Is the Air Force Group Insurance Society a ‘State’ Under Article 12? Supreme Court Clarifies

The Supreme Court of India, in Ravi Khokhar & Ors. v. Union of India & Ors. (2026 INSC 233), addressed a significant constitutional question, whether the Air Force Group Insurance Society (AFGIS), a society registered under the Societies Registration Act, qualifies as “State” under Article 12 of the Constitution. This determination is crucial because it decides whether writ jurisdiction under Article 226 can be invoked against such bodies.

The judgment revisits and applies established constitutional tests to determine the scope of “State” under Article 12 and ultimately holds that AFGIS is indeed a “State,” thereby reversing the Delhi High Court’s ruling.

Facts of the Case

The appellants were employees of AFGIS, an organisation established in 1976 with the sanction of the President of India. The Society functions as a welfare and insurance body for Indian Air Force personnel.

Initially, AFGIS had adopted pay scales aligned with Central Government pay structures, including the Sixth Pay Commission. However, in 2017, the Board of Trustees decided to delink AFGIS employees’ pay from Central Government pay scales and required employees to accept revised service conditions.

Aggrieved by this decision, the employees filed writ petitions before the Delhi High Court, claiming parity with Central Government employees and challenging the change in service conditions.

Proceedings Before the High Court

The Delhi High Court dismissed the writ petitions on the ground that AFGIS is not “State” under Article 12. Consequently, the petitions were held to be not maintainable.

The High Court reasoned that:

• AFGIS is a society under the Societies Registration Act.
• It is self-funded through member contributions.
• It is not financially dependent on the Government.
• There is no deep and pervasive control by the Government.

Therefore, it concluded that AFGIS does not fall within the scope of “other authorities” under Article 12.

Arguments of the Parties

Arguments by the Appellants

The appellants contended that AFGIS should be treated as “State” because:

• It was established with the sanction of the President of India.
• Membership is compulsory for all Air Force personnel.
• Contributions are automatically deducted from salaries.
• The Board of Trustees consists entirely of senior Air Force officers.
• The organisation functions under the Ministry of Defence.
• It performs welfare functions of public importance.

They also relied on the decision in Rajkaran Singh v. Union of India to argue that similar organisations have been treated as “State.”

Arguments by AFGIS

AFGIS argued that:

• It is a self-financed body with no funding from the Consolidated Fund of India.
• Its funds come solely from member contributions.
• It does not submit accounts to the Comptroller and Auditor General.
• Its employees are not government servants.

Therefore, it cannot be considered “State.”

The Union of India supported AFGIS and defended the High Court’s decision.

Legal Framework: Article 12 and the Concept of ‘State’

Article 12 defines “State” to include:

• Government and Parliament of India
• State Governments and Legislatures
• Local authorities
• Other authorities within India or under government control

The expression “other authorities” has been interpreted broadly by courts to include bodies that function as instrumentalities or agencies of the State.

Judicial Tests for Determining ‘State’ under Article 12

While examining whether a body qualifies as “State” under Article 12, the Supreme Court reaffirmed the well-settled principles laid down in leading precedents.

In Ajay Hasia v. Khalid Mujib Sehravardi (1981), the Court emphasised that the decisive factor is not the manner in which an entity is created, but whether it functions as an instrumentality or agency of the Government. The focus is thus on the functional character of the body rather than its formal structure.

This position was further clarified in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology (2002), where the Court held that the tests in Ajay Hasia are not rigid. Instead, the determination must be based on the cumulative effect of factors, particularly whether the body is subject to financial, functional, and administrative domination of the Government, with control that is deep and pervasive.

At the same time, the Court cautioned against over-expansion of Article 12 in Chander Mohan Khanna v. NCERT (1991), holding that mere governmental association, aid, or supervision is insufficient to classify a body as “State.”

The Court also rejected reliance on Sagarika Singh v. Union of India (2011), noting that it had been disapproved by a larger Bench in Ex. Sub. Rajender Singh v. Union of India (2013). It was clarified that welfare or insurance schemes connected with the armed forces do not automatically become “State” unless there is demonstrable pervasive governmental control.

Further, in Ramana Dayaram Shetty v. International Airport Authority of India (1979), Justice P.N. Bhagwati highlighted that a corporation becomes an instrumentality of the State when it is subject to substantial governmental control in both policy and functioning. However, no rigid or exhaustive test can be laid down.

These principles guided the Court in the present case.

Application of Law to the Present Case

The Supreme Court applied the above tests to determine the status of AFGIS.

1. Administrative Control

The Court found strong evidence of governmental control:

• The Board of Trustees consists entirely of serving Air Force officers.
• Officers are deputed to AFGIS with government approval.
• The President sanctioned the establishment and deputation rules.
• Regular reporting is made to senior Air Force officials.

This indicated deep and pervasive administrative control.

2. Functional Control

The Court observed that:

• AFGIS performs welfare and insurance functions for Air Force personnel.
• These functions are closely linked to national defence and state obligations.

Thus, AFGIS performs public functions of significant importance.

3. Compulsory Membership

Membership in AFGIS is mandatory for all Air Force personnel, and contributions are automatically deducted from salaries.

This lack of choice indicates that AFGIS operates as an extension of service conditions imposed by the State.

4. Financial Control

Although AFGIS argued that it is self-funded, the Court held that:

• Financial control is not determinative.
• Even in the absence of direct government funding, other factors can establish State status.

The Court rejected the argument that the absence of government funding negates Article 12 applicability.

5. Government Recognition and Representation

AFGIS had previously claimed to be “Government” for tax exemptions.

The Court held that:

• An organisation cannot claim to be government for benefits and deny it for liabilities.

This inconsistency weighed against AFGIS.

Public Function Doctrine

A key aspect of the judgment is the emphasis on public duty.

The Court held that:

• Welfare of armed forces personnel is a core governmental function.
• Insurance schemes for defence personnel ensure security, dignity, and welfare.
• AFGIS acts as a conduit for fulfilling State obligations.

Thus, the Society performs a public function of constitutional significance.

Supreme Court’s Findings

The Court concluded that:

• AFGIS is subject to deep and pervasive governmental control.
• It performs essential public functions related to national defence.
• Its structure and functioning indicate it is an instrumentality of the State.

Accordingly:

• AFGIS is a “State” under Article 12.
• Writ petitions against AFGIS are maintainable.

Final Decision

The Supreme Court:

• Allowed the appeal
• Set aside the Delhi High Court judgment
• Restored the writ petitions
• Directed the High Court to decide the matter expeditiously

Conclusion

The Supreme Court, through a careful application of established constitutional principles, has reinforced the functional and control-based approach to determining “State” under Article 12. By emphasising the cumulative effect of administrative control, public duty, and institutional structure, the Court clarified that entities closely integrated with governmental functions cannot evade constitutional scrutiny merely by adopting the form of a society.

The ruling underscores that where an organisation operates under deep and pervasive governmental control and performs functions intrinsically linked to State obligations, particularly in sensitive domains such as defence and welfare, it becomes subject to constitutional accountability. The judgment thus strengthens the scope of judicial review and ensures that employees of such bodies are not left without effective remedies.

Important Link

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