The Air Force Group Insurance Society is not classified as 'State' under Article 12 of the Constitution due to its autonomous functioning and lack of pervasive government control, despite its public welfare role.

JUDGMENT :

SANJAY KAROL, J.

1. Leave Granted.

THE CONTROVERSY IN A NUTSHELL

2. The Appellants are employees of the Air Force Group Insurance Society¹ [AFGIS] established under the Societies Registration Act, 1860² [SRA] in the year 1976, with sanction of the Hon’ble President of India, having been received in the same year on 6th October. The dispute germane to this lis is that while the Board of Trustees, had, vide special meeting dated 27th December 2016 decided that the pay scales of the workers would be revised in accordance with the Sixth Pay Commission of the Government of India, subsequently, by way of meeting dated 13th February 2017 resolved that pay structures would be revised in a way that any linkage/connection to and pay parity with the Central Government, by virtue of the Pay Commissions be done away with, and according thereto, asked all employees by way of notice dated 22nd May 2017 to sign their acceptance to the revised terms.

THE IMPUGNED JUDGMENT

3. The appellants, aggrieved thereby, filed Writ Petitions before the High Court of Delhi³ [WP (C) No. 5024 of 2017; WP (C) No. 16428 of 2022, CM APPL 51620 of 2022; WP (C) No. 6759 of 2022; WP (C) No. 13858 of 2018; WP (C) No. 863 of 2019; WP (C) No. 15835 of 2022 & CM APPL. 49280 of 2022] which were dismissed by a common judgment dated 1st February 2023. The findings of the Learned Division Bench can be summarised as follows:

3.1 The Court’s central finding was that none of the respondent organisations, namely the Air Force Group Insurance Society, the Air HQs Non-Public Fund Organisation, or the CRPF Employees’ Educational Society, could be treated as “State” or “other authority” within the meaning of Article 12 of the Constitution of India. This determination was foundational, because the Court held that unless the respondents satisfied the requirements of Article 12, the writ petitions under Article 226 were not maintainable and the Court cannot not adjudicate on claims relating to pay parity, service conditions, promotions, retirement age, or implementation of Pay Commission recommendations. In examining the status of the Air Force Group Insurance Society, the Court found that it is a Society registered under the Societies Registration Act, 1860, established in 1976 as a self-contained and self-run welfare and insurance scheme meant exclusively for Air Force personnel and their families. While senior Air Force officers form part of the Board of Trustees and certain officers are posted with the Society on deputation, the Court held that this association does not translate into deep or pervasive governmental control. The day-to-day administration of the Society is carried out under its own internal governance framework, and its finances are sourced entirely from member contributions and the insurance fund rather than from any budgetary allocation or grant from the Central Government. The Court placed particular reliance on the appointment letters of AFGIS employees, which expressly state that their service conditions are governed by the Rules of the Society as amended from time to time. The Court noted that there is no statutory or contractual guarantee of parity with Central Government employees and that allowances and pay structures are subject to approval by the Board of Trustees. The Court, therefore, concluded that even if historical parity with Central Government pay scales had existed in practice, it did not create any enforceable legal right nor did it convert AFGIS into an instrumentality of the State.

3.2 While addressing the legal tests applicable to Article 12, the Court reaffi