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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 Dictionary-  Sixth 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.

       1.      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.