CHAIRMAN, M.P. ELECTRICITY BOARD AND ORS.versusSHIV NARAYAN AND ANR.

A            CHAIRMAN, M.P. ELECTRICITY BOARD AND ORS.
                                 v.
                     SHIV NARAYAN AND ANR.

                                AUGUST 24, 2005
B
                    [ARIJIT PASA YAT AND H.K. SEMA, JJ.]

         Electricity Laws:

          Electricity Tariff-Lawyer's office-Whether a commercial
C   establishment-Electricity Board issued circular classifying lawyer's office as
    a commercial establishment which attracted commercial rates, of tariff-
     Validity of-High Court held that the office of a lawyer or a firm of lawyers
    was not a 'commercial establishment' and, therefore, rates applicable to
    commercial consumers could not be charged-Correctness of-Held: There
    is a fandamental distinction between a professional activity and an activity
D
    of a commercial character-The view expressed in New Delhi Municipal
    Council's case that if the user was not 'domestic' it might be 'non-domestic'
    and, therefore, commercial rates were applicable did not appear to be
    correct-The words 'non-domestic' and 'commercial' were not
    interchangeable-Hence, matter referred to a larger Bench.
E
         Words & Phrases:

         "Commerce'; "commetcial" and "profession "-Meaning of

F        Respondent No. 1 was the landlord of the house in which the
    respondent No. 2-Advocate was staying as a tenant. Subsequently,
    respondent No. 2 shifted to his own house but maintained his office in the
    tenanted premises. Respondent No. 1 was paying electricity charges at the
    rate applicable to the domestic consumers. The appellant-Board issued a
    circular classifying a lawyer's office' as a 'commercial establishment' and
G   issued a notice of demand that respondent No. 1 was liable to pay electricity
    charges at the rates applicable to commercial consumers.

         Respondent No. 1 filed a writ petition challenging the aforesaid
    notice of demand. The High Court allowed the writ petition and held that
H   the office of a lawyer or a firm of lawyers was not a 'commercial

                                         958
          CHAIRMAN. M.P. ELECTRICITY BOARD v. SHIV NARA YAN              959


establishment' and, therefore, rates applicable to commercial consumers         A
could not be charged. Hence the appeal.

     Disposing of the appeal, the Court

     HELD : 1. A professional activity must be an activity carried on by
an individual by his personal skill and intelligence. There is a fundamental
                                                                                B
distinction, therefore, between a professional activity and an activity of
a commercial character. 1967-A]

     V Sasidharan v. Peter and Karunakar, AIR (1984) SC 1700, relied on.

    Harendra H: Mehta v. Mukesh H Mehta, 11999] 5 SCC 108 and Dr.
                                                                                c
Devendra M Surti v. State of Gujarat, AIR (1969) SC 63, referred to.

     2. 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 interchangeable. The entry is           D
"commercial". It is not a residual entry; unless the user is commercial the
rate applicable to the commercial user cannot be charged merely because
it is not considered to be domestic user as has been held in New Delhi
Municipal Council's case. 1968-D]

     New Delhi Municipal Council v. Sohan Lal Sachdev, 12000] 2 SCC 494,
                                                                                E
held inapplicable.

     Black's Law Dictionary 6th Edn., P. Ramanatha Aiyar: Advanced Law
Lexicon 3rd Edn. Vol. I p. 876, Vol. 3 p. 3764, Stroud's Judicial Dictionary
St" Edn., referred to.                                                          F
    3. The view expressed in New Delhi Municipal Council's case does not
appear to be correct. Therefore, the matter is refe.-red to a larger Bench.
                                                                    1968-E]

     CIVIL APPELLATE JURISDICTION Civil Appeal No. 1065 of2000.                 G
    From the Judgment and Order dated 6.5. 1999 of the Madhya Pradesh
High Court in M.P. No. 411 of 1987.

     Sakesh Kumar and D.K. Sinha for the Appellants.
                                                                                H
    960                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A         Respondents-Ex-parte.

          The Judgment of the Court was delivered by

          ARIJIT PASA YAT, 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
B
    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
c   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 no~ much dispute on the factual aspect. Respondent no. I was
D   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 electr-icity 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
E   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
F   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
G   establishment' and therefore rates applicable to commercial consumers cannot
    be charged.

          Learned counsel for the appellant-Board an.P its functionaries submitted
    that the High Court has not considered the relevant aspects. When a lawyer
H   has his office-cum-residence in particular premises the domestic rate is
   CHAIRMAN, M.P. ELECTRICITY BOARD v. SHIV NARAYAN [PASA YAT, J.)           961

applicable. Where however only the chamber is functioning, clearly commercial        A
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 anJ merely because
for the sake of convenience the description has been given as "commercial"           B
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                C
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
                                                                                     D
         No.5/GA/44/126/23256/356 dated 30th November,76

         To,

                     The Divisional Engineer,
                     M.P. Electricity Board.                                         E
               Reference is invited to this office circulars No. 5/121/S/l l l/49-
         A dated 21.7.1971 and 5/ll/5/l l l/49-A/54/4506 dated 8.7.1975
         wherein the categories of consumers which could be classified as
         'Commercial' were indicated. Points have been ra;sed in regard
         to the tariff which shall be applied to the consumption in the house
                                                                                     F
         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,           G
         shall be treated as domestic purposes, even though these persons
         carry out some professional work in the residence.

               (i)   Advocate, Vakils.

               (ii) Doctors.                                                         H
    962                  SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A                (iii) Writers, poets and artists.

                  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.
B
                                               Director, Commercial
                                               M.P. Electricity Board
                                                    Jabalpur."

C        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
D   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.
E           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
F           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.
G           Fuller, 84 U.S. (17 Wall.) 568, 21 L.Ed. 71 O; Hoke v. 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,
H           transportation or communication among the several States, or between
CHAIRMAN, M.P. ELECTRICITY BOARD v. SHIV NARA VAN [PASAYAT, !.]         963

    the District of Columbia or any Territory of the United States and          A
    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 ...... "            B

    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 v. Humble Oil & Refining Co., 226                  c
          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       D
     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 ofbuying or selling nor any trading ofany kind whatsoever.
     Therefore, to compare legal profession with that of trade and
     business is far from correct approach and it will totally be misplaced.
                                                                                E
         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                 p
          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.                           G

                  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).'                                    H
    964                  SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A        The word 'profession' has been defined in Black's Law Dictionary-
    Sixth Ed. as under:

                 'Profession- A vocation or occupation requmng special,
            usually advanced education, knowledge, and skill; e.g. Jaw or
            medical professions. Also refers to whole body of such profession.
B
                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
c           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.
D
            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:

E                 "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 contro!led 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. CI. T. v. Manmohan Das, (1966) 59 ITR 699,
F
            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
G           employment requiring a learned educ'.ltion, as those of law and
            physics (Worcest Diet.). 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,
H           guiding, or teaching them, or in serving, their interest or welfare in
CHAIRMAN, M.P. ELECTRICITY BOARD' SHIV NARA YAN [PASAYAT, I.I           965

    the practice of an art founded on it."                                      A

    "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
                                                                                B
    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.
                                                                                c
    l. 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."

                                                                                D
    "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) Born 200, 210 (Bombay Shops and Establishment Act (79 of
    1948, s. 2 (4)).                                                            E
          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            F
    profession. N.E. Merchant v. State, AIR (1968) Born 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 Chila/av. Commissioner of Labour,             G
    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 \vhere it is more of a matter of things        H
    966                  SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A           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. Mis Peter and Karunakar, AIR (1984)
B
    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
c           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
D           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 ~oted ~s follows:

E           "I. 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
F           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) sec 541), the terms of the agreement required the
            petitioner to play an active role in promoting the sale and to provide
G           "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
H           construed."
   CHAIRMAN, M.P. ELECTRICITY BOARDv. SHIV NARAYAN [PASAYAT,J.l            967


     In Stroud's Judicial Dictionary (5th Edition) the term "commercial" is        A
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         B
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".
                                                                                   c
      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 :-
                                                                                   D
              "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 populdr 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         E
        "traffic, trade or merchandise in buying and sening 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,      F
         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    G
         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.      H
    968                   SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A            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
B
             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 electrk energy. In the broad classification as
             is made in the Rules, different types of user which can reasonably
c            be grouped together for the purpose ofunderstanding 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."

D         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
E   Corporations' case (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.
F
    v.s.s.                                               Referred to larger Bench.