JUDGMENT K.C. Agrawal, J. - The petitioner's services were terminated by National Textile Corporation (U.P.) Ltd., Kanpur, respondent No. 2, by the order contained in letter No. 11252/Admn. No. 75 dated 6-11-1975 by giving him three months' salary in lieu of notice. 2. The petitioner was appointed as Deputy Manager (Technical) by National Textile Corporation (U.P.) Ltd. on 6th November, 1975. He joined his post on the 12th May, 1976. The appointment letter, which is annexed as Annexure IV to the writ petition incorporates the terms and conditions of his service. His initial appointment was temporary and it was stated that the same would be liable to be terminated on one month's notice. Paragraph 4 of this appointment letter provided that his appointment and Service condition Shall be governed by the rules/order of the Corporation in force from time to time. The petitioner worked as a Deputy Manager (Technical) and was, thereafter, posted as Chief Executive Officer of Rae Bareilly Textile Mills, Rae Bareilly in July, 1973. The petitioner, was promoted to the post of Manager (Technical) in the scale of Rs. 1500/ - by respondent No. 2. On February 24, 1979, the petitioner was given another promotion by appointing him to the post of Manager (Technical) w.e.f. 1st August, 1978. For this post, he was given the grade of Rs. 1500/- 2000/- . Soon thereafter the petitioner's scale was raised to Rs. 1900/- 2250/- and he was deemed to be holding the post of Adviser (Technical) with effect from August 1, 1980. This was followed by another order dated 15-5-1981, wherein his salary was fixed at Rs. 1900/ - per month with effect from August, 1980. The petitioner was posted as General Manager, Laxmirattan Cotton Mills, Kanaur on 6th September, 1982. lie was temporarily shifted to the Head Office of respondent No. 2 and was, thereafter, again posted as General Manager, Laxmirattan Cotton Mills on 15th February, 1983. 3. On 18th January, 1984, the petitioner received a confidential letter from respondent No. 1 informing that his services had been terminated with immediate effect. This letter, as stated above, was accompanied by a draft of Rs. 10,518.90 Paise. It was three months' salary in lieu of notice. The petitioner had not been served with any charge-sheet. He, thereafter, filed this writ petition challenging the order dated 18-1-1984 arid made the prayer for quashing of the same. 4. This letter, as stated above, was accompanied by a draft of Rs. 10,518.90 Paise. It was three months' salary in lieu of notice. The petitioner had not been served with any charge-sheet. He, thereafter, filed this writ petition challenging the order dated 18-1-1984 arid made the prayer for quashing of the same. 4. The petitioner alleged, inter alia, that respondent No. 1 was not legally competent to pass the impugned order. He also alleged that the termination was arbitrary, capricious, unfair and against the principles of natural justice. 5. A Counter Affidavit has been filed on behalf of respondent No. 2 supporting the termination order. It has been alleged in the Counter Affidavit that the termination of the petitioner was justified and being in accordance with law, was not liable to be quashed by this Court. 6. It is not disputed in between the parties that on completion of probationary period, the petitioner became a permanent employee. He was treated as such by the respondent No. 2 when his services were terminated by being offered three months' salary in lieu of notice. It has been urged before us by learned counsel appearing for the petitioner that in accordance with clause 4 of the appointment letter, which runs as under, the service conditions laid down by the National Textile Corporation (U.P.) Ltd. Recruitment and Promotion Rules for Head Office Employees became applicable to him. "Your appointment and Service conditions will be governed by the rules/orders of the Corporation in force from time to time," These Rules came into force with effect from 1-1-1984. Rule 19 of the rules framed by the National Textile Corporation (U.P.) Ltd. deals with appointments. Rule 19.6 deals with probation on initial appointment. It provides that employees should be on probation for a period of 12 months from the date of their appointment. 7. Every employee, who is appointed by the National Textile Corporation (U.P.) Ltd. is given a letter in form Annexure X, which deals with offer of appointment for the posts of........................" Paragraph 3 of this Annexure Provides :- "After your having completed your probationary period satisfactorily, your services can be terminated by three months' notice in writing on either side or payment of three months' pay and dearness allowance in lieu of notice. If during the notice period, you are absent without permission, your services can be terminated without notice." 8. If during the notice period, you are absent without permission, your services can be terminated without notice." 8. It is not disputed that the National Textile Corporation (U.P.) Ltd. is subsidiary Corporation, whereas the National Textile Corporation Ltd., New Delhi is holding company. They are State within the meaning of Article 12 of the Constitution of India. Respondent No. 2 is Custodian and respondent No. 2 has been appointed as an Additional Custodian under the provisions of Laxmirattan and Atherton West Cotton Mills (Taking Over of Management) Act, 1976. Respondent No. 2 is the unit of National Textile Corporation Ltd., New Delhi. 9. Counsel for the petitioner urged that respondent No. 2 Corporation was a Government Company incorporated under the Indian Companies Act, and the petitioner by virtue of being an employee of the State, would be entitled to get protection under Article 14 of the Constitution. The appointment letter of the petitioner stipulated further that he would be governed by the rules and regulations of the Corporation. Rule 3 of the Corporation's Recruitment and Promotion Rules, 1984 provides that the services of a permanent employee could be terminated on three months' notice or on payment of three months' pay. The service of the petitioner was unceremoniously terminated by the letter dated 18-1-1984. The petitioner was not intimated any ground for the termination of his services. In absence of any reasons having been given for his termination, the counsel urged, that on the basis of unconscionable term in the contract of employment entered into with the Corporation, the services of this petitioner could not be dispensed with. He submitted that Rule 3 of Annexure X which empowered the Corporation to terminate the petitioner by giving three months' salary was void under Section 23 of the Contract Act as also violative of Article 14 of the Constitution. 10. Recently in Central In land Water Transport Corporation v. Brojo Nath Ganguly, (1986) 3 SCC Page 156, a similar controversy with regard to Central Inland Water Transport Corporation, which was a Government Company and was incorporated under the Companies Act, came up for consideration before Supreme Court. The Supreme Court held that the Company was a State. 10. Recently in Central In land Water Transport Corporation v. Brojo Nath Ganguly, (1986) 3 SCC Page 156, a similar controversy with regard to Central Inland Water Transport Corporation, which was a Government Company and was incorporated under the Companies Act, came up for consideration before Supreme Court. The Supreme Court held that the Company was a State. On the finding that it was a State, the Supreme Court held that terms of the contract of employment and Service rules being detrimental to the employees, if found to be unconscionable, unfair, unreasonable, against public policy and public interest and against the principle of distributive justice in the context of parts III and IV of the Constitution, would be violative of Article 14 of the Constitution. In view of this, the Supreme Court found that Rule 9 (i) which conferred the right on the Corporation to terminate the service of any employee by giving three months' notice, was violative of Article 14 of the Constitution. The Supreme Court further found that contract, which are unconscionable, unfair, unreasonable and opposed to public policy, are void being against Section 23 of the Contract Act. 11. In the instant case, it appears to us that both on the ground of Rule 3 of the rules framed by the National Textile Corporation (U.P.) Ltd. (Annexure X) having provided unguided power to terminate the service of any employee by giving three months' notice, is ultra vires to the Constitution, being in contravention of Article 14 of the Constitution. On the ground of unfair, arbitrary and capricious, the order would further be liable to be declared illegal and not binding on parties because of Section 23 of the Contract Act. 12. In the counter affidavit Filed on behalf of respondent No. 2, it has been attempted to be brought out that the performance of the petitioner was unsatisfactory and he had also been given warning about the various lapses and inefficient working in the discharge of his responsibility, but since no improvement in the working condition of the units headed by the petitioner were noticed, and condition of the company deteriorated considerably resulting in huge losses, the petitioner's services were terminated by the letter dated 18-1-1984. From the counter affidavit, it appears that the termination of the petitioner was actuated by the fact that he was not found to be fit for being continued as he was inefficient. For this purpose, the petitioner, admittedly, had not been given any opportunity to explain the charges. 13. In the background of facts, which are more or less like the same as they are present before us, the Supreme Court had found that the termination order was against Article 14 of the Constitution and further found that the agreement which was sought to be enforced empowering the employment to terminate on payment of three months' salary in lieu of notice without enquiring or affording any opportunity to the incumbent, is against public policy. What was said by the Supreme Court in the concluding portion of paragraph 93 is as follows "The terms of contracts to which the principle formulated by us above applies are not contract which are tainted with illegality but are contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the Court. They are opposed to public policy and require to be adjudged void." 14. In the result, the writ petition succeeds and is allowed. The order dated 18th January, 1984 is quashed. As a result of quashing of the said order, the petitioner would be entitled to be reinstated to the post which he held earlier to the passing of that order. He will further get the entire arrears, which he may be entitled to and was deprived of due to the illegal termination. The petitioner will also get costs from respondent No. 2.