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,
- 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. - 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.
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