CASE NO.:
Appeal (civil) 1065 of 2000
PETITIONER:
Chairman, M.P. Electricity Board and Ors
RESPONDENT:
Shiv Narayan and Anr.
DATE OF JUDGMENT: 24/08/2005
BENCH:
ARIJIT PASAYAT & H. K. SEMA
JUDGMENT:
J U D G M E N T
ARIJIT PASAYAT, J.
An 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.
There is not much dispute on the factual aspect.
Respondent 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.
However, the respondent No.2 had his office in the premises.
Notice 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.
Learned counsel for the appellant-Board and its
functionaries submitted that the High Court has not
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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.
According to him, the two categories of consumers have to be
classified as domestic consumers and non domestic consumers.
Those 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.
The 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:
“Madhya Pradesh Electricity Board
Rampur: Jabalpur
No.5/GA/44/126/23256/356 dated 30th
November,76
To,
The Divisional Engineer,
M.P. Electricity Board.
Reference 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, etc.
The 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 residence.
(i) Advocate, Vakils.
(ii) Doctors.
(iii) Writers, poets and
artists.
However, consumption in the
premises which are away from the
residential premises and are
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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 applicable.

Director, 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.
The 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 DictionarySixth Edition as under:
“Commerce.-The 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.
     Intercourse 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.
     The 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 foreign country.
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     National Labour Relations Act 2……”
     The word ’commercial has been defined to
     mean:
     “Commercial. 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.
     Therefore, to compare legal profession
     with that of trade and business is far
     from correct approach and it will
     totally be misplaced.
     Similarly, in the Advanced Law
     Lexicon 3rd Edition 2005, Volume 1 at
     page 878 by P. Ramanatha Aiyar, word
     ’commerce’ has been defined as under:
     ’Commerce’ 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.
     Buying 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:
     ’Profession- A vocation or occupation
     requiring special, usually advanced
     education, knowledge, and skill; e.g. law or
     medical professions. Also refers to whole
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     body of such profession.
     The labour and skill involved in a
     profession in predominantly mental or
     intellectual, rather than physical or manual.
     The 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.
     Act of 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:
     “Profession- 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.
     Sec.28.”
     At page 3765 it has been further stated
     as follows :
     “One 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
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     knowledge and skill.
418. The 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)).
     The 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.
     19(6)”
     “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 \026 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:
     “………It 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
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     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:
     “1. Of, engaged in, or concerned with,
     commerce. 2. Having profit as a primary
     aim rather than artistic etc. value;
     philistine”. (The 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”.
     A professional activity must be an activity carried on
     by an individual by his personal skill and intelligence.
     There 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 establishment”.
     In the 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
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     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.
     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 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
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     (supra).
     The 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.