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SEMESTER

2
COURSE

8 - Property Laws I
BLOCK

2 - General Principles of Property Laws


BLOCK

1
AUTHOR

Mr. Krishna Shorewala

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Learning Objectives
After you go through this material, you should be able to:

Understand what a transfer of property is under the


Transfer of Property Act, 1882

Enumerate the kinds of transfers that are covered under


the Transfer of Property Act, 1882

Appreciate the kinds of transfers of property that are not


covered by the Transfer of Property Act, 1882

Understand how a person may transfer property to himself,


if at all

Perceive who is competent to transfer property under the


extant laws of India

Understand how a transfer of property operates

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Introduction
With the conclusion of the Block introducing Property Laws, it is
time to delve into the general principles of property laws. This
Block generally deals with the provisions contained in Chapter II
of the Transfer of Property Act, 1882 (the Transfer of Property
Act).
The main overarching point to understand here is that the Transfer
of Property Act is structured to facilitate transfers. Therefore,
these general principles allow for a great deal of flexibility in the
structuring of the transfer transactions. However, since its purpose
is to promote transfers of property, Chapter II of the Transfer of
Property Act prohibits transactions structured to restrict such
transfers and make properties inalienable or illiquid. Therefore, it
is extremely important to study these various principles in some
detail. We will do so in this Block.

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Unit 1: General rules of transfer of property: What is

or to himself and one or more such other person. From this

transferable property?

definition, we can identify that the key elements of a transfer of

Since we were introduced to the Transfer of Property Act in Block

property are:

1, it is time to look into the general principles that govern the

There must be a convenyance (transfer) of property;

transfer of properties. As mentioned above, these are found in

Both the transferors and the transferees must be living

Chapter II of the Transfer of Property Act more specifically from


Section 5 to Section 49 of the Transfer of Property Act. They deal

persons;

Property may be conveyed in the present or in the future.

with various aspects of transfer of property including, inter alia,

Therefore, even future properties may be transferred under

what may or may not be transferred, principles and doctrines such

the Transfer of Property Act.

as the rule against perpetuity, and the doctrine of election. These


Illustration: A transferred certain properties to B to be held

are key principles that govern all transfer of property covered by

in trust for C. The properties included certain machinery in

the Transfer of Property Act, irrespective of their form. Therefore,

the mill as well as machinery to be bought in the future.

we will study them here.

New machinery was added. As creditor sought to claim it


The first issue that must be considered here is: what is a transfer

against the debts owed to him, which was contested by C.

of property under the Transfer of Property Act? In other words, we

It was held that C acquired a title over the machinery as

have to understand what kinds of transfers are within the purview

soon as it was acquired and As creditor couldnt claim.

of this statute. Section 5 of the Transfer of Property Act provides

These were the facts of the case, Holroyd v. Marshall.i

the answer to this. It states that the term transfer of property, for
the purposes of the Transfer of Property Act, means an act

through which a living person conveys property, whether in

The transfer may be to any living person or to the


transferor himself, or to any combination of these two.

present or in future, to one or more other living person, himself


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Illustration: A owns certain properties. He seeks to create a

Further, recall our discussion in Unit 3 of Block 1, where we noted

trust for those properties. Therefore, he can make a

that there are a variety of transfers that are not covered by the

settlement or trust for the properties and constitute himself

Transfer of Property Act. Some more examples of such transfers

as the trustee. In this case, he is transferring the property

are:

to himself, but in a different capacity. From an owner, he


becomes a trustee of the property.

Family Arrangements: Family arrangements entered into


for the benefit of the family and to avoid disputes are not
considered to be transfers per se. The Transfer of Property

From Section 5, it is clear that the Transfer of Property Act is


concerned with transfers inter vivos that is, transfer between
living persons. Therefore, transfer between a deceased party and

Act does not cover such arrangements since the existence


of a dispute as to title is not a sine qua non (an essential
requirement) of a family arrangement.

a living person would not fall within the definition provided by

Illustration: A is the head of a family and has three children

Section 5.

B, C, and D. They own a large number of properties,

Transfer connotes a creation of interest in the property and mere


compromise does not amount to a transfer.iii Having said that, it is
important to note that a sale ordered by the court is not governed
by the provisions of the Transfer of Property Act since it is a sale
in invitum that is, it is a sale made against the will of the other
party. Therefore, the transfer is by the order of the court and not
voluntarily between living persons.

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each of which is in the name of two or more of them. To


avoid disputes and for the well being of the family, they
enter into an arrangement where all of them divide these
properties so as to make the title for each property clearly
in favour of one person only. This would be an example of
a family arrangement where property technically changes
hands but does not fall within the purview of the Transfer
of Property Act.

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Partitions: Partition agreements among members of a

vein, an abandonment or relinquishment of a claim will not

Hindu joint family are also not considered to be a transfer

constitute a transfer.vii

under Section 5 Transfer of Property Act since the essence

Illustration: There is a piece of land measuring six acres.

of such agreements is that each person gets ownership

Both A and B have made claims over the property. Instead

over specific properties in exchange for his or her share in

of having the dispute decided upon, they decide to enter

all of the joint properties. In such cases, joint enjoyment is

into a settlement wherein A takes two acres and B takes

changed to enjoyment in severalty. Hence, this does

four acres of the land. This would be a settlement of a

amount to a transfer and would not be governed by the

disputed claim, and therefore, would not amount to a

Transfer of Property Act;v

transfer.

Illustration: A, B, C, and D together constitute an undivided


Hindu joint family. The family has extensive property that it

A transfer in favour of the Almighty: A transfer made in the


name of God does not amount to a transfer either. This is

holds jointly. A seeks partition of the property and claims

so because no God can be treated as a living person

his share. This would not be a transfer because all of

within the meaning of Section 5 of the Transfer of Property

them already own and enjoy the properties jointly. As you

Act.ix

may have known, partition only converts joint enjoyment


into enjoyment in separation. So, there is no conveyance
of the property.

Settlement of disputed claims: Settlements of disputed


claims also do not amount to a transfer. When a dispute is
being settled, neither party is conveying a right in one
property to another who did not have it before. In the same

Transfers in the future


Once we are clear on this, the next issue is the meaning of the
term future under Section 5 of the Transfer of Property Act.
Further, let us also examine if the term future refers to the time of

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the transfer or the nature of the property.


With respect to Section 5 of the Transfer of Property Act, the
Hon'ble Supreme Court of India has held that the phrase in
present or in future qualifies the term conveys and not the term
property.xi The term conveys means the transfer of the property
from one person to another. Therefore, here the term in present

in possession of the property answering to the description in the


contract at a later stage, the contract would transfer the beneficial
interest to the transferee immediately after the transferor acquires
the property. The primary requirement for such a contract to be
enforced, however, is that the property must be sufficiently
specified in the contract or instrument of transfer.xvii

or in future qualifies the word conveys that is, the act of

The final issue worth considering here is whether, and how, a

transferring the property and not the property itself. Therefore, it

person can transfer property to himself? Section 5 of the Transfer

allows for parties to enter into a contract to transfer existing

of Property Act clearly contemplates a situation where a person

property not only in the present, but where the conveyance takes

may transfer the property to himself. No person can, or is likely to

xiii

place in the future . Section 5 does not refer to the conveyance of

simply transfer property to himself. However, if a person transfers

future property that is, property that is acquired only after the

the property in a certain capacity and receives it himself in another

transfer transaction. However, unless hit by Section 6 of the

capacity, then such a transfer is permissible. Let us look at an

Transfer of Property Act, which deals with certain kinds of

illustration to help you understand this better.

transfers that are prohibited under the Transfer of Property Act,


such transfers are also valid and enforceable in India. We will
discuss Section 6 in detail later on in this Unit.

Illustration: A is the trustee of a trust, X. A also owns certain lands


in his individual capacity. Now, from the above discussion, it
implies that A may execute a transfer where the lands would be

In such cases, the rule in Holroyd v. Marshallxv would apply. If a

transferred from him, in an individual capacity to himself, but in the

transferor agrees to transfer real and personal property that is not

capacity of a trustee of that trust, X. In such a transfer, although

in his possession at the time when the transfer is purportedly

the transferor and the transferee are the same person, the latter

made, receives consideration for the same and thereafter, comes

takes the property in a capacity other than the former and hence,

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such a transfer is valid under Section 5 of the Transfer of

mere spes succesionis or chance of succession, which do

Property Act.

not amount to an interest in the property and cannot be

With this, we conclude our discussion on what a transfer of

made the subject matter of a transfer.xix

property means. The next broad area to discuss is what may be

In India, the principle goes one step further and even a

transferred under the Transfer of Property Act and for this we

contract to assign a spes succesionis is a nullity. A

must look at Section 6 of the Act.

contract to assign is as much within the purview of


Section 6(a) of the Transfer of Property Act as an actual
assignment, according to the Privy Council. The provision

What may be Transferred?


Section 6 of the Transfer of Property Act is a curiously drafted

would be futile even if the contract were valid and


enforceable.xx

section. Although titled, What may be transferred, it is mainly

Illustration: A is the nephew of B, who owns certain

about what may not be transferred. It provides that property of any

properties. As B has no children, he expects to succeed to

kinds may be transferred except as provided by the Transfer of

the entire estate of B. Consequently, A sells a part of his

Property Act or any other law in force at the time being. After that,

right to the property to C. Later, A succeeds to the

it lists out the transactions that are prohibited under the Transfer

property. The question is whether C can claim the property

of Property Act. Let us look at some these:

from A. The answer is no, since at the time of the transfer,

Spes succesionis: A mere chance of an heir-apparent


succeeding to an estate, the chance of a relation obtaining
a legacy on the death of a kinsman, or any other similar
possibility cannot be transferred. This is because these are

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A did not have any interest in the property other than a


mere chance of succession. Therefore, the transfer is
inoperative even if he succeeds subsequently.
The right of a Hindu reversioner in case of a Hindu women
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holding a limited estate over the property is also an

condition subsequent cannot be transferred to anyone

example of spes successionis and it cannot be

other than the owner of the property thereby affected

transferred.xxi

under Section 6(b) of the Transfer of Property Act.


Therefore, if a lessee commits a breach of the lease

However, a spes successionis should be distinguished

covenant, the lessor may only reverse a right of re-entry to

from a future interest in property, such as contingent or

himself. He cannot transfer that right by itself apart from

executory interest. These are more than mere possibilities

the estate to which it is attached. However, when the

as they are coupled with interest, and hence, may be

lessee breaches the lease terms and, as a result, incurs

transferable.xxii

forfeiture of the land, and the lessor leases the land to

Illustration: A and B were co-widows and held a widows

another with the right to take possession, such a transfer

estate over their deceased husbands property jointly.

will be held to be valid. This is so because it is a transfer of

They entered into an agreement whereby they divided the

more than a mere right of re-entry. In this case, it is a

property equally on the condition that neither would have a

transfer of the reversion following upon the incursion of

right of survivorship over the property after the other dies.

forfeiture.

A died. The court held that this was more than a mere
spes succesionis. The right of survivorship was incidental

to a limited estate the co-widows enjoyed. Hence, it was a


future interest contingent on the death of the other widow
and was alienable. Further, because it was relinquished, B
would not be able to claim As share in the estate!

Right to Re-Entry: A mere right of re-entry for breach of a

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Easement: According to Section 6(c) of the Transfer of


Property Act, an easement cannot be transferred apart
from the dominant heritage. The dominant heritage is the
main property to which the easement is attached.
Easement is a right to use the property or a part of the
property granted for the complete and proper enjoyment of
the dominant property. It arises with continued use of the
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property. It is a right incidental to the ownership of the

recover the property back from the transferee.xxiii Similarly,

dominant heritage and passes with it. It cannot be

the right to manage a temple is a personally enjoyable

detached from it.

right and cannot be transferred.xxiv

Illustration: A owns a huge bungalow near the seaside.

There is an easementary right attached to a bungalow to

of Property Act prohibits the transfer of a right to future

use the path adjoining it leading up to the main road. In

maintenance. This right is irrespective of how it arises, is

such a case, the easement that is, the right to use the

secured, or is determined. The provision was inserted by

path cannot be alienated from the dominant heritage to

way of an amendment in order to resolve a conflict of

which it is attached, that is, the bungalow.

decisions where the Calcutta High Courtxxv held that a right

Personally enjoyable interests: Interests in property that


are restricted in their enjoyment to the owner personally
cannot be transferred. These interests are such that only
the specific person or office can enjoy them and hence,

to future maintenance fixed by decree was not transferable


but the Madras High Court held to the contrary.xxvi
However, it is important to note that maintenance in
arrears is transferable.

they are inalienable. A service inam that is, the

Illustration: A is the wife of B. The court passes a decree in

discretionary grant of property for the purpose of

her favour granting a monthly maintenance of Rupees Five

conducting services in exchange for returns from the

thousand from her husband. The maintenance amount is

property is an example of this.

unpaid and in arrears for six months. A then transfers the

Illustration: When the government granted a service inam


to the ancestors of a person, alienation by that person of
the property was held to be void and he was allowed to
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Right to Future Maintenance: Section 6(dd) of the Transfer

maintenance in arrears as well as the maintenance


payable for the next one year in favour of C. The transfer
of arrears is valid but the transfer of future maintenance is
invalid under Section 6(dd) of the Transfer of Property Act.
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Mere right to sue: Under Section 6(e) of the Transfer of

case of the former, it is an actionable claim, and in the

Property Act, a mere right to sue is not transferable.

latter case, it is a mere right to sue.xxix Further, when any

Please keep in mind that the operative word here is mere.

property is transferred and along with it is a right to sue,

This is indicative of a situation where the transferee

the transfer is valid.xxx Thus, when insured goods were

acquires nothing more than a bare right to sue. The

damaged in transit, the insured claimed the insurance

causes of action arising in tort or in relation to a breach of

amount and, under the doctrine of subrogation, transferred

contract are bare rights to sue and hence, are not

all the interest in the destroyed goods to the insurance

transferable.

company. This transfer was more than a mere right to sue


and the insurance company was allowed to successfully

However, if the interest is more than a bare right to sue,

sue the transport company.xxxi

then it is transferable. In this regard, a mere right to sue


should be distinguished from an actionable claim. When

the beneficial interest in a contract is transferred and that

Property Act, the office held by a public servant or the

subsequently gives rise to a claim in damages, it will be

salary derived from the office is not transferable. As you

valid as a transfer of an actionable claim.xxvii However,

may have realised, such transfers are prohibited because

when the assignment of contract is made after the breach

there is a strong public interest attached to the

occurs, it is only mere right to sue, and hence, excluded by

performance of a public office.

virtue of Section 6(e) of the Transfer of Property Act.xxviii

Stipends and pensions: Similarly, stipends received by

So how does one know whether it a mere right to sue or an

members of the armed forces and pensions received by

actionable claim? The test for distinguishing an actionable

civil and political pensioners of the Government of India

claim from a mere right to sue is whether the claim is for a

are also not transferable under Section 6(g) of the Transfer

precise and ascertained amount or an unliquidated sum. In

of Property Act.

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Public office or salary: Under Section 6(f) of the Transfer of

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Illegal transfers: Section 6(h) of the Transfer of Property

Therefore, a transfer of property in exchange for future

Act prohibits three kinds of transfers:

illicit cohabitation would be hit by this prohibition.

However, irrespective of such a transfer being invalid, if

Transfers opposed to the nature of the interest affected

the immoral purpose has already been achieved, then

thereby: This essentially means that a person with a

the transferor cannot recover the property.

mere life interest cannot alienate as though such person


was the owner of the property.

This is self-explanatory. Therefore, if a person does not

Illustration: A transfers a property to B for Bs lifetime,

have the capacity to contract, he would ordinarily be

and then to Bs first son. Here, B has a life interest in the

disqualified from entering into a contract to transfer

property. He has the right to enjoy the property during

property. Hence, the transfer itself would be invalid in

his lifetime. On his death, it passes to his first son.

such a case.

Therefore, B cannot transfer the property in favour of


another as though B was the owner because it is

Illustration: A is an insane person. B thinks he is sane

opposed to the nature of his interest in the property.

and transfers his property to A. Such a transfer is not


valid as A is incompetent to contract on account of his

Transfer for an unlawful object or consideration: A

insanity.

consideration that is excluded by virtue of Section 23 of


the Indian Contract Act, 1872 (the Contract Act) cannot

Transfer to a person legally disqualified to be transferee:

Miscellaneous: Finally, Section 6(i) of the Transfer of

be transferred. Recall having learnt in Course 3 that

Property Act prohibits certain other forms of transfers,

Section 23 of the Contract Act stipulated what

namely, transfer by tenant of an un-transferable right of

considerations and objects are lawful and what are not.


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occupancy, or by the farmer of an estate with respect to


which there has been a default in the payment of revenue.

Authority to dispose such property that is not is own.

If these qualifications are fulfilled, then a person may transfer the


property either in whole or in part absolutely or conditionally,

Thus, we have seen that there are a number of transactions that


form exceptions to the general rule allowing all forms of transfer of
property. These exceptions are important for a variety of practical

in any circumstance, manner or extent allowed and prescribed by


any law in force at the time of the transfer, provided that the
property is transferable of course.

and public policy reasons. Therefore, it is important to keep them

The primary requirement is that a person should be competent to

in mind at all times when dealing with this area of law.

contract in order to transfer the property. Recall having learnt


about persons competent to contract in Course 3. At the cost of
being repetitive, a minor, that is, a person below 18 years of age is

Persons Competent to Transfer


Now that we know what cannot be transferred under the Transfer
of Property Act, it is also imperative that we understand who is
competent to transfer property under this statute.

not competent to contract,xxxiii and any lunatic or person of


unsound mind cannot transfer property under Section 7 of the
Transfer of Property Act. It may be important to note that, a minor,
however, can be a transferee of property in case of a mortgage in
his favourxxxiv or a salexxxv , but not a lease. This is because a lease

Section 7 of the Transfer of Property Act deals with persons

would entail an obligation on the minor to pay rents and undertake

competent to transfer. Under this provision, to be competent to

other obligations under the lease agreement.xxxvi

transfer property, a person must have the following qualifications:

Competence to enter into contracts; and

Entitlement to the property; or

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Operation of Transfer
Once we know that there is transferable property and a person
has the capacity to transfer it, the next question that arises is: how
does the transfer operate? When a property is transferred, which

income accruing from it is also presumed to be transferred.


However, these rules will obviously not apply where the parties
have entered into contracts that provide to the contrary, either
expressly or by necessary implication.

parts of it are automatically included in the transfer? The answer is


found in Section 8 of the Transfer of Property Act. This section
deals with the operation of transfers. The provision states that

Oral Transfers

unless provided otherwise expressly or by necessary implication,

The final issue for this Unit is: how is a transfer to be effected?

a transfer passes to the transferee all the interest that the

Section 9 of the Transfer of Property Act provides that a transfer

transferor is then capable of in the property and all the incidents

may be effected orally that is, without writing in any case in

thereof. This is the general rule. After that, the provision gives

which writing is not expressly required by law, such as immovable

many specific instances and provides an illustrative list of what

property valued under Rupees One hundred. This provision

would be transferred in each instance.

becomes relevant when we come to registration of property in the

For instance, in the case of land, any easements annexed to it,

final Block and we shall examine it in greater detail then.

rents and profits accruing from it, and all things attached to the
earth are transferred with the land. In case of machinery attached
to the earth, the immovable parts go with it. Where the property is
a house, the easements annexed, the rent accruing, and the
fixtures provided for permanent use, such as bolts and doors are
automatically transferred. Where the property is money or other
property yielding income such as leased property, the interest or
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Conclusion
With this, we conclude this Unit on the general rules of transfer
of property. Once you have an understanding of these rules, we
must then look at specific rules that govern transfers generally.
Transfer transactions may be carried out with varied nuances.
For each of these, there are different principles applicable.
These principles shall be the subject matter of our study for
the remaining Units in this Block.
-x-x-

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Suggested Reading
Books

Justice Ramanujam (ed.), G.C.V. Subbaraos Transfer of


Property Act, 15th ed., C. Subbiah Chetty & Co, Chennai,
2005.

G.P. Tripathi, The Transfer of Property Act, 1882, 15th ed.,


Central Law Publications, Allahabad, 2005.

Poonam Pradhan Saxena, Property Law, 2nd ed.,


LexisNexis Butterworths, New Delhi, 2011.

S.M. Lahiri, The Transfer of Property Act (Act IV of 1882),


11th ed., India Law House, New Delhi, 2001.

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i

Holroyd v. Marshall (1862) 10 HLC 1.


P. John Chandy and Company Private Limited v. P. Thomas, AIR 2002 SC 2057
and Dr. Mahesh Chand Sharma v. Raj Kumar Sharma, AIR 1996 SC 869.
v
Radhakrishnayya v. Sarasamma, AIR 1951 Mad 213.
vii
Khunnilal v. Govind, 33 All 356 P.C.
ix
Narasimha v. Venkatalingam, 50 Mad. 687 (F.B.).
xi
Jugal Kishore v. Raw Cotton Company, AIR 1955 SC 376
xiii
Sumsuddin .v. Abdul Husein, (1909) 31 Bom 172
xv
See, Holroyd v. Marshall (1862) 10 HLC 1
xvii
Also see, Talby v. Official Receiver, 13 App Case 543.
xix
Stockly v. Parsons (1890) 45 Ch. D. 51.
xx
Ananda Mohan v. Gaur Mohan, AIR 1923 PC 189.
xxi
Amrit Narayan v. Gaya Singh 45 Cal 590 (PC).
xxii
See May Yaitt v. Official Assignee, (1930) P.C. 17.
xxiii
Anjaneyulu v. Sri Venugopala, 45 Mad 620.
xxiv
Raja Varma v. Ravi Varma 1 Mad 235 (P.C.).
xxv
Asad Ali v. Haider Ali, 38 Cal. 13
xxvi
Thimmanayanim v. Venkatappa, (1918) Mad. 713 (F.B.)
xxvii
Jaffer Meher Ali v. Budge Budge Jute Mills Company, 38 Mad 308.
xxviii
Hirachand v. Nem Chand, 47 Bom 719.
xxix
See Manmath Nath Mullick v. Hedait Ali, 11 Pat 266 (1932)
xxx
See Shankarappa v. Khatumbi, 56 Bom 403 (mesne profits).
xxxi
See United India F&G Insurance Company v. P. Transport Carriers, AIR 1986
AP 31.
xxxiii
See Mohori Bibi v. Dharamdas Ghosh, 30 Cal 539 (PC); Raja Balwant Singh v.
Rao Maharaji Singh, 34 All 296 (PC).
xxxiv
See Raghavachariar v. Srinivasa Raghavachariar, 40 Mad 308 (FB).
xxxv
Subba Reddy v. Guruva Reddy, 1930 Mad 425,
xxxvi
Pramila v. Jogeshar, 3 Pat. LJ 518.
iii

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