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Parbhudas Girdhardas v. Lallubhai Khushal .
Comprehensive Summary of the Opinion
Factual and Procedural Background
Plaintiffs, a firm of commission agents in Bombay, sued three defendants for Rs. 3,150, the balance alleged to be due in respect of the purchase price of goods sold and delivered. The plaint alleged that the defendants were members of a joint undivided Hindu family and that defendant 1 was the manager of the joint family business. Plaintiffs alleged they purchased goods in Bombay under the defendants' instructions and consigned them to the defendants at Pen; an account was made up showing Rs. 3,150 due and an acknowledgment was signed by defendant 1.
Defendant 2 (the appellant) pleaded, among other defences, that he was an agriculturist within the meaning of the Dekkhan Agriculturists' Relief Act, prompting a reference to a Commissioner to determine agricultural and non-agricultural income. The Commissioner found that non-agricultural income exceeded agricultural income; exceptions to that finding were dismissed by the learned Judge, a decision the appellate court upheld.
Before the hearing on the merits the plaintiffs sought and obtained leave to amend the plaint to add, as an alternative claim, that defendants 2 and 3 were liable under Sections 247 and 248 of the Contract Act as having been admitted to and having derived benefits from a grocery business run by defendant 1. The amendment was allowed despite issues of limitation (the alleged adjustment dated July 1926; the amendment was moved in August 1930) and objections that the amendment introduced a new, time-barred cause of action.
On the merits the learned Judge found the grocery shop was not a joint family ancestral business and, on the amended plea, held that evidence showed defendant 2 had been admitted to the benefits of the partnership (invoking Section 247) and had not given public notice on attaining majority (invoking Section 248), thereby rendering him liable. The appellate court disagreed, concluding there was no evidence to bring the case within Sections 247 and 248 because evidence relied on (statements of defendant 1 taken before the Commissioner) was wrongly admitted against defendant 2. The appeal was allowed with costs and the suit dismissed with costs (except as to certain costs directed by an earlier order). Attachment was ordered to be raised.
Legal Issues Presented
- Whether the plaintiffs' amendment to the plaint (introducing a claim under Sections 247 and 248 of the Contract Act) was permissible when the alleged cause of action, if new, would be barred by limitation at the date of amendment.
- Whether defendant 2 was liable (a) as a member of a joint Hindu family for acts of the manager (defendant 1), or (b) under Sections 247 and 248 of the Contract Act as having been admitted to and deriving benefits from the grocery business.
- Whether the evidence of defendant 1, taken before the Commissioner on a prior reference, was admissible against defendant 2 (including whether defendant 1 could be treated as an “agent” of defendant 2 or as manager whose admissions bind the others).
- Whether the court had jurisdiction in view of defendant 2's plea under the Dekkhan Agriculturists' Relief Act (relating to the classification of his income).
Arguments of the Parties
Appellant (Defendant 2) — Key Contentions
- He was an agriculturist within the meaning of the Dekkhan Agriculturists' Relief Act, and accordingly the Court lacked jurisdiction (or the relief sought would be affected by that status) — leading to the reference on income classification.
- The amendment to the plaint prejudiced him by introducing a new cause of action barred by limitation and thus deprived him of an accrued right (the right to plead limitation).
- The evidence admitted (the record of defendant 1’s evidence before the Commissioner) was wrongly admitted against defendant 2 because admissions by defendant 1 are generally only evidence against defendant 1, not against defendant 2; defendant 1 was not an agent of defendant 2 when examined; partition had taken place prior to that examination.
Respondents (Plaintiffs) — Key Contentions
- The original and amended causes of action were the same in substance, even if based on different legal grounds; therefore the amendment did not introduce a new, barred cause of action.
- Even if the amendment did introduce a new cause of action, the Court could in special circumstances allow the amendment despite limitation (relying on defendant 2's own delay and conduct before the Commissioner), and such special circumstances existed in this case.
- Evidence of defendant 1 before the Commissioner was admissible against defendant 2 because defendant 1 was called as a witness for defendant 2 before the Commissioner and (as argued) could be treated as an “agent” for purposes of Section 18 of the Evidence Act or that defendant 1 was manager whose statements could bind the others.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kisandas Bupahand v. Baahappa Vithoba | General principles on when courts allow amendments to pleadings (whether amendment introduces new cause of action). | The court observed that the general principles were accurately stated by the judges in that case and referred to those principles when considering whether the amendment introduced a new cause of action and whether it should have been allowed. |
| Sanyasi Gharan Mandal v. Kriahnadhan Banerji | Rule that the person setting up a claim under Section 247 must prove facts bringing the case within that section. | The court cited this case to emphasize that plaintiffs bore the burden of proving admission to benefits under S.247 and found that the plaintiffs had not discharged that burden on the evidence before the court. |
| Sanyasi Charan Mandal v. Krishnadhan Banerji | ?)> (Privy Council rule cited in text) | The court relied on the rule (as stated by earlier decisions of the Privy Council and referenced in this authority) that a manager of a Hindu joint family as such has no authority to start a new business and impose liability upon minor coparceners; this supported the view that a business started by a manager may not automatically make minors liable by birth unless ancestral. |
| Weldon v. Neat | Principle that an amendment which deprives the opposing party of an accrued right (for example, the right to plead limitation) should ordinarily be refused unless exceptional circumstances exist. | The court cited the Weldon decision (and Lord Esher's judgment) when discussing whether the amendment improperly deprived defendant 2 of the right to plead limitation; the court treated this principle as central to deciding whether to allow the amendment. |
Court's Reasoning and Analysis
The appellate court proceeded in distinct analytical stages:
- Jurisdiction / Income-reference stage: A plea by defendant 2 under the Dekkhan Agriculturists' Relief Act required a reference to the Commissioner to determine agricultural and non-agricultural income. The Commissioner found non-agricultural income exceeded agricultural; exceptions were dismissed by the learned Judge and that outcome was upheld by the appellate court.
- Amendment to the plaint and limitation: The plaintiffs obtained leave to amend the plaint to add an alternative cause of action under Sections 247 and 248 Contract Act. The appellate court recognized the well-established principle that courts should not allow amendments that deprive an opposing party of an accrued right (citing Weldon v. Neat and the general authorities summarized in Kisandas Bupahand). The court acknowledged that the amendment may have introduced a new cause of action barred by limitation (the adjustment dated July 1926; amendment sought in August 1930). Nevertheless, because of defendant 2's own conduct and delay (noted in proceedings before the Commissioner), the court treated this as a special case in which the amendment could be allowed and proceeded to decide the substantive merits.
- Merits — joint family claim: The learned Judge (below) held the grocery shop was not an ancestral joint family business; there were no cross-objections to that finding and it was treated as conclusive on appeal.
- Merits — claim under Sections 247 and 248: The learned Judge had held that evidence showed defendant 2 had been admitted to the benefits of the partnership (S.247) and that he failed to give public notice on attaining majority (S.248). The appellate court examined the evidence relied upon and found the record of defendant 1's evidence before the Commissioner had been tendered and admitted en bloc by the learned Judge — a course the appellate court found wrong.
- Admissibility of evidence and agency questions: The court analyzed whether the evidence of defendant 1 before the Commissioner could be used against defendant 2. It held that an admission by a party is generally admissible only against that party and not against others, except in limited statutory exceptions (Sections 18–20 of the Evidence Act). The plaintiffs' argument that defendant 1 was an “agent” of defendant 2 when examined before the Commissioner (and thus his evidence admissible under Section 18) was not supported by authority and was rejected. Moreover, at the time defendant 1 was examined the parties had already separated by partition, so defendant 1 could not properly be regarded as manager or agent whose admissions bound defendant 2.
- Burden of proof under S.247: Relying on authority cited (Sanyasi Gharan Mandal v. Kriahnadhan Banerji), the court emphasized that it was for the plaintiffs to prove facts bringing the case within Section 247. The appellate court found that, apart from a few indicia (defendant 2 sometimes sat at the shop, made occasional entries, and later was shown as employed with salary credited), there was no evidence to justify holding that defendant 2 had been admitted to the benefits of the grocery partnership.
- Conclusion of analysis: Given the lack of admissible evidence to support the amended cause of action under Sections 247 and 248, the appellate court concluded the learned Judge's findings on those sections could not stand. Accordingly the appeal was allowed with costs and the suit dismissed with costs (subject to a limited exception regarding costs directed in a prior order), and attachment was ordered to be raised.
Holding and Implications
Core Holding: Appeal allowed; the suit is dismissed with costs (except as to any costs directed by the order of 15th August).
Direct consequences for the parties:
- The appellate court set aside the learned Judge's findings that defendant 2 was liable under Sections 247 and 248 of the Contract Act because there was no admissible evidence to establish admission to the benefits of the grocery business.
- The appeal was allowed with costs; the original suit was dismissed with costs subject to the limited exception referred to in the order of 15th August.
- The court ordered attachment to be raised (i.e., any attachment previously made was to be released).
Broader legal implications: The opinion does not purport to lay down a new precedent beyond applying established principles concerning (a) the circumstances in which courts should allow amendments that may impair accrued rights, (b) the burden of proof for claims under Section 247, and (c) the limits on admitting admissions made by one party as evidence against another. The court emphasized faithful application of those existing principles to the facts before it.
Beaumont, C.J:— In this case the plaintiffs who are a firm carrying on business as commission agents in Bombay sue the three defendants for a sum of Rs. 3,150, balance agreed by defendant 1 to be paid in respect of purchase price of goods sold and delivered. The plaint alleges in para. 1 that the defendants are members of a joint undivided Hindu family and that defendant 1 is the manager of the joint family business. Then in para. 3 it is alleged that the plaintiffs from time to time under instructions of the defendants purchase 1 in Bombay various goods and consigned them to the defendants at Pen, and then it is alleged that an account was made up when a sum of Rs. 3,150 was found due and payable by the defendants to the plaintiffs at foot thereof, and that the defendants through their said manager, defendant 1, signed an acknowledgment in respect of the plaintiffs' goods. So that, reading the plaint as a whole, I think it is clearly a claim against the defendants as members of a joint Hindu family, the allegation being that the manager of the family—defendant 1 had signed an acknowledgment of the amount due. The 1st defence taken by deft. 2, who is the appellant, was that he was an agriculturist and that having regard to the Dekkhan Agriculturists' Relief Act this Court had no jurisdiction. On that plea a reference was made to the learned Commissioner to ascertain the amount of the income, agricultural and non-agricultural, of defendant 2. The Commissioner found that the non-agricultural income exceed 1 the agricultural income, and on exceptions being taken to that finding, the learned Judge dismissed them, and we have already held that the learned Judge's decision was right. But in the course of those proceedings before the Commissioner the plaintiffs no doubt came to the conclusion that they would have considerable difficulty in proving that this, business to which they had supplied goods, which was a grocery business, was joint family business. Accordingly before the hearing they applied to the learned Judge for leave to amend the plaint by alleging as an alternative claim that defendants 2 and 3 were liable by reason of the provisions contained in Sections 247 and 248 of the Contract Act, as having been admitted to and derived benefits from the said grocery business, and that amendment was allowed.
2. It was not, I think, brought to the attention of the learned Judge when he allowed the amendment that the claim of the plaintiffs at the date of the amendment was more than three years' old, and their claim, if a new one, was therefore barred by limitation. It is well established by many authorities that the Court will not as a rule allow an amendment which deprives the opposing party of a right which he has acquired. It was contended before us that the amendment in question really introduced a new cause of action which had become barred at the date of the amendment and that therefore the amendment ought not to have been allowed. Mr. Coltman for the respondents on the other hand says that the cause of action is the same in the original and amended plaint though the grounds upon which the case is based may be different in the two cases an he referred us particularly to the case of Kisandas Bupahand v. Baahappa Vithoba (1). I only desire to say in reference to that case that I think the general principles on which the Court acts in relation to amendments were accurately stated by both the learned Judges; whether in applying those principles the Court arrived at a correct conclusion it is not necessary to consider. It was further contended by Mr. Coltman, and I think correctly, that even if the amendment did introduce a new cause of action, it is within the power of the Court in special circumstances to allow the amendment even though the cause of action may be barred by limitation. He drew our attention to the judgment of the learned Judge in this case in dealing with the exceptions to the Commissioner's report from which it appears that defendant 2 had been guilty of very gross delay, and it was only because of that delay that any question under the Limitation Act might arise. I think there is a good deal of force in that argument. I am myself disposed to think that the amendment offended against the general principle discussed above, since it deprived defendant 2 of an acquired right, but having regard to defendant 2's own conduct, I am not prepared to say that this was not a special case in which the amendment might be allowed. We have therefore to deal with the case on its merits.
3. Now, on the merits, the learned Judge held in the first place that this shop to which the plaintiffs had supplied goods was not a joint family ancestral shop and;that the plaintiffs could not succeed on the ground of joint family. Against that finding there are no cross-objections and therefore that finding is conclusive. Then the learned Judge went on to hold on the amended plea that the evidence showed that the appellant defendant 2 who was a minor had been admitted by defendant 1 to the benefits of the partnership in the grocery business, and that therefore Section 247 of the Contract Act, applied. He further held that the evidence showed that the appellant on attaining majority did not give public notice under Section 248 of the Contract Act, and therefore he was liable under that section. The learned Judge does not in terms say on what evidence he relies, and having been through the relevant passages of the evidence to which Mr. Coltman has referred, lam quite unable to see any evidence in support of the proposition, that the appellant was admitted to the benefits of this business, and, that therefore S. 247 applied. The case of Sanyasi Gharan Mandal v. Kriahnadhan Banerji (2), referred to by Mr. Somji, shows that it is for the person setting up the claim under S. 247 to prove the facts which bring the case within that section. In this case the evidence was in a very peculiar state, because at the hearing the plaintiffs tendered a certified copy of the whole of the evidence taken before the Commissioner on the issue as to the appellant's income, and that evidence was admitted an bloc. I think that course was wrong. No doubt the appellant's own evidence was admissible against him as an admission but I fail to see how the evidence of defendant 1 could be evidence of an admission against defendant 2. Mr. Coltman has, somewhat boldly, argued that inasmuch as defendant 1 was called before the Commissioner as defendant 2's witness upon the issue as to defendant 2's income therefore he was an agent for defendant 2 before a different Judge upon a totally different issue, viz., as to whether delendant 2 was admitted to the benefits of the partnership with defendant 1, and that as such agent his evidence was admissible under Section 18 of the Evidence Act. We invited Mr. Coltman to produce authority in support of his proposition, but I need hardly say he was unable to do so. Apart from the fact that defendant 1 was called as a witness before the Commissioner, it is quite clear that he was not an agent of defendant 2, because before the hearing before the Commissioner defendants 1 and 2 had separated and had ceased to be members of a joint family. We think therefore that before the learned Judge the evidence of defendant 1 taken before the Commissioner was not relevant. In my opinion there was really no evidence at all to bring the case within Sections 247 and 248 of the Contract Act. That being so, I think the appeal must be allowed with costs. Appeal allowed with costs. Suit dismissed with costs except in respect of any costs directed to be paid by the order of 15th August. Attachment to be raised.
Rangnekar, J.:— The plaintiffs brought this suit to recover a sum of Rs. 3,150 from the defendants alleged to be due on an adjustment at the foot of a current agency account in respect of goods supplied to the defendants. They alleged that the account was made up and adjusted and the adjustment was signed by defendant 1. On the face of the adjustment there was nothing to show that was passed by deft. 1 on behalf of the other defts. The three defts. were members of a joint and undivided Hindu family up to September 1926 when a partition of the joint family properties was affected and they separated from each other. Defendant 1 is a cousin of defendants 2 and 3, and admittedly the latter were minors at the date of the transactions in respect of which the adjustment was passed. Defendant 2 attained majority in September 1925, and defendant 3 was still a minor at the date of the hearing of the suit. The plaintiff's case was that all the three defendants were carrying on joint family business and that defendant 1 was the manager of the joint family business and also of the joint family estate. Looking at the plaint and the prayer and the history of the family to which I have referred, it seems to me to be clear that the plaintiffs really looked upon this business as at ancestral business in which defendants 2 and 3 took an interest by birth. For, it is clear that in a family consisting of a major coparcener and two minor coparcener any business started by the former would not be a joint family business in the sense that the latter would take an interest in it by birth. It is a rule of Hindu law which has been laid down by decisions of the Privy Council that a manager of a Hindu joint family as such has no authority to start a new business and impose liability in respect of it upon the other minor co-parceners: see Sanyasi Char an Mandal v. Krishnadhan Banerji . It is only on the footing that the business, which in this case was a grocery shop, was considered to be ancestral that the prayer of the plaint can be understood and even then the prayer as it stands goes beyond the provisions of the law in that it seeks to make defendant 3 personally liable.
4. The answer of defendant 2, who is the appellant before us, was that the grocery business was the separate business of defendant 1, that it was not a joint family business, that he was not interested in it, and he was not bound by any transactions entered into by defendant 1. He also pleaded that he himself was an agriculturist within the meaning of the Dekkhan Agriculturists' Relief Act. On these pleadings the suit in the first instance was referred to the Commissioner of this Court to ascertain whether the agricultural income of defendant 2 exceeded his non-agricultural income.
5. On the reference the parties agreed that the income of the joint family as a whole should be taken under both these heads and on that footing the question as to whether the income from agricultural exceeded that from non-agricultural sources, should be ascertained. It is unnecessary to consider the question as to whether the mode of taking the account, apart from the agreement of the parties in this case, would be correct, and I reserve to myself the liberty of considering the question when it arises, as to whether on a reference as in this case the income of the joint family as a whole should be considered to be the income of an individual member of the joint family. In this case however it was agreed, as I have stated, that this particular method should be followed, and therefore the question whether the method adopted was proper or not does not arise. The Commissioner found that the income of defendant 2 from non-agricultural sources exceeded that from agriculture and made his report accordingly. Exceptions were filed on behalf of defendant 2 which came before Mirza, J. The learned Judge dismissed the exceptions and confirmed the Commissioner's report, but for reasons which differed from those of the Commissioner. Speaking personally, I think the basis adopted by the Commissioner was correct. In his interlocutory judgment Mirza, J., held that the grocery business carried on by defendant 1 was not a joint family business in which defendants 2 and 3 were interested.
6. With that finding before them the plaintiffs realised that they would have little chance of succeeding on the merits against defendant 2, and therefore when the case came on for hearing before Mirza, J., they promptly applied for an amendment of the plaint and it was allowed by the learned Judge overruling defendant 2's objection to it. The amendment in effect states that even if defendant 2 was not liable to the plaintiffs on the ground that the business was not a joint family business still he was liable by reason of the provision contained in Sections 247 and 248 of the Contract Act, as having been admitted to the benefits of the grocery business. At this date it is clear that if the plaintiffs had withdrawn their original cause of action and filed a fresh suit seeking to make defendant 2 liable under the provisions of Ss. 247 and 248, their claim would have been barred by the law of limitation. The application for amendment was made in August 1930 and the adjustment on which the suit was brought passed in July 1926.
7. It is argued on behalf of the appellant that the learned Judge was in error in allowing the amendment for two reasons: firstly, that the amendment prejudiced defendant 2 and caused an injury to him which could not be sufficiently compensated for by costs and secondly, that the effect of the amendment was to deprive the appellant of a right which had accrued to him by lapse of time, that is, the right to plead limitation to the amended plaint. The second point was not specifically put before the learned Judge, for, if it had been, I feel sure that the learned Judge would have hesitated before allowing the amendment. In view of the conclusion to which we have come on the merits, it is not necessary to examine in detail the contention put before us. But speaking for myself I have a doubt in my mind as to whether the amendment was properly allowed. It is established by decisions that if the effect of an amendment is to deprive a party of a right which had accrued to him, such as a right to plead limitation, such amendment ordinarily should be refused although, if there are any exceptional circumstances in the case, it may be allowed. I need only refer to the well-known case of Weldon v. Neat (3), and the judgment of Lord Esher, M.R, at p. 396. Mr. Coltman has argued that the amendment did not introduce a different cause of action so as to bring the case within the rule to which I have referred. Having regard to the frame of the suit and the evidence which is now before us I am unable to agree that the effect of the amendment was not to introduce in the case a different cause of action from that on which defendant 2 was originally sued. There is some force in his contention however that, having regard to the conduct of defendant 2, this was an exceptional case within the meaning of the rule laid down by Lord Esher, and was properly allowed. The point however need not be pursued further.
8. As to the other objection to the amendment however, speaking for myself, I am not prepared to say that the effect of the amendment was not to cause prejudice or injury to defendant 2, and for this reason. Defendant 2 was originally sued as a member of a joint family and as a person having an interest in the joint family business, and on that footing he agreed, that the accounts of the joint family business should be taken for ascertaining, the income for the purpose of his status. If he had been originally sued, not on the ground that there was a joint family business but on the grouted that although the business was one which belonged to defendant 1 alone, still defendant 2 was admitted to the benefits of it and therefore-was liable to the extent of his share in the assets of the business under S. 247, two defences would have been open to-defendant 2: (1) that he was not admitted to the benefits of the partnership under S. 247; and (2) if he was, then the accounts to be taken should be taken on the footing of a partnership between him and defendant 1. If this had been done there is no doubt on the evidence he would have succeeded in establishing that his income from agriculture exceeded that from non-agricultural sources, as the partnership had made a loss of about Rs. 8,000 in 1918. There seems to me therefore considerable force in Mr. Somji's argument that the learned Judge was wrong in allowing the amendment. But in view of the conclusion to which we have come it is unnecessary to pursue the point further. The question then is whether the plaintiffs have succeeded in discharging the burden which lay on them to establish the amended pause of action against defendant 2. At the outset I feel this difficulty that although the learned Judge states that he is satisfied on the evidence that defendant 2 was admitted to the benefits of the partnership he has unfortunately not referred to the evidence on which he bases his conclusion; and Mr. Coltman had to refer to the relevant evidence. Before dealing with the merits I would like to refer to Mr. Somji's complaint: that certain evidence was wrongly admitted by the learned Judge and used against defendant 2. After the amendment was allowed, what happened was, that the whole record of the evidence given by defendant 1 before the Commissioner and that given by defendant 2 was tendered on behalf of the plaintiffs. It was objected to on behalf of defendant 2, but the objection was overruled by the learned Judge and the record admitted in evidence. The order made by the learned Judge shows that he admitted the evidence of defendant 1 not only as against him but also against defendant 2 as admission made by defendant 1 on the ground that he was a witness for defendant 2. Now, with respect to the learned Judge, I think the procedure followed by him is not supported by authority, and this is conceded by Mr. Coltman. The general rule is that an admission can only be given in evidence against the party making it and not against any other party. There are exceptions to this rule, which are laid down under Sections 18 to 20 of the Evidence Act. An admission made by defendant 1 could have been proved against him, and similarly an admission of defendant 2 could have been proved against him. But to prove a statement made by a party and amounting to an admission within the meaning of Section 17 of the Evidence Act, is one thing, and to admit the cord of evidence given by a party on a former occasion on the ground that it contains some statements which are admissions is quite a different thing.
9. But the more serious objection to the course followed by the learned Judge is that he admitted the evidence of defendant 1 before the Commissioner as admissions against defendant 2 on the ground that defendant 1 was examined by defendant 2 as his witness. Now, this order can only be supported under para. 1, Section 18 of the Evidence Act, and so Mr. Coltman had to go the length of saying that a person called by a party as his witness would be an “agent” within the meaning of that section. This seems to me, with respect, a hold proposition and has no authority in law to support it. Mr. Coltman's second argument was that defendant 1 was the manager of the joint family and therefore statements made by him which are admissions could be proved against defendant 2. Unfortunately however the facts are against Mr. Coltman, for when defendant 1 was examined before the Commissioner he had ceased to be the manager of the joint family if at all he was one before. As stated above a partition was effected in March 1926 between defendant 1 on the one hand and defendants 2 and 3 on the other, and defendant 1 was examined as a witness for defendant 2 in June 1929. I think therefore that the evidence was wrongly admitted.
10. But, even if the evidence is looked at, I do not think that it carries the case of the respondents any further. The effect of the whole of the evidence is that the three defendants were living together when defendants 2 and 3 were minors. Defendant 1 managed the joint family properties and did what he liked with them. He started various businesses which he stated were his own. All that is alleged against the appellant is that he sometimes sat at the grocery shop and sometimes made some entries in the account books of the shop. Apart from the fact that an entry in one of the books shows that after he attained majority he was employed as a servant in the shop and his salary credited to him, there is hardly any evidence to justify the contention that defendant 2 was admitted to the benefits of the partnership in the grocery shop. I agree therefore that the appeal must be allowed with costs.
K.N/R.K
11. Appeal allowed.
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