Citation : 2022 Latest Caselaw 11555 Ker
Judgement Date : 20 December, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE V.G.ARUN
TUESDAY, THE 20TH DAY OF DECEMBER 2022 / 29TH AGRAHAYANA, 1944
WP(C) NO. 3897 OF 2022
PETITIONERS:
1 CHAITHANYA KRISHNAN.A.,
THEJAS, ELAPPULLY 1, ELAPPULLY,
PALAKKAD, PIN-678 622.
2 VARIJAKSHAN,
PALACHIRAKALAM, MANNUKLAD, VENGODI P.O., ELAPPULLY 1,
PALAKKAD, PIN-678 622.
3 RANI.K.,
75, PACHAMALAYIL HOUSE, NOMBIKODE, ELAPPULLY 2,
PALAKKAD, PIN-678 622.
4 VISHALAKSHI,
VISMAYA NIVAS, PATTACHAMKAVU, ELAPPULLY P.O., PALAKKAD,
PIN-678 622.
BY ADVS.
N.RAGHURAJ
SAYUJYA
RESPONDENTS:
1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)
PALAKKAD, OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL), CIVIL STATION, PALAKKAD-678 002.
2 THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL),
JAWAHAR BAHVAN, EAST FORT ROAD, PALAKKAD-678 001.
3 THE ADMINISTRATIVE COMMITTEE,
THE ELAPPULLY SERVICE CO-OPERATIVE BANK LTD.NO.F 1193,
ELAPPULLY P.O., PALAKKAD, PIN-678 622, REPRESENTED BY
THE COMMITTEE CONVENOR.
4 THE ELAPPULLY SERVICE CO-OPERATIVE BANK LTD.NO.F 1193,
ELAPPULLY P.O., PALAKKAD, PIN-678 622, REPRESENTED BY
ITS SECRETARY.
BY ADV ADVOCATE GENERAL OFFICE KERALA
W.P.(C) Nos. 3897 & 3937/2022
2
OTHER PRESENT:
SPL.GP CO-OPERATION.P.P.THAJUDHEEN
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
14.12.2022, ALONG WITH WP(C).3937/2022, THE COURT ON 20.12.2022
DELIVERED THE FOLLOWING:
W.P.(C) Nos. 3897 & 3937/2022
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE V.G.ARUN
TUESDAY, THE 20TH DAY OF DECEMBER 2022 / 29TH AGRAHAYANA, 1944
WP(C) NO. 3937 OF 2022
PETITIONERS:
1 K.R.SURESH KUMAR, AGED 57 YEARS
S/O.RAMANKUTTY, MEMBER, MANAGING COMMITTEE ELAPPULLY
SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY
P.O., PALAKKAD DISTRICT, PIN CODE-678 622.
2 M.JAMEESHA, AGED 56 YEARS
S/O.C.A.MOHAMMED HANEEFA, MEMBER, MANAGING COMMITTEE
ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193,
ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.
3 DEVADAS.K., AGED 43 YEARS
S/O.KANNAN, MEMBER, MANAGING COMMITTEE ELAPPULLY
SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY
P.O., PALAKKAD DISTRICT, PIN CODE-678 622.
4 N.KRISHNADAS,
S/O.NARAYANAN, MEMBER, MANAGING COMMITTEE ELAPPULLY
SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY
P.O., PALAKKAD DISTRICT, PIN CODE-678 622.
5 K.ARAVINDAKSHAN, AGED 57 YEARS
S/O.KRISHNAN, MEMBER, MANAGING COMMITTEE ELAPPULLY
SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY
P.O., PALAKKAD DISTRICT, PIN CODE-678 622.
6 SREEDHARAN.U., AGED 79 YEARS
S/O.UNNY, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE
CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O.,
PALAKKAD DISTRICT, PIN CODE-678 622.
7 C.MURALIKUMAR,
S/O.CHAMI, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE
CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O.,
PALAKKAD DISTRICT, PIN CODE-678 622.
BY ADVS.
ARUN CHANDRAN
NISHA GEORGE
CHITHRA P.GEORGE
W.P.(C) Nos. 3897 & 3937/2022
4
REGINALD VALSALAN
HANA KARNOLIA MADONA CYRIL
GEORGE POONTHOTTAM (SR.)
RESPONDENTS:
1 THE JOINT REGISTRAR OF COOPERATIVE SOCIETIES (GENERAL),
OFFICE OF THE JOINT REGISTRAR OF CO OPERATIVE
SOCIETIES(GENERAL), KENATHUPARAMBU, KUNATHURMEDU, CIVIL
STATION, PALAKKAD DISTRICT, PIN CODE-678 013.
2 THE ASSISTANT REGISTRAR OF CO OPERATIVE SOCIETIES
(GENERAL),
JAWAHAR BHAVAN, EAST FORT ROAD, PALAKKAD DISTRICT, PIN
CODE-678 001.
3 THE ELAPPULLY SERVICE CO OPERATIVE BANK LIMITED NO.F
1193,
ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622,
REPRESENTED BY ITS SECRETARY.
4 THE ADMINISTRATIVE COMMITTEE,
THE ELAPPULLY SERVICE CO OPERATIVE BANK LIMITED NO.F
1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678
622, REPRESENTED BY ITS CONVENOR.
BY ADV ADVOCATE GENERAL OFFICE KERALA
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
14.12.2022, ALONG WITH WP(C).3897/2022, THE COURT ON 20.12.2022
DELIVERED THE FOLLOWING:
W.P.(C) Nos. 3897 & 3937/2022
5
JUDGMENT
[WP(C) Nos.3897/2022, 3937/2022]
Dated this the 20th day of December, 2022
The petitioners are the elected Managing Committee
members of the Elappully Service Co-operative Bank. They are
aggrieved by the supersession of the Committee under Section
32 of the Co-operative Societies Act, 1969 ('the Act' for short).
2. Heard Senior Adv. George Poonthottam and Adv. N.
Raghuraj for the petitioners and Adv. P.P. Thajudheen, Special
Government Pleader (Co-operation) for the respondents.
3. Although various contentions were raised assailing the
order of supersession, including the contention that the
impugned order is motivated by personal animosity and
political rivalry, those contentions based on disputed facts
cannot be decided in a writ petition under Article 226 are
concerned. Similarly the gravity of the charges alleged and
the acceptability of the explanation offered are not open for W.P.(C) Nos. 3897 & 3937/2022
consideration, they being disputed facts. The contentions I find
worthy of consideration are; (i) the order for inquiry under
Section 65 was issued under dictation (ii) the consultation
mandated under Section 32(2) of the Act was not done
properly (iii) The order is issued in violation of the principles of
natural justice and fair play since the order is not issued by the
officer who heard the petitioners.
4. In order to consider the challenge, it is essential to
have an understanding of the scheme of the Co-operative
Societies Act. As discernible from the preamble to the Act,
Co-operative Societies are meant to be self-governing
democratic institutions. No doubt, Co-operative Societies
should function within the framework of the Act and the Rules
and are bound to abide by the orders and circular instructions
issued by the Registrar of Co-operative Societies. Whenever
the Societies deviate from its objectives as declared by the
bye-laws and are found to be violating the mandatory
stipulations under the Act and the Rules and fails to abide by
the Government Orders and circular instructions, resulting in W.P.(C) Nos. 3897 & 3937/2022
loss to the Society and its members, the Registrar has the
power to conduct enquiry or inspection and to initiate further
action, which may ultimately result in the Managing
Committee being superseded or the persons responsible for
causing loss to the Society, being proceeded against. Except
under the above circumstances, there cannot be any
unnecessary intervention into the affairs of co-operative
Societies. Even in such circumstances, action can be initiated
only in accordance with the procedure prescribed under the
Act and Rules.
5. The first ground of challenge is that the order for
enquiry under Section 65 was issued under dictation. In my
opinion, having participated in the enquiry and the subsequent
proceedings under section 32, the petitioners are estopped
from raising that contention at this stage. The principles of
acquiescence and waiver deprives the petitioners' right to raise
such a challenge.
6. The next contention is that the order under Section
32 was passed without considering the opinion of the W.P.(C) Nos. 3897 & 3937/2022
consultees. For considering this challenge, it is essential to
carefully scrutinize the impugned order. A reading of the order
reveals that for the purpose of consultation, the notice under
Section 32(1) along with documents were forwarded to the
State Co-operative Bank and the Circle Co-operative Union,
Palakkad. The State Co-operative Bank approved the decision
to supersede the Managing Committee while the Circle
Co-operative Union opined that the explanation offered by the
Bank should be accepted in its face value and opportunity
given to cure the defects, rather than superseding a
democratically elected Committee. Other than extracting the
opinion of the consultees, there is absolutely no discussion in
the order as to how the opinion is dealt with. It is not stated
as to whether the opinion of the Circle Co-operative Union was
rejected and if so, the reason for doing so. In this context, it
may be profitable to refer to the decision in Jose Kuttiyani v.
Registrar of Co-operative Societies [AIR 1982 Ker. 12]
which is considered to be the locus classicus on the procedure
and powers under Section 32 of the Act. Paragraph 23 of the W.P.(C) Nos. 3897 & 3937/2022
decision being contextually relevant is extracted hereunder;
"23. The word 'consult implies a conference of two or
more persons or an impact of two or more minds in
respect of a topic in order to enable them to evolve a
correct or at least a satisfactory, solution- see R.
Pushpam v. State of Madras (AIR 1953 Mad. 392).
This meaning was approved by the Supreme Court in
Union of India v. Sankalchand (AIR 1977 SC 2328.
Para 39) and then their Lordships added-
"In order that the two minds may be able to
confer and produce a mutual impact, it is
essential that each must have for its
consideration full and identical facts which can
at once constitute both the source and
foundation of the final decision."
In a case that arose under a similar provision in the
Tamil Nadu Cooperative Societies Act a single Judge
of the Madras High Court has in K. Thangavelu v Jt
Registrar, Cooperative Societies (AIR 1976 Mad. 280)
considered the nature and occasion of consultation W.P.(C) Nos. 3897 & 3937/2022
with the financing Bank. The aspect is stated thus at
P. 281, para 4.
"At the stage of the issue of the above show
cause notice no one knows as to what is going
to happen ultimately. It is only the first
respondent makes up his mind after due enquiry
in relation to the irregularities referred to in the
show cause notice, that the financing bank has
to be consulted with regard to the action
proposed to be taken. If the consultation is
before the issue of show cause notice and if the
first respondent ultimately finds that the
irregularities referred to in the show cause
notice have not been established, the
consultation earlier obtained will become a mere
formality and it would be a sheer waste of time."
We think the principle is correctly stated in this case
and we agree with it."
7. The Apex Court also had occasion to consider the
meaning and ambit of the term 'consultation', though in a W.P.(C) Nos. 3897 & 3937/2022
different context. In Ram Tawakya Singh v. State of Bihar
and Ors. [(2013) 16 SCC 206) the Supreme Court made the
following observation at paragraphs 29 and 30;
"29. The word "consultation" used in Sections 10(2)
and 12(1) of the BSU Act and Sections 11(2) and
14(1) of the PU Act is of crucial importance. The word
"consult" implies a conference of two or more persons
or impact of two a or more minds in respect of a
topic/subject. Consultation is a process which requires
meeting of minds between the parties involved in the
process of consultation on the material facts and
points to evolve a correct or at least satisfactory
solutions. Consultation may be between an uninformed
person and an expert or between two experts. In
either case, the final decision is with the consultor, but
he will not be generally ignoring the advice of the
consultee except for good reasons.
30. In order for two minds to be able to confer and
produce a mutual impact, it is essential that each must
have for its consideration fully and identical facts, W.P.(C) Nos. 3897 & 3937/2022
which can at once constitute both the source and
foundation of the final decision. Such a consultation
may take place at a conference table or through
correspondence. The form is not material but the
substance is important. If there is more than one
person to be consulted, all the persons to be consulted
should know the subject with reference to which they
are consulted. Each one should know the views of the
other on the subject. There should be meeting of
minds between the parties involved in the process of
consultation on the material facts and points involved.
The consultor cannot keep one consultee in dark about
the views of the other consultee. Consultation is not
complete or effective before the parties thereto make
their respective points of view known to the other and
discuss and examine the relative merit of their views."
8. Going by the above decisions, the 'consultation'
mandated under Section 32(2) is not an empty formality.
Though not bound by the opinion of the consultees, the
Registrar should clearly state the reasons for not accepting the
opinion. In the case at hand although consultation is effected, W.P.(C) Nos. 3897 & 3937/2022
the opinion of the consultees is not taken into consideration
before arriving at the final decision. If such procedure is
adopted that would render the consultation process otiose.
Therefore, I hold that the consultation process mandated in
Section 32(2) was not adhered to.
9. Coming to the challenge on the ground that the
impugned order was passed by a officer other than the one
who had heard the petitioners, it is to be noted that the
respondents do not dispute the fact that the notice under
Section 32(1) was issued and the hearing conducted by M.
Sabaridas, while the order under challenge is passed by a
person named M.P. Hiran, who succeeded M. Sabaridas as joint
Registrar, Palakkad. The requirement under Section 32 is of
the Registrar being satisfied that the Committee is guilty of the
actions enumerated as (a) to (d) under Section 32(1). Such
satisfaction has to be arrived at based on the available
material. Thereafter, the Registrar has to give an opportunity
to the Committee to state its objections. If the Registrar is not
satisfied with the explanation offered by the Committee, then W.P.(C) Nos. 3897 & 3937/2022
the Committee can be removed. The above procedure
indicates that satisfaction of the officer is fundamental for
initiating action under Section 32 and for superseding the
Committee. Such satisfaction is essential for finding that the
Committee is liable to be superseded and should continue to
exist even after hearing the explanation offered by the
members of the committee. Here, the Joint Registrar who
issued Section 32(1) notice had arrived at the satisfaction that
the Committee is liable to be removed. He had also heard the
explanation offered by the Committee, but did not decide to
supersede the Committee in spite of the explanation
submitted by the members. On the other hand, the officer who
passed the impugned order had neither arrived at the
satisfaction regarding the requirement of removing the
committee nor had occasion to hear the explanation offered by
the members of the Committee. As such, the order is passed
merely based on the records available. Considering the gravity
of the action taken and its implications, the order of
supersession should not have been passed without the officer W.P.(C) Nos. 3897 & 3937/2022
being satisfied that the Committee was bound to be
superseded despite the explanation. In view of the element of
subjectiveness involved, it is imperative for the officer who
passed the order to have heard the Committee members in
person before taking a decision. The law on this point is laid
down by the decision in Jesudasan v. Joint Registrar of Co-
operative Societies (2009 (2) KLT 86), wherein it was held
as follows;
"20. In cases of supersession under S.32(1) of the Act,
the occurrence of the statutory facts among the
different clauses in the said section is a matter about
which the Registrar has to be satisfied, if the order that
he passes has to stand on a jurisdictional issue. That
finding has necessarily to be rendered after taking
stock of facts and materials in relation to the
functioning of a co-operative society, when the
committee to which an opportunity to state objections
is given, shows cause as to why the committee shall
not be superseded and states its objections with
reference to materials, it is the bounden duty of the W.P.(C) Nos. 3897 & 3937/2022
Registrar to decide on the matter after looking into the
materials in the light of the objections. As in the case
in hand, even oral evidence may be tendered. As noted
by the Division Bench in Marico Industries Ltd. (supra),
a decision on those materials cannot be exclusively of
the head or of the heart. Not only that, the decision
under S.32 is not to be rendered either by the
Government or by any other body of persons. It is not
a collective decision that is contemplated or provided
for. It is the satisfaction of the Registrar, who is an
officer appointed by the State Government under S.3
of the Act or on whom the powers of the Registrar are
conferred under that provision. Therefore, there is no
ground to hold that the decision to be rendered under
S.32 could be an institutional one. Hence, the officer
who hears the objections of a committee to the notice
proposing supersession under S.32(1) shall himself
decide on the matter. The impugned order, admittedly
rendered by one, after the committee of which the
petitioner was the President was heard by another, is
without jurisdiction."
W.P.(C) Nos. 3897 & 3937/2022
10. Although the learned Special Government Pleader
relied on the decision in Sudheer T v. M.V. Susheela and
Ors. [2009 (3) KHC 991] to contend that hearing need not
always be personal hearing and unless prejudice is shown,
violation of the principles of natural justice, ipso facto, will not
be accepted as a ground for quashing a decision. The principle
laid down in that decision will not apply to the case at hand. As
discussed earlier, the scheme of the Co-operative Societies Act
indicates that there can be intervention with the functioning of
Co-operative Societies only on the Registrar being satisfied
that such intervention is warranted. Supersession of the
Committee under Section 32 being a drastic action visiting the
Committee members with adverse consequences, the
satisfaction can be arrived at only after hearing the affected
persons and being convinced that, in spite of their explanation,
the Committee is liable to be removed. No such exercise
having been undertaken by the officer who passed the
impugned order, the order under challenge is liable to be
quashed.
W.P.(C) Nos. 3897 & 3937/2022
In the result, the writ petitions are allowed. Ext.P15,
Order No. JRGPKD/3817/2020/CRP2 dated 24.01.2022 is
quashed, reserving the respondent's liberty to continue the
proceedings from the stage of Section 32(1) notice. In view of
the above finding, the elected Committee shall be restored to
office forthwith.
Sd/-
V.G.ARUN JUDGE
sb W.P.(C) Nos. 3897 & 3937/2022
APPENDIX OF WP(C) 3897/2022
PETITIONER EXHIBITS Exhibit P1 TRUE PHOTOCOPY OF THE ORDER BEARING NO,JRGPKD/3991/2020/CRP2 DATED 05.10.2020 ISSUED BY THE 1ST RESPONDENT.
Exhibit P2 TRUE PHOTOCOPY OF THE INTERIM ORDER DATED 22.10.2020 IN WPC NO.22630 OF 2020.
Exhibit P3 TRUE PHOTOCOPY OF THE ORDER BEARING NO.JRGPKD/3817/2020-CRP2 DATED 12.07.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P4 TRUE PHOTOCOPY OF THE INQUIRY REPORT DATED 17.09.2021.
Exhibit P5 TRUE PHOTOCOPY OF THE NOTICE BEARING NO.JRGPKD/3817/2020-CRP 2 DATED 01.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P6 TRUE PHOTOCOPY OF THE REQUEST DATED 13.10.2021 SUBMITTED BY THE PETITIONERS AND OTHERS.
Exhibit P7 TRUE PHOTOCOPY OF REQUEST DATED 16.10.2021 SUBMITTED BY THE 1ST PETITIONER AND ANOTHER. Exhibit P8 TRUE PHOTOCOPY OF THE SHOW CAUSE NOTICE BARING NO.JRGPKD/3817/2020-CRP 2 DATED 26.10.2021 ISSUED BY THE 1ST RESPONDENT. Exhibit P9 TRUE PHOTOCOPY OF REPLY OF 1ST PETITIONER. Exhibit P10 TRUE PHOTOCOPY OF THE REPORT DATED 23.11.2021.
Exhibit P11 TRUE PHOTOCOPY OF THE RECEIPT DATED 22.11.2021.
Exhibit P12 TRUE PHOTOCOPY OF THE RECEIPT DATED 23.07.2021.
Exhibit P13 TRUE PHOTOCOPY OF THE LETTER DATED 19.11.2021.
Exhibit P14 TRUE PHOTOCOPY OF THE ORDER BEARING NO.2013/2010/CRP DATED 03.08.2010.
Exhibit P15 TRUE PHOTOCOPY OF THE ORDER BEARING NO.JRGPKD/3817/2020/CRP 2 DATED 24.01.2022 W.P.(C) Nos. 3897 & 3937/2022
ISSUED BY THE 1ST RESPONDENT.
Exhibit P16 TRUE PHOTOCOPY OF THE RESOLUTION NO.1 OF THE CIRCLE CO OPERATIVE UNION PALAKKAD DATED 04.01.2022.
Exhibit P17 TRUE PHOTOCOPY OF THE REPLY BEARING NO.JRGPPD/955/2021-CRP2 DATED 11.08.2021 ISSUED BY THE PUBLIC INFORMATION OFFICER. Exhibit P18 TRUE PHOTOCOPY OF THE REPLY BEARING NO.
JRGPKD/955/2021-CRP2 DATED 11.08.2021. Exhibit P19 TRUE PHOTOCOPY OF THE RECEIPT ISSUED BY THE 4TH RESPONDENT BANK TO SMT. NIRMALA A.V. DATED 11.11.2021.
Exhibit P20 TRUE COPY OF THE NOTIFICATION DATED 30/11/2022, PUBLISHED IN DESHABHIMANI DAILY DATED 12/12/2022 W.P.(C) Nos. 3897 & 3937/2022
APPENDIX OF WP(C) 3937/2022
PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE ORDER NO.JRGPKD/3817/2020-
CRP 2 DATED 12.07.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P2 TRUE COPY OF THE SECTION 65 REPORT ON INQUIRY DATED 17.09.2021.
Exhibit P3 TRUE COPY OF THE NOTICE NO.,JRGPKD/3817/2020-
CRP 2 DATED 01.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P4 TRUE COPY OF THE REQUEST SUBMITTED BY THE PETITIONERS AND OTHERS TO THE 1ST RESPONDENT DATED 13.10.2021.
Exhibit P5 TRUE COPY OF THE REQUEST DATED 16.10.2021 SUBMITTED BY THE PRESIDENT TO THE 1ST RESPONDENT ALONG WITH ENCLOSURES.
Exhibit P6 TRUE COPY OF THE NOTICE NO.JRGPKD/3817/2020-
CRP 2 DATED 26.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P7 TRUE COPY OF THE EXPLANATION DATED 15.11.2021 SUBMITTED BY THE PRESIDENT FOR AND ON BEHALF OF THE BOARD OF DIRECTORS, ALONG WITH THE SECRETARY OF THE BANK.
Exhibit P8 TRUE COPY OF THE REPORT SUBMITTED BY THE BOARD OF DIRECTORS DATED 23.11.2021 BEFORE THE 1ST RESPONDENT.
Exhibit P9 TRUE COPY OF THE RECEIPT DATED 23.07.2021 ISSUED BY THE BANK EVIDENCING THE REMITTANCE OF THE AMOUNTS.
Exhibit P10 TRUE COPY OF THE ORDER NO.KRGPKD/3817/2020/CRP 2 DATED 24.01.2022 ISSUED BY THE 1ST RESPONDENT.
Exhibit P11 TRUE COPY OF THE REFERENCE ORDER DATED 31.05.2021 IN WA NO.1751/2020 PASSED BY THIS HON'BLE COURT.
RESPONDENT EXHIBITS
Annexure Annexure R1 (a)
W.P.(C) Nos. 3897 & 3937/2022
RESPONDENT EXHIBITS
Exhibit R1(a) True copy of the communication dated
23.12.2021
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