Summary
Employees of the Air Force Group Insurance Society (AFGIS), a society registered under the Societies Registration Act, 1860, challenged the High Court's dismissal of their writ petitions on pay revision as not maintainable. The Supreme Court held AFGIS to be 'State' under Article 12. It relied on compulsory membership and pay deductions, administration entirely by serving IAF officers, Presidential sanction and IAF monitoring, its public function of insuring armed forces personnel, and its own claim to be 'Government' for tax purposes. The writ petition was restored to the High Court.
Issues
- Whether the Air Force Group Insurance Society is 'State' or 'other authority' under Article 12 of the Constitution.
- Whether the appellants' writ petition under Article 226 against AFGIS was maintainable.
Provisions considered
- Article 12, Constitution of IndiaApplied the cumulative test from Ajay Hasia and Pradeep Kumar Biswas: whether the body is financially, functionally and administratively dominated by the Government with deep and pervasive control, also considering whether it discharges a public function. On the documents, AFGIS was held to be 'State'. (¶¶ 7, 7.1, 7.2, 7.3, 7.4, 8, 15, 16, 17, 18, 19)
- Article 226, Constitution of IndiaBecause AFGIS is 'State', the writ petition challenging the pay revision was maintainable and was restored to the High Court for decision. (¶¶ 3.1, 19)
Held
- Whether a body is 'State' under Article 12 depends on the cumulative facts: whether it is financially, functionally and administratively dominated by the Government, with control that is particular to the body and pervasive. The Ajay Hasia factors are indicative, not conclusive, and merely regulatory control is not enough. (¶¶ 7, 7.2, 7.3, 16)
- Deep and pervasive control over AFGIS was shown. The President sanctioned its establishment and the terms of deputation to it. Membership and premium deductions are compulsory for IAF personnel under Air Force Instruction 16/87. The Board of Trustees and Managing Committee consist of serving IAF officers on deputation, and its cash flow and investments are reported to senior IAF officers. Its administration is therefore entirely in the hands of Government servants, though it is a self-contained society. (¶¶ 8, 9, 10, 11, 12, 15)
- Even if the Government has no direct financial role in AFGIS, status as 'State' turns on the cumulative effect of control together with other factors such as performance of a public duty. (¶¶ 15, 16)
- Providing insurance and welfare to armed forces personnel and their dependants is a public function, closely linked to a core governmental obligation towards those who serve the nation; AFGIS acts as a conduit for discharging that obligation. (¶ 17)
- AFGIS had described itself as 'Government', controlled through the Ministry of Defence and Air HQ, to claim exemption from service tax. It cannot be Government for one purpose and not for another. (¶¶ 8, 9, 18)
- AFGIS is 'State' within Article 12, and the writ petition before the High Court was maintainable. (¶ 19)
Result
Appeal allowed. AFGIS was held to be 'State' under Article 12, and the writ petition was restored to the High Court to be decided expeditiously, since it was filed in 2017. The High Court's findings on the other bodies were not under challenge.