Bombay High Court
Borivali Rajesh Co-Operative Housing ... vs Messers Kamla Homes And Lifestyles ... on 28 April, 2022
Author: G.S. Kulkarni
Bench: G.S. Kulkarni
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Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L.) NO.9433 OF 2022
Borivli Rajesh Co-op. Hsg. Soc. Ltd. ..Petitioner
Vs.
M/s. Kamla Homes & Lifestyles Pvt. Ltd. & Ors. ..Respondents
-----
Mr. Gauraj Shah with Ms. Karshini Khanna, Mr. Pratik Jani, Ms. Princee
Vaishnav i/b. Prime Legem for Petitioner.
Mr. Vishal Kanade with Mr. Pramod Vora and Ms. Ketki Prajapati i/b. M/
s. Pramodkumar & Co. for Respondent Nos.1 to 4.
-----
CORAM : G.S. KULKARNI, J.
DATE : APRIL 28, 2022.
Order:
1. This is another case, which on one hand, concerns a long wait of
twelve years and now an urgent requirement of a permanent roof over
the heads of 64 members of a housing society, and on the other hand a
developer unsuccessfully foisting itself on the helpless housing society
insisting for performance of a development agreement terminated in the
year 2015. Whether the already faded commercial interest of a
developer can have precedence over the suffering and agony of these
members so as to be deprived of the basic human needs for a roof over
their heads is the issue.
2. This is a petition filed under Section 9 of the Arbitration and
Conciliation Act, 1996 (for short, "the Act") whereby the petitioner
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which is a Co-operative Housing Society having about 64 members, is
before the Court praying for interim measures of an urgent nature
pending the arbitral proceedings.
3. It appears from the record that since the year 2010, the petitioner-
society is attempting to redevelop its building which has been
categorized as "extremely dangerous and deteriorated" by the municipal
corporation, on which there is no dispute. It is declared to be a C-I
category building which is likely to collapse. In fact, a structural audit
of the building undertaken in the year 2005 noticed the deteriorated
condition of the building. In the year 2010, the procedure was followed
by the petitioner to select a developer to undertake redevelopment.
Respondent No.1 came to be selected to be appointed as a developer.
4. In pursuance of such decision, a development agreement came to
be entered between the petitioner and respondent no.1-developer on 08
October, 2010. Respondent nos. 2 to 4 are stated to be the Directors of
respondent no.1. It is clearly seen from the development agreement that
the redevelopment was required to be undertaken within 18 months of
such agreement being entered between the parties.
5. Also a power of attorney was executed by the petitioner in favour
of respondent no.1 dated 26 October, 2010, so that all further steps to
undertake redevelopment could be taken. It appears that although the
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parties had agreed that within a period of 18 months the entire
redevelopment would be completed, nothing whatsoever moved and the
things remained at an absolute standstill. There is hardly any material
for respondent no.1 which would show that any concrete steps were
taken by respondent nos.1 to 4 so as to change their position qua the
redevelopment in question, much less of any relief to the society.
Consequently, being seriously concerned with the ruinous state of
the building, as also in view of the fact that the municipal corporation
was issuing notices, for demolition of the building, a majority resolution
was passed by the society to terminate the said development agreement
dated 8 October, 2010 as entered with respondent no.1. Accordingly, on
9 July, 2015 a communication was addressed by the petitioner to
respondent no.1 informing of the breaches and delays and of the
consequent termination of the development agreement. Respondent
no.1, did not take any steps to assail the termination of the development
agreement. Respondent no.1, however, re-approached the petitioner
and possibly exploiting a situation of such helplessness of the petitioner,
attempted to have negotiations with the petitioner. Such post
termination negotiations were not fruitful. In fact the termination of the
development agreement dated 09 July 2015 had remained intact and
confirmed. This was informed by the petitioner to respondent no.1 by
its letter dated 04 November, 2015, which is stated to be the second
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termination. Moreover, such termination being labelled to be a second
termination in my opinion appears to be a misnomer, as there is nothing
on record and as conceded by Mr. Kanade that the termination dated 09
July 2015 at no point of time expressly revoked or withdrawn by any
communication of the petitioner as addressed to respondent no.1.
6. However, the miseries of the petitioner would not come to an end,
as respondent no.1 despite the termination of its agreement being
confirmed by the petitioner by its letter dated on 04 November, 2015,
would nonetheless insist that it was still interested to undertake the
redevelopment work. Again it appears that respondent no. 1 attempted
to enter negotiations with the petitioner. However, such talks appear to
have totally failed in view of the petitioner again informing/continuing
respondent no.1 by its letter dated 21 April, 2016 of the termination of
the development agreement. Thus the petitioner had clearly taken a
position that the termination of the development agreement in no
manner would stand disturbed, thereby clearly indicating that the
petitioner was not interested to have the redevelopment at the hands of
respondent no.1.
7. The petitioner took further steps by addressing a notice dated 26
April, 2016 informing respondent no.1 of terminating the power of
attorney which was issued to respondent no.1 under the terminated
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development agreement. Also a public notice dated 04 May, 2016 came
to be issued informing the public at large of the petitioner revoking the
power of attorney.
8. It clearly appears that respondent no.1 did not take any steps to
assail the termination even assuming that the termination of the
development agreement can be said to have taken place in the month of
April, 2016. From what has been pointed out on behalf of the petitioner,
it appears that respondent no.1 however would nonetheless keep
insisting that it is still interested in the project and force the petitioner to
have the redevelopment only at the hands of respondent no. 1.
Respondent no. 1 however pursued its unrequited love for the
petitioner's project when respondent no.1 had no right/authority to do
anything on the petitioner's redevelopment project. Respondent no.1
nonetheless attempted to prepare some plans showing its purported
interest in the petitioner's project. However, outrightly not acceptable to
the petitioner.
9. Today the position is that the building is in an extremely
dangerous condition. Almost all the members of the petitioner,
considering the safety of their lives, have already vacated their
respective tenements except 4 to 5 members who are yet to vacate their
luggage. The electricity and water connection of the building has also
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been disconnected. The building is now eminently required to be
demolished either by the respondents or by the municipal corporation or
it falls by itself during the monsoon. The dilapidated condition of the
building is seen from the photographs as placed on record by the
petitioner. It is sad and painful to see such ruinous condition of a
residential building. In can only be said that God was kind to the
residents. It is in these circumstances, the petitioner has approached
this Court that respondent nos.1 to 4 cannot in any manner obstruct any
redevelopment which is now proposed to be undertaken by the
petitioner and cause hurdles to the petitioner under the guise of a
terminated development agreement. The following are the prayers:-
"a. This Hon'ble Court may be pleased to pass an order and
temporary injunction restraining the Respondent Nos.1 to 4 or
their servants, agents, nominees, employees and/or any other
person/s claiming by under or through the Respondent Nos.1
to 4 and or any of them, from acting in pursuance of the
Development Agreement dated 08.10.2010 and Power of
Attorney dated 26.10.2010.
b. This Hon'ble Court be pleased to pass an appropriate
order and for all direction allowing the Petitioner to undertake
self-development by themselves or by appointing a Project
Management Consultant or allow the appointment of fresh
developer to complete the redevelopment project and obtain
Occupation Certificate on the Suit Land being Land bearing
City Survey No. 31-C, admeasuring 2009.6 Sq.Mtrs of Village
Eksar, Taluka Borivali, in the Registration District and Sub-
District of Mumbai Suburban District lying and being situated
at Eksar Road, Near Royal Complex, Borivali (West), Mumbai-
400 092, more particularly mentioned in "Exhibit A" of the
present Petition;
c. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent Nos. 1 to 4 to
return the original documents and/or certified copy of the
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documents which are in possession of Respondent Nos. 1 to 4
and/or in possession of their agents, servants, employees,
professionals engaged etc. and/or any other person claiming
under them to have those documents in possession pertaining
to the Suit Land being Land bearing City Survey No. 31-C,
admeasuring 2009.6 Sq.Mtrs of Village Eksar, Taluka Borivali,
in the Registration District and Sub-District of Mumbai
Suburban District lying and being situated at Eksar Road, Near
Royal Complex, Borivali (West), Mumbai-400 092., more
particularly mentioned in "Exhibit A" of the present Petition;
d. This Hon'ble Court be pleased to pass a temporary
order and Injunction to restrain Respondent Nos. 1 to 4 or
their servants, agents, nominees, employees, and/or any other
person/s claiming by under or through the Respondent Nos.1
to 4 and or any of them from entering upon, remaining or
disturbing the possession of the Petitioner with respect to the
Suit land being land bearing City Survey No. 31-C.
admeasuring 2009.6 Sq.Mtrs of Village Eksar, Taluka Borivali,
in the Registration District and Sub-District of Mumbai
Suburban District lying and being situated at Eksar Road, Near
Royal Complex, Borivali (West), Mumbai-400 092., more
particularly mentioned in "Exhibit A" of the present Petition;
e. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent Nos. 1 to 4 to
disclose on oath the status of proposal submitted by file No. P-
9717/2021/(31C)/R/C ward/Eksar (RC) with the Respondent
No.5;
f. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent No.5 from
entertaining any applications for the development of the Suit
Land being land bearing City Survey No. 31-C, admeasuring
2009.6 Sq. Mtrs of Village Eksar, Taluka Borivali, in the
Registration District and Sub-District of Mumbai Suburban
District lying and being situated at Eksar Road, Near Royal
Complex, Borivali (West), Mumbai-400 092., more
particularly mentioned in "Exhibit A" of the present Petition;
or any part or portion thereof; that may be put up by
Respondent Nos. 1 to 4 hereafter,
g. This Hon'ble Court be pleased to pass an appropriate
order to allow the Petitioner's proposal for redevelopment
without insisting on obtaining the No Objection Certificate
from the Architect of Respondent No.1 and process the file
which may be submitted by Petitioner.
h. This Hon'ble Court be pleased to pass a temporary
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order and Injunction to restrain Respondent No.6 from taking
any actions on Impugned Notices dated 09.12.2021, Notice
dated 15.02.2022 and Notice dated 21.02.2022 being
"Exhibit VV1" ; "Exhibit WW" and "Exhibit ZZ" to the present
Petition.
i. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent nos. 1 to 4 to
disclose on oath the Plans submitted before the Chief Fire
Officer.
j. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent Nos. 1 to 4 to
disclose on oath the reasons as to why the Plans submitted
before the Chief Fire Officer are not sanctioned till date.
k. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent Nos. 1 to 4 to
disclose on oath any pending ongoing Litigations against
Respondent Nos. 1 to 4;
l. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent Nos. 1 to 4 to
disclose on oath the stock in hand as Immovable property in
the ongoing Redevelopment projects in the hands of
Respondent Nos. 1 to 4;
m. This Hon'ble Court be pleased to pass an appropriate
order and for all direction directing Respondent Nos. 1 to 4 to
disclose on oath list of any sale component sold by the
Respondent Nos. 1 to 4 in the proposed building to be
constructed on the Suit Land and the documents/deeds of sale
of such sale transactions entered by Respondent Nos. 1 to 4.
n. for ad -interim reliefs in terms of prayer clauses (a.), (b),
(c), (d), (e), (g), (h),(i), (j), (k), (1) and (m) above."
10. On the above backdrop, I have heard Mr. Shah, learned counsel
for the petitioner and Mr. Kanade, learned counsel for respondent nos.1
to 4.
11. Mr. Shah has drawn the Court's attention to the development
agreement and the correspondence on record to contend that a prima
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facie case has been made out by the petitioner for grant of the above
reliefs as prayed for. He submits that irreparable loss would be caused
to the petitioner, if the reliefs as prayed for are not granted, as the
redevelopment is required to be immediately commenced so that the
process to rehabilitate 64 members of the petitioner can be commenced
by taking further steps to undertake construction. He submits that the
development agreement as entered with respondent no.1 having been
terminated by the petitioner in the year 2015, respondent no.1 has no
right whatsoever to oppose the prayers as made and in any manner
obstruct the petitioner from undertaking a redevelopment in the manner
the petitioners desires. It is submitted that except for repeated false
assurances, no concrete steps whatsoever were taken by respondent no.1
ultimately leading to the termination of the development agreement by
the petitioner on 9 July 2015. It is his submission that in law once the
development agreement in the present situation was terminated the only
remedy for respondent nos.1 to 4 was to seek damages against the
petitioners and nothing else. It is his submission that respondent no.1's
case that the negotiations were held between the parties post
termination would revive the terminated agreement, is fully unfounded.
It is his submission that the termination of the agreement, in the event
of any post termination compromise, could be revoked only in a manner
known to law. According to him, there was no communication
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whatsoever by which the termination of the development agreement
was revoked by the petitioner. It is his submission that the negotiations
were sought to be foisted on the petitioner and the approach of
respondent no.1 was to adamantly insist that the redevelopment work
ought to be entrusted only to respondent no.1 and no other developer.
He accordingly, would submit that the reliefs as prayed for need to be
granted by the Court.
12. On the other hand, Mr. Kanade, learned counsel for respondent
nos.1 to 4, relying on the affidavit of Mr. Pravin Jain, Director of
respondent no.1, would submit that his clients are still interested to
undertake the redevelopment of the petitioner's premises and they
would have all means to do so. Mr. Kanade has drawn the Court's
attention to the various negotiations respondent nos.1 to 4 had with the
society and/or the members of the Managing Committee, to point out
that the Managing Committee was agreeable to re-consider the
termination and to continue with respondent no.1 as a developer.
However, Mr. Kanade is not in a position to point out that the petitioner
society had actually revoked the termination of the development
agreement which was terminated by the petitioner's letter dated 09 July,
2015. Mr. Kanade would also not dispute that except for the failed
attempts of the post termination negotiations, there can be no other
position which could be recognized in law to enable his clients to
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contend that the termination no more subsisted and/or was revoked by
the petitioner. Also if the negotiations were to succeed, a supplementary
agreement could be entered between the parties, however, no such
agreement was entered between the parties at any point of time. Mr.
Kanade, however, would submit that if the petitioner takes a position
that it can still continue with respondent no.1 to be the developer,
certainly, respondent no.1 is prepared to undertake the project and
complete the redevelopment. He, therefore, submits that the reliefs as
prayed for by the petitioner ought not to be granted.
13. Having heard learned counsel for the parties and having perused
the record, in my opinion, there is much substance in the contentions as
urged on behalf of the petitioner. It is clear from the record that under
the development agreement dated 08 October, 2010 entered between
the petitioner and respondent nos.1 to 4, respondent no.1 had agreed
to complete the redevelopment within 18 months. Such contractual
assurance had not moved forward in any manner and ultimately,
resulted in its termination on account of several breaches and delays of
such agreement on the part of respondent no.1, which was by the
petitioner's termination letter dated 09 July, 2015 as addressed to
respondent No.1. It also appears to be quite clear that such termination
was never revoked and in fact, it came to be confirmed subsequently
vide letter dated 04 November, 2015 of the petitioner and thereafter by
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its further letter dated 21 April, 2016 and by subsequent public notices
as issued by the petitioner in April, 2016 and May, 2016 issued in regard
to the cancellation of the power of attorney. Thus, on record, it is quite
clear that the development agreement as entered by the petitioner with
respondent Nos.1 to 4 had stood terminated on 9 July 2015. Also the
power of attorney stood terminated. Admittedly, respondent nos.1 to 4
did not choose to assail such termination, except to re-enter
negotiations, which admittedly were post termination. As years passed
by, the condition of the building had further and substantially
deteriorated. The post termination settlement talks could not succeed.
Thus, the termination of the development agreement as entered
between the petitioner and respondent nos.1 to 4 has remained
unshaken. It is difficult to accept that mere negotiations post
termination would be of any consequence to uproot the termination,
which had already taken place. In these circumstances, in my opinion,
respondent nos.1 to 4 cannot take a position that they can prevent or
obstruct the petitioner in any manner to undertake the redevelopment of
its building. If at all, in my opinion, the remedy for respondent nos.1 to
4 is to seek damages against the petitioner for any monetary losses
which respondent nos.1 to 4 may feel that they have suffered as a
consequence of termination, that too, if so permissible in law. All this
would be subject matter of evidence, for such respondents to prove that
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in fact losses were suffered by them.
14. Mr. Shah, learned counsel for the petitioner has rightly pointed
out an order dated 23 September, 2019 passed by this Court in
Commercial Arbitration Petition (L.) No.1004 of 2019 wherein the
developer in that case in a somewhat similar situation could not oppose
the decision of the society for a self redevelopment. The Court in such
context, made the following observations:-
"5] The agreement itself is of the year 2011 and what was
agreed by the respondent nos. 1 to 3 was to complete the
construction within 2 years and already a period of more that 9
years has elapsed. Be that as it may it is not in dispute that the
agreement is
terminated and in these circumstances the petitioner society
intends to go for a self re-development. It cannot be
countenanced that the respondent can bring about a situation
that the members of the petitioner in perpetuity
remain without a shelter over their heads by opposing self-
redevelopment. For the respondent it was a commercial
venture. If the respondents are of the opinion that there are
some losses incurred by the respondents and if
they are aggrieved by the termination they have their remedies
open including to seek damages against the petitioner. But,
certainly they cannot stop the petitioner society proceeding for
re-development."
15. Considering the facts and circumstances of the present case, the
Court cannot be unmindful of the interest of 64 members of the society
who are without roof over their heads and who are anxiously awaiting
redevelopment of their building since the year 2010. Miserably, for
almost 12 years nothing has moved for the petitioners for the
redevelopment to commence. It is not at all an easy situation for the
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members of a society to remain homeless and that too in a city like
Mumbai, in which it is extremely difficult to find out even the temporary
alternate premises, except at a huge cost, inconvenience and human
suffering. The members of the society do not suffer alone. They suffer
along with their family members which may comprise of senior citizens,
ailing persons, women and children. In my opinion, this is a classic case
where respondent Nos.1 to 4 appear to be concerned only of their
commercial interest and their business propositions. On the other hand,
there are fundamental interest of the members of the society namely for
a shelter, which is the very livelihood of the members of the society.
In a recent decision of a Division Bench of this Court in High
Court on its own motion (in the matter of Jilani Building at Bhiwandi)
Versus Bhiwandi Nizampur Municipal Corporation & Ors. reported in
2022 SCC OnLine Bom 386, the Division Bench has held that the
right to live in a safe building is a part of the fundamental right
of the citizens under Article 21 of the Constitution. Respondent No.1 at
the inception could have had a strong commercial interest, however,
respondent No.1 could have never been oblivious of the helpless
condition of the members of the petitioner society and their urgent
requirement to have their legitimate entitlement to the redeveloped
premises. In a contract where such basic human needs and
requirements are concerned and that too of such large number of
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persons, the commercial interest of the developer is saddled with an
onerous obligation to recognize that what is paramount to such contract
is dependency of the society on the developer to satisfy the housing
requirement for its members. Thus a human sensitivity in handling
these projects with utmost expediency and to rise to such human needs
and expectations by maintaining an impeccable transparency and
fairness in executing such contracts, is the need. In contracts of such
nature any breach on the part of the developer would be fatal to the
collective interest of the members of the society. This would not
however mean that the members of the society or the society itself ought
not to cooperate. Both these wheels on which the contract is founded,
are required to work in tandem and by adopting all norms of fairness in
such commercial venture so as to create a win-win situation, for all the
stake holders. The developer would ever by remembered for his good
work. There cannot be a better satisfaction to him.
16. Thus in the present case, the Court would certainly recognize the
urgent housing requirements of the large number of members of the
society rather than the faded commercial interest of respondent nos.1 to
4 in granting injunctory reliefs to the petitioner. These are the strong
factors, the Court would bear in mind when it considers granting reliefs
to the petitioner in the present facts.
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17. In the above circumstances, in my opinion, a strong prima facie
case has been made out by the petitioner for grant of interim measures.
The balance of convenience is also eminently in favour of the petitioner.
The petition is accordingly being disposed of by the following order:-
ORDER
i. Respondent nos.1 to 4, their servants, agents, nominees, employees etc. are restrained from in any manner whatsoever acting under the terminated development agreement dated 08 October, 2010 and the power of attorney dated 26 October, 2010, so as to cause any obstruction to the petitioner in undertaking redevelopment of its building.
ii. Respondent Nos.1 to 4 are directed to hand over to the petitioner the original documents in regard to the redevelopment of the petitioner's building/premises, within a period of 15 days from today.
iii. In the event, the petitioner submits a development proposal along with the plans to respondent nos.5 and 6 Municipal Corporation for construction /redevelopment of its premises, the Municipal Corporation shall consider such proposal without insisting for a no objection certificate of respondent No.1's-architect.
iv. The petition is accordingly disposed of in the above terms, however, keeping open the rights and contentions of respondent Nos.1 to 4 to seek other reliefs in the arbitral proceedings. Equally all rights and contentions of the petitioner are expressly kept open.
18. Mr. Kanade, learned counsel for respondent nos.1 to 4 fairly states that as noted above the disputes between the parties can be referred to arbitration. He also agrees for appointment of an arbitral tribunal in ::: Uploaded on - 30/04/2022 ::: Downloaded on - 30/04/2022 21:50:55 ::: 17 914-carbpl 9433-22 that regard. Mr. Shah would also fairly agree that such disputes can be referred to arbitration. In these circumstances, subject to above observations, an arbitral tribunal is required to be appointed as consented by the parties.
19. Ms. Deepti Panda, Advocate of this Court is appointed as a sole Arbitrator to arbitrate the disputes and differences between the parties.
20. The learned prospective sole arbitrator, before entering the reference, shall forward a statement of disclosure as per the requirement of Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996, to the Prothonotary & Senior Master of this Court, to be placed on record of this petition with a copy to be forwarded to both the parties;
21. The fees payable to the arbitral tribunal shall be as prescribed under the Bombay High Court (Fees Payable to Arbitrators) Rules, 2018.
22. At the first instance, the parties shall appear before the prospective arbitrator within 15 days from today on a date which may be mutually fixed by the prospective sole arbitrator;
23. All contentions of the parties on merits of the arbitral proceedings are expressly kept open;
24. Saving the above reliefs as granted in favour of the petitioner, the parties are free to seek any other reliefs before the arbitral tribunal. All contentions of the parties in that regard are also expressly kept open.
25. The petition is disposed of in the above terms. No costs.
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26. At this stage, Mr. Kanade seeks stay to the operative part of the order as contained in paragraph 17. Considering the facts and circumstances of the case, the request as made by Mr. Kanade is rejected.
[G.S. KULKARNI, J.] ::: Uploaded on - 30/04/2022 ::: Downloaded on - 30/04/2022 21:50:55 :::