The Supreme Court has ruled that the Air Force Group Insurance Society (AFGIS) qualifies as a “State” under Article 12 of the Constitution, holding that the body performs a public duty by safeguarding the welfare of armed forces personnel and their families. The ruling came as the court set aside a 2023 Delhi High Court decision in a dispute concerning pay parity claims by AFGIS employees.
A bench of Justices Sanjay Karol and Vipul M. Pancholi delivered the judgment on March 12, concluding that the functioning, structure, and control of AFGIS indicate deep and pervasive government involvement. As a result, the court restored the employees’ petition seeking benefits under the Sixth Pay Commission before the Delhi High Court.
The Supreme Court examined the institutional framework of AFGIS and found multiple indicators of government oversight. The bench noted that the President of India had sanctioned the creation of the society and approved the deputation rules governing it.
“In our view, a perusal of the documents extracted makes out a case for AFGIS to be considered ‘State’ within the meaning of Article 12,” the court said, highlighting that the society operates under significant administrative supervision.
The court also observed that the principal director of AFGIS must submit monthly cash flow updates to the Assistant Chief of Air Staff. This reporting requirement, the bench said, ensures continuous monitoring by a core officer of the Indian Air Force.
Another important factor considered by the court was the mandatory nature of AFGIS membership for serving Indian Air Force personnel. The bench pointed out that contributions to the insurance scheme are automatically deducted as part of service conditions, leaving individual officers with no option to opt out.
The court further noted that the governing bodies of the society are composed entirely of serving Air Force officers.
“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,” the bench said.
“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, self-contained society.”
The judgment emphasised that the services provided by AFGIS are closely tied to the state’s obligations toward members of the armed forces.
“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 court observed.
The bench highlighted that members of the armed forces operate under strict discipline and often in extremely challenging conditions to safeguard national security. Insurance coverage and welfare support therefore serve as crucial safeguards for their well-being and economic security.
“Insurance to service members is a critical instrument for safeguarding their physical, mental well-being, dignity and economic security,” the court noted, adding that such measures provide peace of mind to personnel and enable them to perform their duties without worry.
The bench also referred to arguments presented by senior advocate Shoeb Alam, appearing for the employees, who pointed out that AFGIS had earlier described itself as part of the government in official correspondence.
Justice Karol noted that the society had claimed exemption from service tax by stating that it functioned under the Ministry of Defence. The court found it inconsistent for AFGIS to now deny being a “State” while opposing employees’ claims.
“We fail to understand how an organisation can be ‘Government’ for one purpose and not be, for another purpose,” the court said.
After concluding that AFGIS falls within the definition of “State” under Article 12, the Supreme Court held that the employees’ writ petition seeking pay parity benefits is maintainable.
The bench restored the petition before the Delhi High Court and directed that it be decided expeditiously, noting that the case has been pending since 2017.
“The High Court is requested to decide the same expeditiously, keeping in view the fact that the same has been filed in the year 2017. Appeal is allowed,” the court ordered.
