New Delhi, March 16 The Supreme Court has ruled that the Air Force Group Insurance Society (AFGIS) is a 'State' under Article 12 of the Constitution, as it performs a public duty by protecting and looking after the welfare of armed forces personnel and their families.
Article 12 of the Constitution defines 'State' for enforcing fundamental rights.
A bench of Justices Sanjay Karol and Vipul M Pancholi overturned the view taken by the Delhi High Court on February 1, 2023, in a pay parity dispute related to the employees of AFGIS.
"In our view, a review of the documents makes a case for AFGIS to be considered a 'State' within the meaning of Article 12. Regarding the aspect of deep and pervasive control, we observe that the President of India has granted sanction for AFGIS to be established and has also specifically approved the deputation Rules…," the bench said in its March 12 verdict.
It further stated that the principal director of AFGIS must inform the assistant chief of air staff every month about the society's financial transactions, which ensures monitoring by a core member of the IAF on its activities.
Membership and deductions arising therefrom are a compulsory aspect of serving in the IAF, meaning that there is no choice for the individual officer in that matter and instead, it 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, as well as 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 purportedly a private, self-contained society," the top court said.
Senior advocate Shoeb Alam, representing the employees of AFGIS, had argued that in a letter dated March 15, 2016, AFGIS had represented itself as 'Government' in official correspondence.
He said that the day-to-day affairs of AFGIS are managed by serving senior officers of the Indian Air Force, and the land on which the office is situated has been granted by the Ministry of Defence, and it also enjoys exemptions from various taxes.
The top court said that it may be that, insofar as the financial aspects of AFGIS are concerned, the government may not have a direct role. However, for a body to be held to be a 'State', it is the cumulative effect and impact of deep and pervasive control, financial and administrative control, along with other factors, such as carrying out of public duty, it said.
"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," it said.
The top court further elaborated that 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.
"Insurance for service members is a critical instrument for safeguarding their physical, mental well-being, dignity, and economic security… The fact that healthcare, rehabilitation, and support to dependants is readily available undoubtedly gives great peace of mind to the service member, enabling them to carry out their duties without worry, at least in this regard," it said.
The top court added that the role of the State in protecting them does not end upon their superannuation from service, for the life of a person from the forces is forever shaped by their time in service.
Justice Karol, who penned the verdict, pointed out that at one point AFGIS itself claimed to be Government while claiming an exemption from service taxes, since it is under the control of the Ministry of Defence.
"In effect, by opposing the challenge of the appellants (employees), AFGIS has resiled from its own statement. We fail to understand an organisation can be 'Government' for one purpose and not be, for another purpose," it said.
The top court, while restoring the petition of employees seeking sixth pay commission before the Delhi high court, said it is maintainable as AFGIS is ‘State’ under Article 12 of the Constitution.
"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 bench ordered.