In an appeal filed before the Supreme Court by the employees of the Air Force Group Insurance Society (AFGIS), established under the Societies Registration Act, 1860 (SRA), a Bench comprised of Justice Sanjay Karol and Justice Vipul M. Pancholi held that AFGIS was ‘State’ within the meaning of Article 12 of the Constitution and restored the writ petition filed by the appellants before the Delhi High Court, stating that the same was maintainable.
The Board of Trustees, at a special meeting dated 27-12-2016, decided that the pay scales of the workers would be revised in accordance with the Sixth Pay Commission. By a meeting dated 13-02-2017, it was resolved that pay structures would be revised in a way that any linkage or connection to and pay parity with the Central Government was to be done away with, and accordingly, asked all employees to sign their acceptance of the revised terms by a notice dated 22-05-2017.
Aggrieved, the appellants filed writ petitions before the Delhi High Court, which were dismissed by a judgment dated 01-02-2023, whereby one of the central findings was that none of the organisations, the AFGIS, the Air HQs Non-Public Fund Organisation, or the CRPF Employees’ Educational Society could be treated as ‘State’ or ‘other authority’ within Article 12 of the Constitution. Examining the status of AFGIS, the High Court found that it was a Society established in 1976 as a self-contained, self-run welfare scheme intended exclusively for Air Force personnel and their families.
The appellants submitted that AFGIS represented itself as ‘government’ in official correspondence, and that the day-to-day affairs were managed by serving senior officers of the Indian Air Force. It was also asserted that the appellants would be entitled to the benefits of the 7th Pay Commission.
Regarding whether a particular body could or could not be recognised as ‘State’, the Court said that the test pertained to the nature of functions, character of activity, and the degree of government control. It was said that this test ensured that the scope of examination is not limited to ownership, but is instead informed by accountability, the rule of law, in furtherance of practical governance.
The Court referred to cases such as Ramana Dayaram Shetty v. International Airport Authority of India (1979) 3 SCC 489, Ajay Hasia & Ors. v. Khalid Mujib Sehravardi & Ors. (1981) 1 SCC 722, Pradeep Kumar Biswas v. Indian Institute of Chemical Biology (2002) 5 SCC 111, and Zee Telefilms Ltd. v. Union of India (2005) 4 SCC 649 to evaluate the matter in its entirety.
It was noted that the membership of AFGIS was compulsory for all officers and airmen, that the contribution of premiums was automatically deducted from salaries, and that the Board of Trustees comprised senior serving IAF officials. It was also noted that service at AFGIS was considered a proper deputation for officers, while the sanction for the body, as well as the deputation rules, was granted by the President of India. The Court noted that the society was exempted from various taxes and that the President had accorded sanctions on separate occasions.
The Court referred to a letter dated 15-03-2016, in which AFGIS itself accepted its position as ‘government’, among other documents related to the pointers made above. The Court opined that a case was made out for AFGIS to be considered ‘State’ within the meaning of Article 12. Regarding the aspect of deep and pervasive control, the Court observed that the President granted sanction for AFGIS to be established and specifically approved the deputation rules. Further, it was observed that the Principal Director, AFGIS, is to apprise the Assistant Chief of Air Staff every month of the cash flow, thereby ensuring monitoring by a core member of the IAF.
Regarding administrative control, the Court found that all members of the Board of Trustees are serving members of the IAF and are deputed to AFGIS for a fixed period. Hence, it was said that the administration of the body was entirely in the hands of government servants, even though the body was a private, self-contained society.
Regarding the financial aspects of AFGIS, the Court said that while the government may not have a direct role, for a body to be considered a ‘State’, the cumulative effect of deep and pervasive financial and administrative control is imperative. The Court opined that AFGIS performs a public duty since the protection and welfare of armed forces is a core governmental function.
The Court stated that providing insurance coverage is a public function, as it addresses a collective obligation the State has towards a defined public class whose services are indispensable. It was said that insurance for service members provides protection and support in the event of disability, illness, or untimely death.
Thus, the Court held that AFGIS would be ‘State’ and that the writ petitions before the High Court were maintainable. The writ petition was restored by the Court, and the High Court was requested to decide it expeditiously, as it was filed in 2017.
Appearances:
For Petitioners – Mr. Sourav Roy (AOR), Mr. Udai Khanna, Mr. Anshu Deshpande, Mr. Hemant Gupta, Mr. Pranav Bafna
For Respondent – Mr. Vikramjeet Banerjee (ASG), Mr. Mukesh Kumar Maroria (AOR), Mr. Vardhman Kaushik (AOR), Mr. B. Sunita Rao, Mr. P.V. Yogeswaran, Ms. Sakshi Kakkar, Mr. Praneet Pranav, Mr. Navanjay Mahapatra, Mr. Abhishek Khanna
