17 March 2026 Legal Updates

Air Force Group Insurance Society Is ‘State’ Under Article 12: Supreme Court Expands Scope of Public Function Test

Case Details

(a) Case Title: 

• Ravi Khokhar & Ors v. Union of India & Ors.

(b) Court: 

• Supreme Court of India

(c) Bench:

• Justice Sanjay Karol & Justice Vipul M. Pancholi

Facts of the Case

• Employees of the Air Force Group Insurance Society (AFGIS) challenged a decision of the Society which initially adopted the Sixth Central Pay Commission recommendations but later reversed its decision and delinked its pay structure from government pay scales.
• The employees approached the Delhi High Court under Article 226, claiming violation of their rights. However, the High Court dismissed the petition, holding that AFGIS was not a “State” under Article 12 as it was a self-funded welfare body. Aggrieved, the employees appealed before the Supreme Court.

Issues Raised

• Whether AFGIS qualifies as “State” under Article 12 of the Constitution?
• Whether writ petitions under Article 226 are maintainable against AFGIS?
• Whether performance of welfare functions for armed forces amounts to a public function?

Contentions of the Petitioners

• AFGIS performs public functions related to welfare of Air Force personnel, which is a State obligation.
• There exists deep and pervasive control of the government over AFGIS.
• The body is administratively and functionally integrated with the Indian Air Force.
• Hence, it must be treated as “State” and subject to writ jurisdiction.

Contentions of the Respondent

• AFGIS is a self-contained insurance and welfare society, funded by member contributions.
• It is not owned or financially dependent on the government.
• Therefore, it does not fall within the definition of “State” under Article 12.
• Consequently, writ petitions are not maintainable.

Court’s Reasoning & Key Findings

1. Interpretation of Law (Article 12)

The Court held that definition of “State” is not limited to ownership or origin.

It must be determined by:

• Nature of functions
• Degree of governmental control
• Character of the activity

2. Public Function Test

• Welfare of armed forces personnel is a core governmental function.
• AFGIS provides insurance to a specific class performing sovereign duties.
• Hence, its functions are public in nature.

3. Deep and Pervasive Control Test

The Court found strong indicators of government control:

• Established with sanction of the President of India
• Financial operations monitored by Air Force authorities
• Board of Trustees and Managing Committee consist of serving Air Force officers
• Membership is compulsory for Air Force personnel

 Therefore, AFGIS is functionally, administratively, and structurally controlled by the State.

4. Administrative Control & Integration

• Entire administration is handled by government servants.
• Shows complete integration with the State machinery.

5. Reliance on Precedents

Court applied established principles from earlier Article 12 jurisprudence:

• Instrumentality or agency test
• Public function test
• Control test (deep and pervasive control)

Final Verdict

• Appeal allowed.
• AFGIS held to be “State” under Article 12.
• Delhi High Court judgment set aside.
• High Court directed to hear writ petitions on merits expeditiously.

Legal Principles Established

1. Expanded Scope of “State” under Article 12

• “State” includes not only government bodies but also instrumentalities performing public functions.
• Ownership is not decisive → function + control matters more.

2. Public Function Test

If an entity performs a function:

• Closely linked to government obligations, and
• Serves a public or defined class,

It can be treated as “State”.

Here: Welfare of armed forces = public function

3. Deep and Pervasive Control Test

A body is “State” if government exercises:

• Administrative control
• Financial supervision
• Structural dominance

Indicators include:

• Government-appointed members
• Policy control
• Monitoring of operations

4. Functional Approach over Formal Approach

• Courts focus on real nature of functions, not formal structure.
• Even a society or private-looking body can be “State”.

5. Article 226 – Writ Jurisdiction Expansion

Once a body is “State”, it becomes:

• Subject to fundamental rights obligations
• Liable under writ jurisdiction

6. Link with Sovereign Functions

Activities connected to:

• National security
• Armed forces welfare

Strongly indicate State character.

Key Constitutional Provisions

1. Article 12 – Definition of State

Includes:

• Government and Parliament
• State Governments
• Local authorities
• Other authorities (interpreted broadly by courts)

2. Article 226 – Writ Jurisdiction

High Courts can issue writs against:

• State
• Authorities performing public functions

3. Link with Indirect Precedent Doctrine

Reinforces jurisprudence from:

• Ajay Hasia v. Khalid Mujib
• Pradeep Kumar Biswas case
•  Establishes that instrumentality of State depends on control + function.