Bangalore District Court
Ratnakar Hegde vs Mangala on 2 January, 2024
1
C.C.No.30138/2022
KABC030755092022
Presented on : 20-09-2022
Registered on : 20-09-2022
Decided on : 02-01-2024
Duration : 1 years, 3 months, 12 days
IN THE COURT OF THE XXII ADDL.CHIEF
METROPOLITAN MAGISTRATE, BENGALURU
PRESENT : SRI.JAI SHANKAR.J,
B.A.L., LL.B
XXII ADDL.C.M.M., BENGALURU.
DATED: THIS THE 2ND DAY OF JANUARY 2024
JUDGMENT UNDER SECTION 355 OF CODE OF
CRIMINAL PROCEDURE
C.C.NO. : 30138/2022
COMPLAINANT : Sri. Ratnakar Hegde,
S/o. Vittal Hegde,
Aged about 66 years,
R/at No. 1030, 5th Stage,
2nd Cross, II Phase,
BEML Layout, R.R.Nagara,
Bengaluru - 560 098.
(By Sri. Srikanta.H.S., Adv.,)
V/S.
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C.C.No.30138/2022
ACCUSED : Smt. Mangala,
Aged about years,
W/o. Anthony,
R/at No.178, BHEL Layout,
R.R.Nagara, Bengaluru South,
Rajarajeshwarinagara,
Bengaluru South,
Bengaluru -560 098.
(By M/s. Lawnex Associates.,)
Offence complained : U/s.138 of N.I.Act
of
Plea of the Accused : Pleaded not guilty
Final Order : Accused is convicted
Date of order : 02.01.2024
JUDGMENT
This is a private complaint filed by the complainant against the accused for the offence punishable under Section 138 of Negotiable Instruments Act.
2. The brief facts of the complainant's case is as under:
The accused and her husband are the family friends of complainant and well known to each other from past several years. During the first week of November 2018, the accused 3 C.C.No.30138/2022 had obtained hand loan of Rs.7,50,000/- from the complainant to meet her urgent family needs with an assurance that, the same would be repaid within 2 years. After completion of 2 years, in the month of March 2022, towards discharge of her liability, the accused had issued a cheque bearing No.042529, dt:05.04.2022 for Rs.7,50,000/- drawn on Karnataka Bank Ltd., Rajarajeshwarinagra Branch, Bengaluru, assuring that, on presentation it would be honoured. Believing the assurance made by the accused, when the complainant presented the cheque for encashment through her banker ie., Bank of Baroda, Rajarajeshwarinagara branch, Bengaluru., the same came to be dishonored for want of sufficient funds as per memo dt: 06.04.2022. Immediately, the complainant got issued the legal notice dt:03.05.2022 demanding the repayment of the cheque amount. The notice sent to accused has been returned with shara as "Addressee Left/Returned to Sender"
dt:4.5.2022, which has given cause of action to file the present complaint. 4
C.C.No.30138/2022
3. After filing of the complaint, this court has taken cognizance of the offence punishable U/s.138 of N.I.Act. Sworn statement of the complainant was recorded. Being satisfied that, there are prima-facie materials to proceed against accused, summons was issued. After appearance of the accused, she was enlarged on bail and plea was recorded. The accused has not pleaded guilty, but submitted that, she would go for the trial.
4. From the basis of the pleadings, the following points that arise for my consideration are as follows:-
1. Whether the complainant proves that, the accused issued cheque bearing No. 042529 dt: 05.04.2022 for Rs.7,50,000/- drawn on Karnataka Bank Ltd., Rajarajeshwarinagra Branch, Bengaluru., towards discharge of her liability which was returned unpaid on presentation for the reason "Funds Insufficient" despite of knowledge of the notice, she has not paid the said cheque amount and thereby, committed an offence punishable U/s.138 of N.I.Act?
2. What order?5
C.C.No.30138/2022
5. The sworn statement and the documents marked at Ex.P.1 to P.5 of the complainant is being treated as the complainant evidence as per the decision rendered by the Hon'ble Apex Court in Indian Bank Association Vs. Union of India and Ors., reported in 2010 (5) SCC 590. The statement of accused as required U/s.313 of Cr.P.C. is recorded and she has denied the incriminating evidence appeared against her and has submitted that, she has the evidence. But however, she has not adduced her side evidence.
6. Heard the argument and Perused the materials available on record.
7. The complainant counsel has relied upon the judgment passed by the Hon'ble High court of Karnataka in Crl.Rev.Pet.No.256/2022 dt: 12.10.2023, Sri.Sudhakar Reddy C.B. Vs. Smt. Pushpa., which is dealt on the point of legally enforceable debt.
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C.C.No.30138/2022
8. The defence counsel has also relied upon the decisions reported in,
1. ILR 2021 Kar. 2437, The Bidar Urban Co-operative Bank Ltd., Bidar Vs. Girish., which is dealt on the point of legally recoverable debt and has held that, a time barred debt cannot be called as a legally recoverable debt.
2. 2010 SCC online Kar. 54, B. Girish Vs. S. Ramaiah., which is dealt on the point of rebuttable presumption.
3. (2019) 5 SCC 418 - Basalingappa Vs. Mudibasappa and (2007) 5 SCC 264 - Kamala.S Vs. Vidyadhjaran M.J. and another., which are dealt on the point of presumption, rebuttable presumption and standard of proof.
9. My answer to the aforesaid points are as under:-
Point No.1 :- In the Affirmative Point No.2 :-As per the final order, for the following:-
REASONS
10. Point No.1:- The complainant has filed this complaint alleging that, the accused has committed an offence punishable U/s.138 of N.I.Act. He pleads and asserts that, the accused in discharge of her liability has 7 C.C.No.30138/2022 issued the cheque bearing No.042529 dt:05.04.2022 for Rs.7,50,000/- drawn on Karnataka Bank Ltd., Rajarajeshwarinagra Branch, Bengaluru, assuring that, on presentation it would be honored. On such assurance, when he presented the said cheque, it returned unpaid with an endorsement Funds Insufficient. Thereby, he got issued the legal notice dt:03.05.2022 which was returned with shara as "Addressee left/returned to sender", which has given a cause of action to file the complaint.
11. To substantiate his case, the sworn statement is being treated as evidence. The complainant has reiterated the contents of complaint in his evidence about the accused approaching for the hand loan and she issuing the disputed cheque at Ex.P.1 towards the discharge of the loan liability which is being dishonored for want of sufficient funds. In this scenario, if the documents placed by the complainant is scrutinized, the complainant in order to examine the compliance of statutory requirements as 8 C.C.No.30138/2022 envisaged U/s.138 of NI Act, he got produced the Ex.P.1 cheque dt:05.04.2022. The said cheque is returned with an endorsement as Funds Insufficient as per Ex.P.2, the return advise dt: 06.04.2022. The Ex.P.3 is the office copy of the legal notice dt:03.05.2022, Ex.P.4 is the postal receipt and Ex.P.5 is the returned postal envelope dt:
04.05.2022. The present complaint is filed on 30.05.2022.
A careful scrutiny of the documents relied by the complainant goes to show that, a statutory requirement of Sec.138 of NI Act is being complied with and this complaint is filed well in time. The complainant has discharged his initial burden by examining his as PW.1 and by producing the documents as referred above. Thus, complainant is entitled to rely on the statutory presumptions enshrined U/s.118 R/w. Sec. 138 of N.I.Act.
Sec. 118 of the Act reads as thus, that every Negotiable Instrument was made or drawn for consideration and that, every such instrument when it has been accepted, 9 C.C.No.30138/2022 endorsed, negotiated or transferred was accepted, endorsed, negotiated or transferred for consideration.
Further Sec.139 of Negotiable Instrument Act provides for presumption infavour of PA holder. It reads like this, it shall be presumed, unless the contrary is proved, that, the holder of a cheque received the cheque, of the nature referred to in Sec. 138, for the discharge, in whole or in part, or any debt or any other liability.
12. A combined reading of the referred sections raises a presumption infavour of the holder of the cheque that, he has received the same for discharge in whole or in part of any debt or other liability. No doubt, the said presumptions of law are rebuttable in nature, the accused can take probable defense in the scale of preponderance of probabilities to rebut the presumption available to the complainant. It is need less to say that, the evidence of the PW.1 can be rebutted even by effectively cross-examining the PW.1, rather entering the witness box. 10
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13. So here, it is relevant to note that, whether the accused by cross examining the PW.1 has really rebutted the presumption available under the law which requires due consideration. Here, it is undisputed fact that, the disputed cheque belongs to the accused and the signature appearing therein. It is also undisputed fact that, the disputed cheque is being dishonored for want of sufficient funds and also, it is not in dispute that, the complainant has issued the notice to the accused demanding the repayment of the cheque amount which is returned unserved. Here, the accused totally denies the transaction and claims that, she never issued the disputed cheque towards any loan transaction, rather claims that, the complainant was carrying on the chit business in which her husband was also one of the subscriber and while taking back the chit amount, the complainant had received the disputed cheque as a security which is alleged to be misused by the complainant and has filed the present complaint. She also contends that, the claim made by the 11 C.C.No.30138/2022 complainant is a time barred debt which cannot be called as legally recoverable debt, has sought for the dismissal of the complaint.
14. By gathering the rival claims of the parties, it is incumbent upon the complainant to establish the loan transaction, the accused issuing the disputed cheque towards the discharge of the loan liability and that, the claim made under the disputed cheque is legally recoverable debt. In this back ground, if the case of the complainant is taken into consideration, he claims that, the accused and her husband being known to him from past several years, had approached for the hand loan of Rs.7,50,000/- and under the acquittance, he had advanced Rs.7,50,000/- towards which the accused has issued the disputed cheque towards the discharge of loan liability. Here, the complainant claims that, he was working as a Sr. Manager of Vijaya Bank and he also claims that, he was retired in the month of August 2016. This fact is not being denied by the accused and on the other hand, the 12 C.C.No.30138/2022 accused herself posses a question that, on the complainant getting retired from the bank, he alleges to have started with the chit business. This question itself suffices that, the complainant was working as a Sr. Manager of the Vijaya Bank and he was retired in the year 2016. In other words, when the accused admits the complainant being retired from the bank as a Sr. Manager, a presumption could be drawn that, the complainant was financially well at a particular point of time and he was capable enough to advance the loan amount of Rs.7,50,000/-. Moreso, the accused has also not specifically disputed the financial capacity of the complainant, but rather posing the question that, even after the retirement the complainant, he was carrying on with the chit business suffices the complainant was financially well.
15. No doubt, the complainant has established his financial capacity to advance the loan amount of Rs.7,50,000/-, but he has to establish that, the said amount was advanced to the accused and the disputed 13 C.C.No.30138/2022 cheque was issued towards the discharge of the loan liability. Here, the disputed cheque at Ex.P.1 belongs to the accused is not in dispute and so also, the signature appearing therein. Here, the complainant admits that, he has no document to show that, he had advanced Rs.7,50,000/- to the accused except Ex.P.1 and that, he also has no document to show that, he had sufficient amount as on the date of advancing the loan amount to the accused. Here, It is relevant here to note that, the complainant by producing Ex.P.1 intends to establish that, the disputed cheque was issued towards the discharge of the loan liability of Rs.7,50,000/- and on the other hand, the accused contends that, on the retirement of the complainant from the bank, he started with the chit business in which her husband was also one of the subscriber and while taking back the entire chit amount, her husband had issued the disputed cheque to the complainant as a security which is being misused by the complainant. Here, the complainant by producing Ex.P.1 14 C.C.No.30138/2022 has intended to establish that, the disputed cheque was issued toward the discharge of legal liability. When, the complainant has produced Ex.P.1 and adduced his oral evidence, a presumption could be drawn that, the disputed cheque was issued towards the discharge of the loan liability, when more particularly the accused has taken a defence that, the disputed cheque was issued by her husband to the complainant as a security for receiving the chit amount. The defence of the accused makes more relevant so as to appreciate as to whether the disputed cheque was being issued towards the security purpose or it was issued towards the discharge of the loan liability. Though, the complainant admits that, on his retirement in the year 2016, he started with the chit business and so also, the accused's husband Sri. Anthony was also one of the subscriber, but he has totally denied the fact that, while her husband taking back the entire chit amount, her husband had issued the disputed cheque towards the security purpose.
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C.C.No.30138/2022
16. Admittedly, it is not in dispute that, the accused's husband was also one of the subscriber of the chit business with the complainant, but it is incumbent upon the accused to establish that, she had issued the disputed cheque towards the security purpose. But, However, by gathering the entire evidence available on record, except the say of the accused that, her husband had handed over the disputed cheque to the complainant towards the receipt of the chit amount as a security, she has not produced any piece of evidence to that regard or has elicited the said fact from the mouth of the PW.1. When, there is no positive evidence placed by the accused to hold that, the disputed cheque was issued towards the security purpose, it cannot be construed that, the accused has rebutted the presumption. The accused has not specifically placed any evidence as to why she has issued the disputed cheque as security to the chit amount of her husband, rather the cheque of her husband. Again, there was also no impediment for the accused to get reduced in writing the 16 C.C.No.30138/2022 said fact from the complainant at a particular point of time or had any impediment to demand the disputed cheque from the complainant at a particular point of time. Through out the evidence of the PW.1, it goes to indicate that, though the accused claims that, the disputed cheque was being issued as a security towards the chit amount, but nothing is placed on record to hold that, she had made some efforts to demand for the return of the cheque or chosen to initiate some action against the complainant or chosen to request her bank to stop the payment by putting forth the real incident, but rather the disputed cheque is being returned with shara as "Funds Insufficient". When such being the case it cannot be construed that, her husband had issued the disputed cheque as a security towards the chit amount received by him. When, there is no evidence available on record, to hold that the disputed cheque was issued towards the security purpose for the receipt of the chit amount, an inference could be drawn that, the dispute cheque is being issued by the accused 17 C.C.No.30138/2022 towards some legally enforceable debt. If that is a case, it has to be construed that, the accused has availed a loan of Rs.7,50,000/- and she had issued the disputed cheque toward the discharge of the loan liability. No doubt, the accused has posed many questions with regard to the ink used for signature and the ink used for reducing other contents in the cheque, but when the law is well settled that, if the cheque is being issued, it has to be construed that, it is being issued towards the discharge of legal liability by giving implied permission to the holder of the cheque to fill it.
17. Here, the complainant has established the loan transaction and so also, established the issuance of the cheque towards the discharge of loan liability. But here, the accused contends that, as the complaint itself indicates that, the disputed cheque alleges to have been issued after the time bound, it is a time barred debt and it is not legally enforceable debt. Thereby, questioning the every 18 C.C.No.30138/2022 maintainability of the complainant has sought for the dismissal of the complaint. The accused has also relied upon the decision reported in ILR 2021 KAR 2437- The Bidar Urban Co-operative, Bank Ltd., Bidar Vs. Mr. Girish., wherein it is held that, a time barred debt cannot be called as legally recoverable debt and merely issuing the cheque without corresponding legally recoverable debt, it is not an offence punishable U/s. 138 of N.I.Act and enlighting on Sec. 25(3) of Contract Act sought for the dismissal of the complaint. Here, it is not under dispute that, the complaint averments goes to indicate that, the accused alleges to have borrowed a hand loan of Rs.7,50,000/- in the first week of November 2018 assuring that, he would repay the said amount within a period of 2 years. The complaint averments also goes to indicate that, inspite of repeated request and demands made by the complainant for repayment, the accused was postponing the same on account of Covid-19 and lock down and finally, the accused happens to have issued the disputed cheque in the 19 C.C.No.30138/2022 month of March 2022. This averments though indicates that, the disputed cheque happens to have issued after lapse of 3 years from the date of the payment, but it also cannot be denied that, as the very complaint averments indicates that, due to the pandemic of Covid-19 and lock down, the accused happens to have postponing the issue and finally, he issuing the disputed cheque, which cannot be neglected or brushed aside. No doubt, the disputed cheque is being issued after the lapse of 3 years from the date of receipt of the loan amount of Rs.7,50,000/- and though, the decision relied by the accused would indicate that, the time barred debt is not a legally enforceable debt, but the complainant by placing the reliance of the judgment passed by our Hon'ble High Court in Crl.Rev.Pet. No.256/2022 dt:12.10.2023, Sudhakar Reddy C.B. Vs. Smt.Pushpa., wherein the Hon'ble High court has referred the judgment relied by the accused in the said judgment and has opined that, even issuing the cheque to the time barred debt, as per Sec.25(3) of the Contract Act, it forms 20 C.C.No.30138/2022 the promise and it creates a legally enforceable debt and it squarely attracts sec. 138 of N.I.Act. So, by applying the judgment passed by the Hon'ble High Court in the above referred Criminal Revision Petition, I do not find any ground to appreciate the argument of the defence and when, the Hon'ble High Court has clearly held that, by issuing a cheque for discharge of time barred debt is a promise and it would attract sec. 138 of N.I.Act, I am of the considered view that, the amount covered under the cheque is legally enforceable debt. With due respect, it could be said that, the decision relied by the accused is not applicable to the case in hand.
18. On dishonor of the disputed cheque, the complainant happens to have issued the legal notice as per Ex.P.3 demanding the repayment of the cheque amount and so also, it being dishonored. However, the said notice is being returned with shara as Addressee left as per Ex.P.5. the accused harping much upon the shara at Ex.P.5 claims that, no notice is being validly served on the accused and 21 C.C.No.30138/2022 thereby, claims that, having the complainant not complied the mandatory provision of serving the demand notice, has also prayed to dismiss the complaint on this ground. Admittedly, it is not in dispute that, the notice issued at Ex.P.3 is being returned with shara as "addressee left and returned to the sender" as per Ex.P.5. But however, the argument canvassed by the defence that, the complainant has not complied the mandatory provision of serving the notice on the accused appears to hold no force. Because, through out the cross examination of PW.1, nowhere the accused has disclosed her correct address by posing a suggestion nor has produced any document by confronting it so as to hold that, the address referred by the complainant at Ex.P.3 is an incorrect address. Perhaps, it would also not be wrong to say that, the contention raised by the accused with regard to the incorrect address appears to falsify her stand. Because, the complainant has referred the very same address as referred in the Ex.P.3 & P5 in the cause title and the accused has appeared 22 C.C.No.30138/2022 through the counsel on the service of process to the said address. When, the very fact goes to indicate that, having the accused appeared through the court process to the address refereed in Ex.P.3, I am of the considered view that, the complainant by issuing the notice as refereed at Ex.P3 & P5 has complied the mandatory provision by issuing the demand notice.
19. In the decision reported in (2021) 5 SCC 283 - Kalamani Tex and Another., Vs. P.Balasubramanian, (2010) 11 SCC 441- Rangappa Vs. Sri.Mohan., Wherein it is held that, when once the signature of an accused on the cheque is established, than the reverse onus clauses become operative, also aptly applies to the case in hand. In the case in hand, the accused do not dispute her signature at Ex.P.1 and also, do not dispute the dishonour of cheque at Ex.P.2. When the complainant has established the accused having issued the cheque at Ex.P.1 towards the discharge of legal liability and their existed a legally enforceable debt, the onus to disprove it, shifts on the 23 C.C.No.30138/2022 accused which is not been proved by placing positive evidence. In this background, having the accused not disputed the complainant case by placing positive evidence, I am of the considered view that, the cheque issued by the accused at Ex.P1 is for the legally enforceable debt and this fact is being established by the complainant by placing cogent and positive evidence which is not rebutted by the other side.
20. Though, the accused has taken a probable defence to disprove the complainant case, but that is not being established by placing the positive evidence. The very oral evidence available on record, totally contradictory to the documentary evidence. It is need less to say that, documentary evidence do prevail on the oral evidence. Absolutely, there is no evidence available on record, to hold that, the disputed cheque was issued towards the security purpose for the chit amount received by her husband. Even she has not opted to examine her husband to assert the disputed cheque was issued by him towards the 24 C.C.No.30138/2022 security purpose. So, in this back ground, when the provisions U/s.118 and 139 of N.I. Act is looked into, it raises the presumption in favour of the holder of the cheque that, he has received the same for discharge in whole or in part of any debt or other liability.
21. It is worth to note that, Sec.106 of Indian Evidence Act postulates that, the burden is on the accused to establish the fact which is especially within its knowledge. This provision is exception to the general rule that, the burden of proof is always on the prosecution to establish its case beyond all reasonable doubt. In that view of matter, the burden is on the accused to prove that, the cheque in question was not issued for discharge of any liability. But, despite the accused has taken the defence that, the Ex.P.1 was not issued towards the legal liability, but the said fact and the version is not been established.
22. From the discussion made supra, it could be said that, the complainant has established his case by placing 25 C.C.No.30138/2022 positive evidence. On the other hand, the accused failed to establish her defence by placing probable defence and also, failed to elicit the said fact from the mouth of the PW.1. To put it in other way, the accused though taken a probable defence, but it is not been established by placing the positive evidence. The presumption of law lies in favour of the complainant as envisaged U/s.118 R/w. Sec. 139 of N.I.Act. In this back ground, the case of the complainant requires to be accepted. The evidence placed on record establishes that, the complainant has proved that, for discharge of the liability, the accused has issued Ex.P.1 and it is being dishonored for the reason Funds Insufficient. Therefore, Point No.1 is answered in the "Affirmative'.
23. Point No.2:- For the reasons discussed in the point No.1, the complainant has proved the guilt of the accused punishable U/s.138 of N.I.Act. The Hon'ble Apex Court also dealt in the decision reported in (2018) 1 SCC 560, M/s. Meters and Instrument Pvt. Ltd., Vs. 26 C.C.No.30138/2022 Kanchana Mehta., wherein It is held that "the object of provision being primarily compensatory, punitive element being mainly with the object of enforcing the compensatory element, compounding at the initial stage has to be encouraged, but is not debarred at the later stage subject to appropriate compensation has may be found acceptable to the parties or the court". By considering the decision, it could be said that, the time when the transaction has taken place and the primary object of the provision being kept in mind, I am of the considered view that rather imposing punitive sentence, if sentence of fine is imposed with a direction to compensate the complainant for its monetary loss by awarding compensation U/s.357 of Cr.P.C., it would meet the ends of justice. By considering these aspects, I am of the considered view that, it would be just and proper to impose fine of Rs.7,55,000/-. Out of the compensation of Rs.7,55,000/-, an amount of Rs.7,50,000/- shall be awarded to the complainant U/s.357 of Cr.P.C. Accordingly I proceed to pass the following :
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C.C.No.30138/2022 ORDER Acting under section 255(2) of Code of Criminal Procedure, the accused is convicted for the offence punishable under section 138 of the Negotiable Instruments Act, the accused is sentenced to pay fine of Rs.7,55,000/- ( Rupees Seven Lakhs and Fifty Five Thousand only).
In default thereof, the accused shall undergo simple imprisonment for the term of one year.
Acting U/s.357(1)(b) of Cr.P.C., it is ordered that, Rs.7,50,000/- ( Rupees Seven Lakhs and Fifty Thousand only), there from shall be paid to the complainant as compensation. The remaining fine amount of Rs.5,000/- (Rupees Five Thousand only) is defrayed to the state for the expenses incurred in the prosecution.
The office is to furnish the free copy of this Judgment to the accused forthwith.
(Directly dictated to stenographer on computer, typed by her, revised by me and then pronounced by me in the open court on this the 2nd day of January 2024). Digitally signed JAI by JAI SHANKAR SHANKAR J Date: 2024.02.02 J 04:40:34 +0530 (JAI SHANKAR.J) XXII Addl. Chief Metropolitan Magistrate, Bengaluru.
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C.C.No.30138/2022 ANNEXURE List of witnesses examined on behalf of complainant:-
PW.1 : Sri. Ratnakar Hegde List of exhibits marked on behalf of complainant:-
Ex.P1 : Original cheque Ex.P1(a) : Signature of the accused Ex.P2 : Bank Memo Ex.P3 : Legal notice Ex.P4 : Postal receipt Ex.P5 : Returned Postal envelope
List of witnesses examined on behalf of the accused :-
- Nil-
List of exhibits marked on behalf of the accused:-
- Nil-
JAI Digitally signed by
JAI SHANKAR J
SHANKAR Date: 2024.02.02
J 04:40:39 +0530
(JAI SHANKAR.J)
XXII Addl. Chief Metropolitan
Magistrate, Bengaluru.
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