active role in promoting the sale and to provide "commercial
and managerial assistance and information" which may be helpful in the
respondents sales efforts. It was held that the relationship between the
appellant and the respondents was of a commercial nature. The Court said that
the word "commercial" under Section 2 of the Foreign Awards Act
should be liberally construed." In Stroud's Judicial Dictionary (5th
Edition) the term "commercial" is defined as "traffic, trade or
merchandise in buying and selling of goods".
professional activity must be an activity carried on by an individual by his
personal skill and intelligence.
is a fundamental distinction, therefore, between a professional activity and an
activity of a commercial character. Considering a similar question in the
background of Section 2(4) of the Bombay Shops and Establishments Act (79 of
1948), it was held by this Court in Dr. Devendra M. Surti v. The State of Gujarat (AIR 1969 Sc 63) that a doctor's
establishment is not covered by the expression "Commercial
above background, we would have dismissed the appeal. But we notice that in New
Delhi Municipal Council v. Sohan Lal Sachdev (2000(2) SCC 494) certain
observations are made, with which we do not agree. In para 12 it was observed
as follows :- "The two terms "domestic" and 'commercial"
are not defined in the Act or the Rules. Therefore, the expressions are to be
given the common parlance meaning and must be understood in their natural,
ordinary and popular sense. In interpreting the phrases the context in which
they are used is also to be kept in mind. In Stroud's Judicial Dictionary (5th Edn.)
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 the character of the
purpose of user of the premises by the owner or landlord is 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 NDMC sets out the categories "domestic" user as
contradistinguished from "commercial" user or to put it differently "non-domestic
user". The intent and purpose of the classifications 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 travellers, 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.
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 of 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." Even if it is accepted that the user was not domestic, it may be
non-domestic. But it does not automatically become "commercial". The
words "non-domestic" and "commercial" are not inter-changeable.
The entry is "commercial". It is not a residual entry, unless the
user is commercial the rate applicable to be commercial user cannot be charged
merely because it is not considered to be domestic user, as has been held in
New Delhi Municipal Corporations' case (supra).
view expressed in the said case does not appear to be correct. We, therefore,
refer the matter to a larger Bench. Place the records before the Hon'ble Chief
Justice of India for necessary orders.