Air Force Group Insurance Society Is 'State' Under Article 12 Of Constitution : Supreme Court

The Supreme Court has held Air Force Group Insurance Society to be a 'State' under Article 12 of the Constitution, amenable to Writ Jurisdiction.

A bench comprising Justices Sanjay Karol and Vipul M Pancholi overturned the Delhi High Court's decision refusing to consider Air Force Group Insurance Society (“Society”) as 'State'. The bench held that since the Society performs a public function closely linked to the State's obligations toward members of the Indian Air Force, it qualifies as a State.

“We are of the considered view that AFGIS does indeed perform a public duty. The protection and welfare of armed forces personnel is a core government function. The role of the armed forces is directly linked to the sovereignty and security of the nation and in protecting the same members of the forces are required to adhere to, abide by, and maintain a strict set of rules, unquestionable conduct, and at times in the most severe and adverse circumstances. Thus, providing insurance coverage is a public function as it addresses a collective obligation the State has towards a defined public class whose service is indispensable.”, the court said.

The Court noted several factors that demonstrate deep governmental involvement, such as the establishment of the Society and its deputation rules sanctioned by the President of India, its financial operations are periodically reported to senior Air Force authorities, and both the Board of Trustees and the Managing Committee are composed entirely of serving Air Force officers deputed for fixed tenures. Taken together, the Court observed, these features clearly bring the Society within the scope of an instrumentality of the State under Article 12 of the Constitution of India.

The controversy arose after the Board of Trustees of AFGIS initially resolved in December 2016 to revise employees' pay scales in accordance with the Sixth Central Pay Commission. However, in a subsequent meeting on February 13, 2017, the Board reversed its earlier decision and resolved to delink the Society's pay structures from Central Government pay scales.

Employees were asked to accept revised service conditions through a notice issued on May 22, 2017. Challenging the decision, they approached the Delhi High Court under Article 226 of the Constitution of India.

The High Court dismissed the petitions, holding that AFGIS was a self-contained welfare and insurance scheme funded by member contributions and therefore not “State” under Article 12. Consequently, it ruled that the writ petitions were not maintainable, prompting them to appeal to the Supreme Court.

Setting aside the impugned decision, the judgment authored by Justice Karol, upon referring to the precedents which had defined the scope of “State” under Article 12, noted that the Courts must assess the cumulative effect of all relevant factors to determine whether the body is financially, functionally, and administratively dominated by the State.

“The test to be satisfied pertained to the nature of functions, character of activity, degree of governmental control. This ensured that the breadth or scope of examination when this question arises is not limited to ownership/origin but is instead informed by accountability, the rule of law in furtherance of practical governance.”, the court said.

Apart from the public function test, the Court had also examined the deep and pervasive control as well as the administrative control, observing:

“the Hon'ble President of India granted sanction for AFGIS to be established and also specifically approved the deputation Rules; the Principal Director (AFGIS), every month is to apprise the Assistant Chief of Air Staff regarding the cash flow of AFGIS which ensures monitoring by a core member of the IAF on the activities of AFGIS; the membership and deductions arising therefrom are a compulsory aspect of serving in the IAF, meaning thereby that there is no choice of the individual officer in that matter and instead is a mandate from the employer.”

“When the aspect of administrative control is examined, it is seen that all the members of the Board of Trustees, so also the Managing Committee are serving members of the IAF and are deputed to AFGIS for a fixed period. In essence, therefore, the administration of the Body is entirely in the hands of Government servants even though the body itself is a purportedly private, a self-contained society”, the court added.

In terms of the aforesaid, the Court allowed the appeal, and held AFGIS to be 'State' under Article 12, requesting the High Court to decide the Appellants Writ Petition expeditiously, keeping in view the fact that the same has been filed in the year 2017.

Cause Title: RAVI KHOKHAR & ORS Versus UNION OF INDIA & ORS.

Citation : 2026 LiveLaw (SC) 244

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Appearance:

For Petitioner(s) Mr. Shoeb Alam, Sr. Adv. Mr. Sourav Roy, AOR Mr. Udai Khanna, Adv. Mr. Anshu Deshpande, Adv. Mr. Pranav Bafna, Adv. Mr. Hemant Gupta, Adv.

For Respondent(s) Mr. Vikramjeet Banerjee, A.S.G. Mr. Mukesh Kumar Maroria, AOR Mr. B Sunita Rao, Adv. Mr. P V Yogeswaran, Adv. Ms. Sakshi Kakkar, Adv. Mr. Praneet Pranav, Adv. Mr. Navanjay Mahapatra, Adv. Mr. Abhishek Khanna, Adv. Mr. Ankur Chibber, Adv. Mr. Anshuman Mehrotra, Adv. Mr. Nikunj Arora, Adv. Mr. Prahil Sharma, Adv. Mr. Vardhman Kaushik, AOR