The Supreme Court ruled that the Air Force Group Insurance Society (AFGIS) constituted a 'State' under Article 12 of the Constitution because it performed a public service by protecting and ensuring the welfare of armed forces personnel and their families.
Article 12 of the Constitution establishes the 'State' as the entity responsible for enforcing fundamental rights.
On February 1, 2023, a bench of Justices Sanjay Karol and Vipul M Pancholi overruled the Delhi High Court's decision on a wage parity case involving AFGIS employees.In our opinion, a review of the recovered papers provides a case for AFGIS to be regarded a 'State' under Article 12.

In terms of deep and pervasive control, we note that the President of India granted permission for AFGIS to be constituted and particularly approved the deputation Rules...," the bench stated in its March 12 decision.
It further stated that the primary director of AFGIS must report to the assistant chief of air staff on the society's cash flow once a month, ensuring that its actions are monitored by a core member of the IAF.
Membership and the deductions that come with it are a requirement of serving in the IAF, which means that the individual officer has no option in the issue and is instead mandated by the employer."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.""In essence, the administration of the body is entirely in the hands of government servants, despite the fact that the body itself is a purportedly private, self-contained society," the Supreme Court stated.
Senior counsel Shoeb Alam, representing AFGIS employees, stated that in a letter dated March 15, 2016, AFGIS characterized itself as 'Government' in official correspondence.

He stated that the day-to-day operations of AFGIS are controlled by serving senior officers of the Indian Air Force, and that the site on which the office is located has been granted by the Ministry of Defence, and that it is also exempt from certain taxes.
The top court stated that the government may not play a direct involvement in the financial aspects of AFGIS. To be considered a 'State', a body must have deep and pervasive authority, including financial and administrative control, as well as fulfilling public duties.We believe that AFGIS fulfills a public duty."We believe that AFGIS fulfills a public duty. The protection and well-being of armed services personnel is a primary government role. The role of the armed forces is directly related to the nation's sovereignty and security, and in order to protect it, members of the forces must adhere to, abide by, and maintain a strict set of rules, unquestionable conduct, and, at times, in the most severe and adverse circumstances," it stated.
The Supreme Court went on to explain that providing insurance coverage is a public function because it addresses the state's collective commitment to a recognized public class whose contribution is essential."Insurance for military personnel is an important tool for protecting their physical and emotional health, dignity, and financial security... The fact that healthcare, rehabilitation, and dependant assistance are easily available is clearly a component that provides considerable peace of mind to the member of service, allowing them to carry out their tasks without concern, at least in this regard," it stated.
The highest court further stated that the State's obligation in protecting them does not cease with their retirement from service, because a person's life in the forces is forever defined by their time in service.

"In effect, by opposing the appellants' (employees') challenge, AFGIS has retracted its own statement." We don't see how an organization can be 'Government' for one purpose but not for another," it stated.
The top court reinstated employees' plea for the sixth pay commission in the Delhi high court, citing AFGIS's status as a 'State' under Article 12 of the Constitution.The High Court is requested to make a prompt decision, given that the case was filed in 2017. "The appeal is allowed," the bench ruled.