The Supreme Court of India ruled Air Force Group Insurance Society is “State” under Article 12, restoring employees’ pay parity plea and setting aside Delhi High Court’s 2023 ruling, with Justices Sanjay Karol and Vipul M. Pancholi.
NEW DELHI: The Supreme Court has determined that the Air Force Group Insurance Society (AFGIS) qualifies as a “State” under Article 12 of the Constitution, asserting that the organization fulfills a public duty by promoting the welfare of armed forces personnel and their families. This decision set aside a 2023 ruling by the Delhi High Court regarding pay parity claims made by AFGIS employees.
A bench of Justices Sanjay Karol and Vipul M. Pancholi issued the judgment, concluding that the operations, structure, and oversight of AFGIS reflect substantial government involvement. Consequently, the court reinstated the employees’ petition seeking benefits under the Sixth Pay Commission before the Delhi High Court.
The Supreme Court examined AFGIS’s institutional framework and identified several indicators of government oversight, noting that the President of India had authorized the establishment of the society and approved its governing rules.
Citing the society’s functioning under considerable administrative supervision,the court stated,
“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 also highlighted that the principal director of AFGIS is required to submit monthly cash flow reports to the Assistant Chief of Air Staff, ensuring ongoing oversight by a core officer of the Indian Air Force.
Another significant aspect noted by the court was the mandatory nature of AFGIS membership for serving personnel in the Indian Air Force. The bench pointed out that contributions to the insurance scheme are automatically deducted as part of the terms of service, leaving officers with no option to opt out. Furthermore, the court remarked that the governing bodies of the society consist entirely of serving Air Force officers.
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The bench said,
“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,”
It 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 underscored that AFGIS’s services are fundamentally linked to the state’s responsibilities toward members of the armed forces.
The court remarked,
“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 bench emphasized that armed forces members operate under strict discipline and often in highly challenging conditions to ensure national security. Consequently, insurance coverage and welfare support are critical safeguards for their well-being and economic security.
Noting that such provisions offer peace of mind to personnel and allow them to carry out their duties without fear, the court indicated,
“Insurance to service members is a critical instrument for safeguarding their physical, mental well-being, dignity and economic security,”
The bench also referenced arguments made by senior advocate Shoeb Alam, representing the employees, who pointed out that AFGIS had previously described itself as part of the government in official communications.
Justice Karol mentioned that the society had sought exemption from service tax by claiming it operated under the Ministry of Defence. The court found it contradictory for AFGIS to deny its status as a “State” while simultaneously opposing the employees’ claims.
The court said,
“We fail to understand how an organisation can be ‘Government’ for one purpose and not be, for another purpose,”
Upon concluding that AFGIS meets the criteria of a “State” under Article 12, the Supreme Court declared that the employees’ writ petition seeking pay parity benefits is valid. The bench restored the petition to the Delhi High Court and instructed that it be resolved quickly, highlighting that the case has been pending since 2017.
The court ordered,
“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,”
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