2015(4) ALL MR 304
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S. J. KATHAWALLA, J.
In Re : Monarch Project and Finmarkets Limited
Company Scheme Petition No.575 of 2012,Company Scheme Petition No.576 of 2012,Respective Company Summons for Direction No.144 of 2012,Respective Company Summons for Direction No.145 of 2012
7th August, 2014.
Petitioner Counsel: Dr. BIRENDRA SARAF, Mr. NAUSHAD ENGINEER, Mr. ROHAN SAVANT and Mr. KUNAL VAGHANI i/b. Mr. YOGESH ADHIA
Respondent Counsel: Mr. C.J. JOY with M.S. BHARADWAJ, i/b H.P. CHATURVEDI, Ms. YOGINI D. CHAUHAN, Asst. Official Liquidator, Mr. DINYAR MADON, Sr. Adv. a/w Mr. SHRIVATRDHAN DESHPANDE, instructed by M/s. DESAI AND DIWANJI
(A) Companies Act (1956), Ss.391, 392, 393 394 - Sanction of scheme of amalgamation - Jurisdiction of company court - Company court while considering scheme of amalgamation, does not sit in judgment over commercial wisdom of shareholders and creditors of company. (Para 16)
(B) Companies Act (1956), Ss.391, 392, 393 394 - Scheme of amalgamation - Sanction to Company has given explanations to accounting issues, which appear to be bonafide and plausible - Overwhelming majority of shareholders have approved scheme - Though individual notices were issued, no other creditor has objected scheme - Adjudicated claim of objector also stands adjusted/secured - Objector has not made out any case to establish that scheme is malafide or not in public interest or that it will adversely affect interests of creditor - Scheme deserve to be sanctioned. (Paras 17, 22, 23, 24)
Scheme of Amalgamation of Zee Interactive Multimedia Limited, 2002(3) ALL MR 788=2002 (4) Bom. CR 137 [Para 13]
Scheme of Amalgamation between Mayfair Limited and Zodiac Clothing Co. Limited, 2004 (2) Bom. CR [Para 13]
Miheer H. Mafatlal Vs. Mafatlal Industries Ltd, (1996) 87 CC 792 : AIR 1997 SC 506 [Para 16]
TCI Infrastructure Finance Ltd., In Re, (2008) 146 Comp. Cases 133 [Para 21]
2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956, to a Scheme of Amalgamation of Monarch Research and Brokerage Private Limited ("1st Transferor Company/MRBPL") and Monarch Project and Finmarkets Limited ("2nd Transferor Company/MPFL") with Networth Stock Broking Limited ("Transferee Company").
3. Both the Transferor Companies, as also the Transferee Company are in the business of share and stock broking and portfolio management. According to the Petitioner Companies, the Scheme will provide an impetus to their growth, since all the Companies are engaged in similar areas of business. It will also result in enhancing their scale of operations and reduction in, and/or optimization of overhead costs, administrative, managerial and other expenditure. It will also lead to operational rationalization, organizational efficiency and optimal utilisation of resources. It will also help in improving economies of scale and improve shareholder value, benefit all shareholders / investors of all the Companies since the combined amalgamated Company will have an improved financial structure, larger cash flows and stronger consolidated revenue and profitability. It will also result in enhanced leveraging capability of the combined entity, which in turn will allow the combined entity to undertake future expansion strategies and to tap bigger opportunities in the market with considerable lower risk / return ratio because of the larger base of the combined entity. It will consolidate the managerial expertise of the Companies involved, thereby giving additional strength to the operations and management of the amalgamated Company. It will result in more activities and a larger number of products / services being offered to the investors. The amalgamated entity will be able to cater to a much wider client base over larger geographical area through a significantly higher number of sub-brokers and franchisees.
4. The Scheme has been approved by an overwhelming majority of the shareholders. Though notices have been issued to the creditors as per the directions of this Court, except for one Gold Castle Private Limited ("the Objector"), no one else has objected to the sanction of the Scheme. Also, the Securities & Exchange Board of India ("SEBI") has given its no objection to the Scheme. The Regional Director has stated that the Scheme is not prejudicial to the interests of the shareholders and the public, subject to certain conditions, which the Petitioner Companies have undertaken to meet. The Regional Director is satisfied with the said undertakings. The Official Liquidator has also filed his Report stating that the Affairs of the 2nd Transferor Company have been conducted in a proper manner and the 2nd Transferor Company may be ordered to be dissolved by this Court.
5. The Objector claims to be the owner of the premises admeasuring 3770.98 sq.ft. and two car parking spaces. The Petitioner/Transferee Company was occupying the said premises as a Licensee of M/s Supariwala Exports. The Objector claims that pursuant to a surrender of lease by M/s Supariwala Exports in favor of the Objector, the Objector became entitled to collect the license fees from the Petitioner. According to the Objector, under the Leave and License Agreement with the Petitioner/Transferee Company, there was a lock-in period and that the Transferee Company terminated the Leave and License Agreement prior to the completion of the said lock-in period.
6. On 23rd July 2010, the Objector filed a Suit in the Small Causes Court at Mumbai claiming an amount of Rs. 30.33 crores and for recovery of possession from the Transferee Company. The Objector also filed a Winding-up Petition against the Transferee Company. On 15th July 2011, the Winding-up Petition was disposed of with an order that the Objector should furnish a bank guarantee for an amount of Rs. 3 crores to the Small Causes Court and the Transferee Company would hand over possession within one week thereafter. Accordingly, possession of the premises was handed over by the Transferee Company.
7. On 9th August, 2012, the Small Causes Court partly decreed the suit for an amount of Rs. 4.09 crores. The Small Causes Court directed that the deposit of the Transferee Company of Rs. 3 crores lying with the Objector be adjusted against the decretal amount and that the balance amount was to be paid over by the Transferee Company to the Objector. The rest of the claim of the Objector was dismissed.
8. In September 2012, the Transferee Company preferred an Appeal against the decree of the Small Causes Court. The Objector also issued a notice dated 24th January, 2013 against the Transferee Company demanding an amount of Rs.1.49 crores, i.e. the balance decretal amount after adjustment of the security deposit.
9. The Appeal preferred by the Transferee Company from the decree of the Small Causes Court was admitted on 5th May, 2014. On 16th May, 2014, the decree against the Transferee Company was stayed on the condition of a deposit of 60% of the decretal amount with interest. The Transferee Company accordingly deposited an amount of Rs. 1.03 crore in the Small Causes Court. On 17th June 2014, the Small Causes Court directed the Transferee Company to furnish a bank guarantee for the balance 40% of the decreetal amount together with interest. Such bank guarantee has already been furnished by the Transferee Company. Thus, as of now, the entire amount as adjudicated by the Small Causes Court has either been paid/adjusted and/or secured.
10. The Learned Counsel for the Objector has informed this Court that they have also filed a Cross Appeal against the decree dated 9th August, 2012. However, the Learned Counsel for the Transferee Company stated that they have not been served with any such Appeal.
11. There is merit in the submission made by the Learned Counsel on behalf of the Petitioner that though the Petitioner/Transferee Company does not accept any liability to the Objector or even their status as a creditor, as of now, the entire claim of the Objector has been adjudicated and the adjudicated amount has been fully adjusted/secured. In such circumstances, the Objector has no locus to raise any objection to the Scheme of Amalgamation.
12. The Learned Counsel appearing for the Petitioner/Transferee Company has placed reliance upon various judgments of this Court as regards the locus of a creditor. It was submitted that, even if an objector is a creditor, the grounds on which such a creditor can object are extremely limited.
"....Of course, in a given case the Court may direct payment, or direct that creditors or any class of them should be paid their dues or be sufficiently secured, before Court sanctions the Scheme. But it must be remembered that a Scheme under Section 391 of the Companies Act, 1956 is not a tool in the hands of a creditor to recover money or to coerce the Company to pay. The objecting creditor must show to the Court that the Scheme is mala fide or fraudulent, is likely to adversely affect him or interest of creditors or any class of them are likely to be adversely affected if the Scheme is sanctioned without securing him or any or all the creditors. No argument was advanced as to how the Scheme is mala fide or fraudulent or would adversely affect creditors of the transferee company. In the circumstances, objections raised by the creditors are rejected."
In the matter of the Scheme of Amalgamation between Mayfair Limited and Zodiac Clothing Co. Limited [2004 (2) Bom. CR], this Court held:
"......In order to get any relief, the objecting creditor must show :
i) that there is a debt due to him and the debt is either admitted by the Company or the Court prima facie comes to the conclusion that the debt is due.
ii) that the creditor would be adversely affected by sanctioning of the Scheme.
iii) the Scheme is unjust and unfair to the creditors or any class of creditors to whom the objecting creditor belongs."
14. Therefore, for a creditor to object to a Scheme of Amalgamation, he must first cross the threshold of prima facie satisfying the Court that there is a debt due to him. In the present case, the claim of the Objector has, at the first instance been adjudicated by a court of competent jurisdiction and the adjudicated amount stands fully paid or secured. According to the Learned Counsel for the Objector, the Objector has filed a Cross Appeal against the decree of the Small Causes Court. Such Appeal if filed, would be considered on its own merits by the Small Causes Court. But the fact remains that as on date there is an adjudication of the claim of the Objector, which is fully adjusted and/or secured.
15. One of the primary contentions raised by the Objector is that by an Order dated 28th December 2011, SEBI had prohibited both the Transferor Companies from buying, selling and dealing with securities for certain alleged violations of SEBI regulations. The Transferor Companies were also prohibited, till further orders, from entering into fresh agreements with new clients as stock brokers. It is contended by the Objector that these facts pertaining to the SEBI proceedings were not disclosed at the Meeting of the Shareholders of the Transferor and Transferee Companies for the sanction of the Scheme. Had these facts been disclosed, it was unlikely that the Shareholder and/or Creditors would have approved the Scheme. It is further stated that SEBI subsequently revoked the ex-parte Order dated 28th December 2011 and has directed proceedings under SEBI Regulations to be initiated against the Transferor Companies in respect of the alleged violations or non-compliances. It is contended that an amalgamation of such Transferor Companies with the Transferee Company would expose the Transferee Company to proceedings by SEBI. The Petitioner Company has in its reply pointed out that the order dated 28th December 2011 against the Transferor Companies was an ex parte order and the same has admittedly been revoked. Thereafter, no further orders have been passed prohibiting the Transferor Companies from dealing in securities. It is stated in the Affidavit of the Transferee Company, that the said issue was raised and discussed at the Shareholders' Meeting called for approval of the Scheme by the Transferee Company. The details of the SEBI orders were also at all times available on the website of BSE and SEBI. In any case, SEBI has now granted its no objection to the present Scheme. Considering the aforesaid facts, I find that merely because an enquiry of SEBI against the Transferor Companies is pending, that fact does not by itself render the Scheme unfair or unjust or prejudicial to the Shareholder or Creditors of the Transferee Company. It is pertinent to note that the Shareholders of the Transferee Company have, with an overwhelming majority, approved the Scheme. None of the Shareholders have objected to the sanction of the Scheme. In such a situation, the apprehensions sought to be expressed by a solitary person claiming to be a Creditor of the Transferee Company does not have much credence.
16. Thereafter, the Objector has raised various objections as regards the annual accounts for the financial year 2010 to 2013 of the Transferor Companies and the Transferee Company. It is settled law that the Company Court while considering the Scheme of Amalgamation, does not sit in judgment over the commercial wisdom of the shareholders and creditors of the Company. The contours of the Court's jurisdiction while considering a Scheme of compromise and arrangement are set out by the Hon'ble Supreme Court in the case of Miheer H. Mafatlal Vs Mafatlal Industries Ltd (1996) 87 Company Cases 792 : AIR 1997 SC 506 where the Hon'ble Court observed as under.
"In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the company court has clearly got earmarked. The following broad contours of such section having emerged:
1. The sanctioning Court has to see to it that all the requisite statutory procedure for supporting such a Scheme have been complied with and that the requisite meetings as contemplated by section 39(1)(a) have been held.
2. That the Scheme put up for sanction of the Court is backed up by the requisite majority vote as required by section 391, sub-section (2).
3. That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the Scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class.
4. That all necessary material indicated by section 393(1) (a) is placed before the voters at the concerned meetings as contemplated by section 391, sub-section (1).
5. That all the requisite material contemplated by the proviso to sub-section (2) of section 391 of the Act is placed before the Court by the concerned applicant seeking sanction for such a Scheme and that the Court is satisfied about the same.
6. That the proposed Scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the Scheme with a view to be satisfied on this aspect, the Court if necessary can pierce the veil of apparent corporate purpose underlying the Scheme and can judiciously X-ray the same.
7. That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising of the same class whom they purported to represent.
8. That the Scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the Scheme is meant.
9. Once the aforesaid broad parameters about the requirement of a Scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the Scheme even if in the view of the Court there would be a better Scheme for the company and its members or creditors for whom the Scheme is framed. The Court cannot refuse to sanction such a Scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the Scheme rather than its supervisory jurisdiction.
The aforesaid parameters of the scope and ambit of the jurisdiction of the company court which is called upon to sanction a Scheme of compromise and arrangement, are not exhaustive but only broadly illustrative of the contours of the Court's jurisdiction."
17. An overwhelming majority of the shareholders of both the Transferor Companies and the Transferee Company have found the Scheme to be fair and reasonable and in the interest of all concerned. Even though notices have been issued to all Unsecured Creditors of the value of Rs.25,000/- and above of the MPFL and the Transferee Company, and the Secured Creditors of the Transferee Company, no other Creditor has objected to the sanction of the Scheme. It would be beyond the jurisdiction of the Company Court considering a Petition for sanction of a Scheme of Amalgamation to analyze the accounts of the Companies in depth, unless something manifestly illegal or malafide is brought to the notice of the Court. In the present case, nothing of that sort has been brought to the notice of this Court. In fact, the Transferee Company has responded to each of the objections raised and on considering the said responses, I find that the objections raised by the Objector are devoid of merit. The Court, while considering the Petition for sanction of a Scheme, has only a supervisory role. In exercise of such power, the Court has neither the expertise nor the jurisdiction to delve deep into the commercial aspects of the Scheme or the commercial wisdom of the shareholders and creditors. In any case, the various objections raised by the Objector with respect to the accounts of the Transferor and Transferee Companies have been dealt with hereunder :-
(a) It is the case of the Objecting Creditor that one of the Transferor Companies - MPFL has granted loans to its related parties, which are as high as Rs. 278.02 crores. The Objecting Creditor questions the wisdom of grant of such huge amount of loans to the related parties, when its net worth is only Rs.20 crores. It is sought to be highlighted that the loan to the related parties is almost 14 times the net worth of the Company. To this, the Transferee Company has pointed out that such loans are dependent on business exigencies and are ever changing. As on 31st March 2013, the amount outstanding from related parties were nil. Thus, it is not even necessary to go into the merit of the said objection of the Objector, since the basis of the objection itself does not survive.
(b) The Objector next asserted that the trade receivables of the Transferor Companies are high. It is asserted that the trade receivables increased in 2011-2012, despite reduction in the operational income of the Transferor Companies. The Transferee Company has responded to this objection by pointing out that the Transferor Companies are broking Companies. Being clearing agents, monies are received and paid on behalf of clients. The Transferor Companies are only intermediaries. When the net obligation of a client results into remittance, it will in turn result in trade receivables, and in case when the net obligation of a client results into receipt, it will result in increase of trade payables. These are constantly fluctuating amounts depending on trades of clients on a daily basis. The figures mentioned in the Balance Sheets are only the position as on 31st March. These figures change on a day to day basis. Considering the response of the Transferee Company, I find that the objection is based on lack of proper appreciation of the nature of business carried out by the Transferor Companies, which are broking Companies. In any case, these are not aspects which would weigh with the Court when it exercises its jurisdiction under Section 391 to 394 of the Companies Act, 1956.
(c) It is next contended that the both Transferor Companies have obtained short term secured loan facilities from HDFC Bank which are repayable on demand and secured against book debts and stock along with the personal guarantees of Directors. It is alleged that this is obviously since the Transferor Companies are not in a position to recover monies from their Debtors. It is for this reason that the Transferor Companies are compelled to obtain financial facilities from external sources. The obtaining of financial facilities for business requirements cannot be said to be a factor which would reflect upon the operations or functioning of a company. Further, the Transferee Company has explained in its Affidavit that the overdraft facility has been taken in the normal course of business for working capital requirements. The clients have demands for multiple combination of products for which deployment of funds is required. With the help of the overdraft facility, the Transferor Company, MPFL was able to generate more income, which increased to Rs.86 lacs in 2010-2011 and to Rs. 105 lacs in 2011-2012. This can be ascertained from the accounts of MPFL.
(d) The next objection of the Objector Creditor is that under the Scheme, the Directors of the Transferor Companies do not become the Directors of the Petitioner Companies. The Directors of the Transferor Companies have executed guarantees to secure overdraft facilities from HDFC. It is the apprehension of the Objecting Creditor that the Directors of the Transferee Company would now have to extend such guarantees. It is difficult to comprehend that even if the Directors of the Transferee Company were to give personal guarantees, how would the Objector be affected by the same. The Transferee Company in its Affidavit in Reply has clarified and explained that the personal guarantees of the Directors of the Transferor Companies shall continue even after the merger and that even if the Directors of the Transferee Company were to give the same, it would not affect the Transferee Company or its Shareholders or Creditors in any manner. There is merit in this stand of the Petitioner Company. In fact, the same would only disclose the commitment of the Directors to the business of the Company.
(e) It is next contended that the Balance Sheet of 31st March, 2013 of the Transferor Company, MRBPL shows that it had given guarantees for loans taken by others from banks or financial institutions for a sum of Rs. 5 crores. The Balance Sheet of MRBPL as on 31st March, 2012 mentions the amount of Rs. 5 crores as contingent liability. Thus it is contended that if the guarantee is invoked by the lender, the same would have the potential to wipe out the net worth of MRBPL. In reply, the Transferee Company has explained that the said bank guarantee is not for a loan. The same is listed for a margin deposit with the Stock Exchange. The bank guarantee is already secured against fixed deposits of Rs. 2.50 crores.
(f) The next objection is that the balance sheets of the Transferor Companies reflect that they are dependent on unsustainable sources of income and the Scheme of Amalgamation would bring down the financial position of the Transferee Company. It is an admitted position that the Balance Sheets of both the Transferor Companies disclosed that they are profit making Companies with a positive net worth. What the Objector seeks to do is to deduct incomes from the balance sheet of the Transferor Companies on the ground that they are not sustainable sources of income. By deleting these items, the Objector contends that if these heads of income are ignored, the Transferor Companies would be making losses. On the basis of such apprehended or notional losses, the Objector contends that the financials of the Transferee Company would be affected as a result of the amalgamation. Firstly, the Objector has not given any basis whatsoever as to why the Objector asserts that the said heads of incomes which it seeks to exclude, are unsustainable. Considering the nature of the business of the Transferor Companies, it is apparent that the said Companies are in broking business and therefore, delayed payment charges and penalty etc. cannot be said to be incomes from sources which are unsustainable. In any case, even if the Transferor Companies were to be making losses, that per se would not render the Scheme, unjust, unfair or prejudicial to the interest of the shareholders or creditors. It is ultimately the potential of the Companies which are assessed by the large body of shareholders at the time of amalgamation. According to the Petitioner Companies, the overwhelming body of the Shareholders have approved the Scheme. The Transferor and Transferee Companies are in the common business of broking. The strength of good clientele of the Transferor Companies and its research team / management will benefit the Transferee Company in the post-merger scenario. I am therefore of the view that this commercial wisdom of the Shareholders of the Company cannot be reassessed while sanctioning a Scheme of Amalgamation.
(g) By a further Affidavit dated 27th March 2014, it is then contended by the Objector that MPFL has taken loans amounting to Rs. 271.79 crores during the financial year 2012-2013. This exposure is many times beyond its net worth. Further, MPFL has granted a loan amounting to Rs. 350.02 crores to related parties. Similarly, for MRBPL for the financial year 2012-13, it is stated that there were related party transactions of Rs.242.98 crores. The said transactions are stated to be several times the net worth of MRBPL. It is also contended that MPFL has service tax liability of Rs. 1.15 crores and in the event that any proceedings are initiated by the authorities against MPFL for such dues, it would create potential liability for the Transferee Company. The said contentions have been dealt with by the Petitioner in its Affidavit in Reply. The Petitioner has given a detailed explanation in paragraph 7 of its Affidavit dated 9th April, 2014. In any case, it has been stated that the loan of Rs.271.79 crores taken by MPFL has been repaid in tranches and the balance outstanding on 31st March, 2013 is nil. Similarly, as regards the loan of Rs.242.98 crores taken by MRBPL, the Petitioner has placed on record that the same were taken as per the needs of business and repaid in tranches. As on 31st March, 2013, the amount outstanding is nil. As regards the loan of Rs.350 crores granted by MRBPL, it is stated that the dues have been received back in tranches and only an amount of Rs. 4.5 lacs is outstanding as on 31st March, 2013. The issue of service tax is merely a contingent liability and the issue is pending before the Income Tax and Service Tax authorities in appeal.
18.In any case, in order to consider the financial strength of the Companies, this Court required the Petitioner Companies to furnish a statement certified by its Chartered Accountant to disclose the net worth of the Companies and the effect of the amalgamation on the net worth of the Transferee Company post-merger. The Petitioners submitted net worth certificates certified by its Chartered Accountant based on the audited balance sheets for the period ended 31st March, 2013 and the unaudited balance sheets for the period ended 31st March, 2014. The said certificates disclose that considering the net worth of the Transferor Companies, in fact the post-merger net worth of the Transferee Company becomes much more healthier and stronger. The figures are set out as under:
As per audited balance sheets for the period ended 31st March, 2013:-
|Particulars||Pre-Merger net worth as on 31st March, 2013 (in Rs.)||Post-Merger as on 31st|
|As per unaudited balance sheets for the period ended 31st March, 2014:-|
|Particulars||Pre-Merger net worth as on 31st March, 2014 (in Rs.)||Post-Merger as on 31st March, 2014 (in Rs.)|
20. The statements produced by the Transferee Company disclose that the Transferee Company has accumulated losses, whereas neither of the Transferor Companies has any accumulated losses. The financial position of the Transferee Company is not in any manner prejudiced by the amalgamation, but in fact, becomes stronger.
21. The Learned Counsel for the Objector relied on the judgment of the Rajasthan High Court in the case of TCI Infrastructure Finance Ltd., In Re (2008) 146 Comp. Cases 133 to contend that the Court can consider certain aspects of the Scheme and merely because consent has been accorded by the shareholders and creditors, it does not prevent the Court from making an enquiry. The observations of the Rajasthan High Court were made in the facts of the said case, where the Scheme compelled the secured creditors to make huge sacrifices, and there were allegations of discrimination between creditors, and also allegations of unfair means being adopted by the company for obtaining three-fourth majority. The facts of the present case and the nature of objections raised herein by the Objector are entirely different. In any case, this Court has satisfied itself by calling upon the Petitioner Companies to produce the Chartered Accountant's Certificates mentioned above.
22. The various objections raised by the Objector do not make out any ground for declining sanction to the Scheme under Sections 391 to 394 of the Companies Act, 1956. As stated herein above, these are not the issues which the Court can investigate in depth. In any case, the Petitioner Company has given explanations to the accounting issues, which appear to me to be bonafide and plausible. An overwhelming majority of the Shareholders have approved the Scheme. Though individual notices were issued, no other Creditor has objected to the Scheme. The adjudicated claim of the Objector also stands adjusted / secured.
24. I do not find that the Scheme is in any manner malafide, or that it in any way prejudices the rights of the Creditors of the Transferee Company. I also do not find the Scheme to be unjust or unfair to the Objecting Creditor nor does it adversely affect the interest of the other Creditors. The Scheme is not violative of any provisions of law and is not contrary to public policy.