Judgment :- V. Ramasubramanian, J. Aggrieved by the order of the learned single Judge dated 26.7.1999 passed in W.P.No.381 of 1992, the Management of Madras Fertilizers Limited has filed the above writ appeal. 2. The facts leading to the above writ appeal are as follows:- In the year 1984, the management of Madras Fertilizers Limited framed a policy known as MFL Service Policy, in the nature of service Rules, to take effect from 11.12.1984 and applicable to and binding on all employees except those governed by the Standing Orders framed under the Industrial Establishments (Standing Orders) Act. Clause 12 (a) of the said MFL Service Policy enabled the Management to terminate the services of a permanent employee by giving 90 days notice in writing or by paying 90 days pay plus D.A. in lieu of notice. The said Clause read as follows:- "Rule 12. Termination a. A permanent employee may be terminated at 90 days notice in writing by the company or by paying 90 days pay plus DA in lieu of notice. A permanent employee desiring to resign shall do so by giving 30 days notice to the Company. Alternatively, the Competent Authority may deduct 30 days pay plus DA from the monies due to the employee, who leaves the employment without giving required notice." 3. Challenging the said Clause as opposed to Public Policy, the Madras Fertilizers Limited Officers' Association, the respondent herein, filed the aforesaid W.P.No.381 of 1992, praying for a Writ of Declaration to declare the said Clause No.12 (a) of the MFL Service Policy as illegal, null and void and not binding on the members of the association. By the order impugned in this appeal, the learned single Judge allowed the writ petition and declared the said clause as illegal, null and void and not binding on the members of the respondent-association. It is against the said order that the Management has filed the above writ appeal. 4. We have heard Mrs. Rita Chandrasekaran, learned counsel appearing for the appellant as well as Mr. K.M. Ramesh, learned counsel appearing for the respondent. 5. It is against the said order that the Management has filed the above writ appeal. 4. We have heard Mrs. Rita Chandrasekaran, learned counsel appearing for the appellant as well as Mr. K.M. Ramesh, learned counsel appearing for the respondent. 5. Learned counsel appearing for the appellant contended that the aforesaid Clause in the MFL Service Policy was only directory in nature and not mandatory and that the appellant had never enforced the said Clause arbitrarily or unilaterally in the past over 20 years and that therefore, the respondent-association had no cause to complain. In other words, it is the contention of the learned counsel for the appellant that the respondent-association had filed the writ petition on mere surmises and conjectures and that it was always open to the individual employees to challenge any order passed in pursuance of such a policy, as and when implemented. 6. Per contra, learned counsel appearing for the respondent relied upon a decision of the Apex Court in Central Inland Water Transport Corporation Ltd Vs. Brojo Nath Ganguly ( AIR 1986 Sc 1571 ). In the said judgment, the Apex Court upheld a challenge to the validity of Rule 9 (i) of the Central Inland Water Transport Corporation Limited Service Discipline and Appeal Rules, 1979 and held that a Clause providing for termination of the services of a permanent employee by serving a three months' notice on him or paying three months' salary in lieu of notice, is arbitrary and unreasonable and also violative of directive principles contained in Article 39 (a) and 41 of the Constitution. The said Rule was also held to be void under Section 23 of the Contract Act, as being opposed to public policy. 7. In another case in Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress ( 1991 (1) LLJ 395 ) that the Constitution Bench of the Apex Court held an identical Rule found in Regulation 9 (b) of the Delhi Road Transport Authority (Conditions of Appointment and Service) Regulations 1952 as illegal and ultra vires. In paragraph 150 of the said judgment, the Apex Court laid down the law in unambiguous terms as follows:- "150. In paragraph 150 of the said judgment, the Apex Court laid down the law in unambiguous terms as follows:- "150. Thus on a conspectus of the catena of cases decided by this Court the only conclusion follows is that Regulation 9 (b) which confers powers on the authority to terminate the services of a permanent and confirmed employee by issuing a notice terminating the services or by making payment in lieu of notice without assigning any reasons in the order and without giving any opportunity of hearing to the employee before passing the impugned order is wholly arbitrary, uncanalised and unrestricted violating principles of natural justice as well as Article 14 of the Constitution. It has also been held consistently by this Court that the Government carries on various trades and business activity through the instrumentality of the State such as Government Company or Public Corporations. Such Government Company or Public Corporations being State instrumentalities are State within the meaning of Article 12 of the Constitution and as such they are subject to the observance of fundamental rights embodied in Part III as well as to conform to the Directive Principles in Part IV of the Constitution. In other words the Service Regulations or Rules framed by them are to be tested by the touchstone of Article 14 of Constitution. Furthermore, the procedure prescribed by their Rules or Regulations must be reasonable, fair and just and not arbitrary, fanciful and unjust. Regulation 9 (b), therefore, confers unbridled, uncanalised and arbitrary power on the authority to terminate the services of a permanent employee without recording any reasons and without conforming to the principles of natural justice. There is no guideline in the Regulations or in the Act, as to when or in which cases and circumstances this power of termination by giving notice or pay in lieu of notice can be exercised. It is now well settled that the 'audi alteram partem' rule which in essence, enforces the equality clause in Article 14 of the Constitution is applicable not only to quasi-judicial orders but to administrative orders affecting prejudicially the party-in-question unless the application of the rule has been expressly excluded by the Act or Regulation or Rule which is not the case here. Rules of natural justice do not supplant but supplement the Rules and Regulations. Rules of natural justice do not supplant but supplement the Rules and Regulations. Moreover, the Rule of Law which permeates our Constitution demands that it has to be observed both substantially and procedurally. Considering from all aspects Regulation 9 (b) is illegal and void as it is arbitrary, discriminatory and without any guidelines for exercise of the power. Rule of law posits that the power to be exercised in a manner which is just, fair and reasonable and not in an unreasonable, capricious or arbitrary manner leaving room for discrimination. Regulation 9 (b) does not expressly exclude the application of the 'audi alteram partem' rule and as such the order of termination of service of a permanent employee cannot be passed by simply issuing a month's notice under Regulation 9 (b) or pay in lieu thereof without recording any reason in the order and without giving any hearing to the employee to controvert the allegation on the basis of which the purported order is made." 8. In reply to the aforesaid contentions of the learned counsel appearing for the respondent, Mrs.Rita Chandrasekaran, learned counsel appearing for the appellant relied upon a recent judgment of the Apex Court in Binny Ltd Vs. V.Sadasivan (2005 III LLJ 738). In para 26 of the said judgment, the Apex court clarified that the earlier decisions were rendered in the background of the fact that the appellants therein were public sector undertakings and that therefore, it was held in those judgments that the contract of employment and the service rules which gave absolute and arbitrary power to terminate the services of the employees were illegal. The Apex Court ruled in para-26 that "the service rules and regulations which are applicable to Government employees or employees of public sector undertakings stand on a different footing and they cannot be tested on the same touchstone or enforced in the same manner". 9. Thus, the law laid down by the Apex Court in Central Inland Water Transport Corporation Ltd Vs. Brojo Nath Ganguly ( AIR 1986 Sc 1571 ) And Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress ( 1991 (1) LLJ 395 ) was clarified by the Supreme Court to the effect that they laid down the law in so far as public sector undertakings are concerned. In our considered view, the decision of the Supreme Court in Binny Ltd Vs. D.T.C. Mazdoor Congress ( 1991 (1) LLJ 395 ) was clarified by the Supreme Court to the effect that they laid down the law in so far as public sector undertakings are concerned. In our considered view, the decision of the Supreme Court in Binny Ltd Vs. V. Sadasivan (2005 III LLJ 738) is of no assistance to the appellant, especially in the light of the fact that the appellant itself is a public sector undertaking. As a matter of fact, the appellant filed a counter-affidavit in the writ petition in which they took a specific stand that it is a Government Company and that the shareholders of the Company are National Indian Oil Co., the general public and the Government of India. The respondent has also pleaded in para-3 of the affidavit filed in support of the writ petition that the appellant is a public sector undertaking and a Government Company substantially owned and controlled by the Ministry of Agriculture of the Government of India. This averment is not specifically denied by the appellant in their counter-affidavit in the writ petition. On the other hand, the appellant has admitted to the fact that it is a Government Company. Therefore, it is crystal clear that the appellant is a public sector undertaking and hence the decisions rendered by the Apex Court in Central Inland Water Transport Corporation Ltd Vs. Brojo Nath Ganguly ( Air 1986 Sc 1571 ) And Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress ( 1991 (1) LLJ 395 ) are applicable to the facts of this case. 10. Hence the order of the learned Judge in W.P.No.381 of 1992 dated 26.7.1999 declaring Clause 12 (a) of MFL Service Policy as null and void is only in tune with the law laid down by the Apex Court. Therefore, we do not find any merit in the appeal and the appeal is dismissed without any order as to costs.