One of my friend is shipping his commercial software written in JAVA and wants to ship JRE 7 installer along with it in the same CD so that user do not have to download from the internet.
DO you know if this is legal ? Otherwise can you point it to someone who would know ?
I believe it's legal: we used to do this in the late 1990s; but your friend should take legal advice about this. What I can tell you is that it isn't a good idea anyway, as I seem to remember saying at the time. The CDs will be out of date almost immediately for one thing. Much better just to provide a link to the download site.
Rather than guessing or relying on someone's personal comments posted on the Internet, I would recommend that you carefully review the license agreement and distribution policy before going forward. You can probably start your investigation here: