Important pointLawyer’s office is not covered by expression “commercial establishment” and would not attract electricity tariff applicable to commercial activity.

Headnote:Constitution of India—Article 226 —Appellant charged respondent consumer as commercial consumer for one room in the house was being used as office by a tenant Advocate—Question whether legal profession was a commercial activity or was a trade or business—Validity of circular classifying office of an advocate as a commercial establishment was questioned in writ petition—High Court held that office of a lawyer or a firm of lawyers was not a “commercial establishment” and thus rates applicable to commercial consumers cannot be charged—Appeal—Words “Commercial” and “profession” —Fundamental distinction between a professional activity and an activity of a commercial character—Professional activity was not covered by the expression “Commercial establishment”—Even if user was not domestic, it may be non-domestic but it would not automatically become “commercial”—Words “non domestic” and “commercial” were not inter-changeable—However in view of contrary view taken in NDMC vs. Sohan Lal Sachdeva case, matter referred to larger bench.
       Held : 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 (Paras 12 to 14)

Judgment

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.

2. 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.

3. 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 respondents.

4. 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/4A/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 th

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2005 Supreme(SC) 1081

Important pointLawyer’s office is not covered by expression “commercial establishment” and would not attract electricity tariff applicable to commercial activity.

Cases Referred (4)