Appeal (civil) 1065 of 2000
Chairman, M.P. Electricity Board and Ors
Shiv Narayan and Anr.
DATE OF JUDGMENT: 24/08/2005
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
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
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
“Madhya Pradesh Electricity Board
Rampur: Jabalpur
No.5/GA/44/126/23256/356 dated 30th
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
However, 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 applicable.

Director, Commercial
M.P. Electricity Board
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,

  1. 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.
    National Labour Relations Act 2……”
    The word ’commercial has been defined to
    “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
    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
    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
    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
    “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.
    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
    “The term is applied to an occupation or
    calling which requires learned and special
    preparation in the acquirement of scientific
    knowledge and skill.
  2. 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
    “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 \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
    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
    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
    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
    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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