History 2 Project
History 2 Project
History 2 Project
On
Regulating Act of 1773
Submitted to
Submitted by:
Amey Prakash Jadhav
2019/B.A.LL.B/43
B.A.LL.B. (Hons.) Semester-II
1
INDEX
1 Introduction 4
2 Aim 5
3 Objectives 5
4 Research methodology 5
2
11 Defects in the Regulating Act 17
13 Conclusion 23
3
INTRODUCTION
The Regulating Act of 1773 was an Act of the Parliament of Great Britain intended to
regulate and restrain the management of the East India Company’s rule in India by
acting as an authoritative watch dog. It was passed by the British Parliament for the
regulation of the British East India Company’s Indian territories, mainly Bengal. [1]
It was the first intervention by the British government in the company’s territorial
affairs and marked the beginning of a takeover process that was completed in 1858.
The Act was passed by Lord North’s Government in 1773. It was designed to remove
the evils inherent in the Company’s constitution and to give an orderly and efficient
government to its territories in India. The Bill for this act was introduced by Lord
North on May 18, 1773. It is therefore also called Lord North’s Bill. Lord North
‘emphasized the need of placing the Company’s affairs on a solid, clear and decisive
establishment. ‘However, the Bill received strong opposition from different quarters,
but eventually it got passed and was called The Regulating Act of 1773.[2]
The Regulating Act was a very long document. It remodelled; reframed the
Company’s constitution as it existed in working in London and also introduced
important changes in the government of its Indian possession. The occasion for the
Regulating Act was the company’s misgovernment of its Bengal lands, brought to a
crisis by the threat of bankruptcy and a demand for a government loan.
The Act, however, failed to stop corruption and it was practiced rampantly by almost
all of the officials from the Governor General at the top to the lowest district
authorities.[3]
4
AIM
The research project aims at shedding light on the the Regulating Act of 1773, passed
by the British Parliament for the regulation of the British East India Company along
with a detailed analysis of its impact on administrative, legislative and judicial system
in India. The main aim of the project is to discuss the various reasons for the
implementation of this act along with an elaborate description of its various
provisions. It even brings in light some of the issues revolving arou nd the topic like
that of the defects of the Supreme Court.
OBJECTIVES
RESEARCH METHODOLOGY
The researcher follows The Doctrinal method of research which requires gathering
relevant data from the specified documents and compiling databases in order to
analyze the material and arrive at a more complete un derstanding and analysis of the
Regulating Act of 1773.
This research paper has both quantitative and qualitative data collection tools. Data
collection is done through referring to various websites -books, classroom observations
and questioning with teacher.
5
SCOPE
There were not much restriction regarding the making of this research paper because
of the nature of this research paper. The reasons and the provisions were fairly easily
accessible and thus it was easy to reach an analysis, but the topic being a vast field of
our glorious history cannot be confined, thus, the research work has sought with some
of the unavoidable limitations.
The key objectives of the Regulating Act of 1773 was to control and regulate the
affairs of East India Company; To remove the political power from the hands of the
Trading Company; To provide new administrative reforms which were to provide a
Central Administration System; To improve the despotic state of affairs (situation) of
the company; To sort out the chaos created by the introduction of the system of dual
government; To bring anti-corruption practices via the medium of the act by
prohibiting the servants of the company, from engaging in any form of private trade
and from accepting bribes, gifts, and presents from the people.[4]
1. As a result of the Battle of Plassey(1757) and the Battle of Buxar(1764) the area of
Bengal and Bihar came under the system of Dual Government(DIWANI & NIZAMAT).
As a result of which the British got the license to exploit the people of these areas without
being accountable to anyone. They made the life of our fellow Indians miserable and full
of troubles. The people of these provinces were thus being suppressed and exploited by
both – Company Official and Nawabs. So the British Government had to Intervene.[5]
2. Due to these exploitative practices, the people were literally reduced to beggars. They
had no means of livelihood or resources to depend upon. This was a major reason of the
Great Bengal Famine of 1770. 10 million perished because of this famine and millions of
6
other were even there who were torn apart. The famine was spread in the period of 1769
to 1773. One important thing to note is that no famine occurred in that century before.
The famine reduced the revenue of East India Company which worsened its financial
condition. [6]
3. The servants of the East India Company were grossly corrupt from bottom to top. They
had no sense of responsibility, accountability or sense of “right and wrong:” Even Clive
was known for his corrupt attitude. Clive and other English officials have benefited
heavily from the Nawabs of Bengal.[7] This corruption took the company to near
bankruptcy which was made worse because of the reduced revenues due to famine. The
Company servants had earned so much money that some of them retired to live luxurious
lives resembling those of Indian Nawabs. These corrupt infamous English Officials were
also known by the name “ENGLISH NAWABS”. They were a blot on the governing
authorities.
4. British Government was willing to know, oversee and regulate the affairs of the East
India Company in India. At this time they didn’t have enough control over the affairs of
the East India Company which led them to find a way to have some means of restraints.
5. The three presidencies of Bengal, Madras and Bombay were independent of each other
and there was no centralised authority in India to control them. All three presidencies
were answerable separately to the Court of Directors in England. The Court of Directors
were 24 in number. The affairs of the East India Company were under the control of the
Court of Directors which were 24 in number. [8]
This was enough for the parliament to catch hold the opportunity, cross examine and
investigate and evaluate the doings of the company and its officials and then enact a
legislation or a set of guidelines to regulate the unfortunate circumstances.
7
PROVISIONS OF THE REGULATING ACT.
The Regulating Act described fully as an “Act for establishing certain regulations for
the better management of the affairs of the East India Company as well in India as in
Europe”. The features are-
The directors of the company were elected for five years instead of being elected for
one year. One- fourth of them retired every year and the retiring Directors were not
entitled to be elected again. This was done to secure continuity in the direction of the
company’s affairs and strengthening the position of the directors at the mercy of the
shareholders who could thus always have their say.
To prevent power from being easily purchased by the company’s servants, voting
power of the shareholders were restricted to those who held stock worth 1000 Pounds
or more in the company. Small shareholders were thus deprived of their votin g rights
in the hope that is would result in improving the quality of shareholders, and
accordingly, of the directors.[9]
In order to assert parliament’s control over the company, the directors were required
to place regularly all their correspondence, regarding civil military affairs within the
Indian authorities, before the Secretary of the State. All correspondence regarding to
revenues in India was required to be placed before the Treasury in England. Thus, a
sense of responsibility, accountability and transparency had to be maintained by the
officials.[10]
8
The Act reorganized the structure of the Calcutta government. It appointed a Governor
General and a Council of four and vested in them “the whole civil and military
government” of the Calcutta Presidency. Warren Hastings was appointed as the first
Governor-General. The decisions in the council meeting were to be made by a
majority of votes. The Governor-General had only one vote and a casting vote in case
of a tie in the Council. He had no power to override the majority in the Council which
could, as a result, defeat any of his policies which means that he did not have a veto.
This system of one vote and no overriding authority was changed under Cornwallis
changes.[11]
The presidencies of Bombay and Madras were placed under the control,
superintendence and overlook of the Governor General in Council while exercising
their power to make war and peace. The Governor General and the Council had to
keep the Court of Directors fully informed of all their activities affecting the interests
of the company and they were also to work in entire obedience , allegiance and loyalty
to the orders and instructions of the court of directors. [12]
The Act prohibited the servants of the company from engaging in any private trade or
accepting presents or bribes from the natives so as to curb corruption.
9
ESTABLISHMENT OF THE SUPREME COURT AT CALCUTTA
An important innovation made by the Regulating Act was the creation of the Supreme
Court at Calcutta under SECTION 13 of the Act. Supreme Court at Calcutta was
created by the Royal Charter. King George III on 26 March 1774 issued the charter
establishing the Supreme Court. It was a crown’s court.[13]
The Governor General, Members of the Council and the judges of the Supreme Court
were appointed as justices of Peace and were empowered to hold Quarter session for
administering criminal justice.
Sir Elijah Impey was appointed as the first Chief Justice of Supreme Court at
Calcutta. It took the place of the former Mayor’s Court with more elaborate
machinery. The Court was constituted of a Chief Justice and three puisine judges
appointed by the King from barristers of at least five years’ experience. The authority
of these judges was like those of King’s Bench in England. Engaging in commercial
pursuits and receiving presents, which were common practices among the company
servants of the time, were strictly forbidden. [14]
The Court had the power to try civil, criminal, admiralty cases and it had to be a Court
of Record and had the power to try both Civil and Criminal c ases even. It was given
supreme jurisdiction over all British subjects including the provinces of Bengal, Bihar
and Orissa. It extended to the servants of majesty, company servants etc. [15]
Supreme Court was not allowed to hear the cases against the Governor General and
Council and exception was crime of felony or treason. The Supreme Court was also
made to consider and respect the religious and social customs of the Indians. Appeals
could be taken from the provincial courts to the Governor -General-in-Council and
from there to King-in-Council.[16]
10
Governor General and council got the powers to make the laws and rules but with the
condition that all the rules and laws must be registered in the Supreme Court and did
not become effective until they were registered and published in the Supreme Court
.Any person in India got the power to appeal against such rules within sixty days in
the King’s council, which then set aside such a rule or changed the law. The appeal
was to be made in the Supreme Court of Calcutta within stipulated period. It was
mandatory to send all the rules made by Governor General to a secretary of state in
England. King in council got the suo moto power to change or disallow any law. Thus,
The Supreme Court reviewed the law before it became the law. [17]
WRITS
In common law, a writ is a formal written order issued by a body with administrative
or judicial jurisdiction; it is often described as a formal order issued by a government
authority in the name of sovereign power.[18]
ORIGIN
In India writs were introduced by the Regulating Act, 1773 under which the Supreme
Court was established in Calcutta. The charter also introduced High Courts and these
High Courts had analogous power to issue writ as successor to the Supreme Court.
The writ jurisdiction of both the courts was limited to their original civil jurisdiction
which they enjoyed under Specific Relief Act, 1877.[19]
CONSTITUTIONAL PROVISIONS
The Constituent assembly of India while drafting the constitution of India had adopted
the very feature of British Judicial System and mentione d it in our constitution in the
name of Constitutional remedies in Article 32 and Article 226. The aim behind
introducing the writ in our Constitution is to ensure the existence of Fundamental
11
rights for all the person and citizen of Country. The power to issue writs remain with
the Supreme Court and the High Courts. [20]
1. Habeas Corpus
The Latin term habeas corpus means ‘you may have the body ‘. By this writ the court
directs the person or authority who has detained another person to bring the body of the
prisoner before the court so as to enable the court to decide the validity, jurisdiction or
justification for such detention. The principal aim of the writ is to ensure swift judicial
review of alleged unlawful detention on liberty or freedom of the prisoner or detention.
The great value of the writ is that it enables immediate determination of the right of a
person as to his freedom.
2. Quo Warranto:
The term quo warranto means what is your authority . The writ of quo warranto is used to
judicially control executive action in the matter of making appointments to public offices
under relevant statutory provisions. The writ calls upon the holder of a public office to
show to the court under what authority he is holding the office in question. If he is not
entitled to the office, the court may restrain him from acting in the office and may also
declare the office to be vacant. The writ proceedings not only give a weapon to control
the executive from making appointments to public office against law but also tend to
protect the public from being deprived of public office to which it has a right.[21]
3. Mandammus
12
4. Prohibition
An order from a superior court to a lower court or tribunal directing the judge and the
parties to cease the litigation becausethe lower court does not have proper jurisdiction
to hear or determine the matters before it.[23] A writ of prohibition is an
extraordinary remedy that is rarely used.
5. Certiorari
When a party loses in a court of law, it is often allowed to appeal the decision to
a higher court. In some instances, parties are entitled to an appeal, as a matter of right.
However, sometimes a party is not able to appeal as a matter of right. In these
instances, the party may only appeal by filing a writ of certiorari. If a court grants the
writ of certiorari, then that court will hear that case. [24]
The Legacy of The Regulating Act was carried further by the constitution makers
through the provision of Article 226 and 32 and its writ jurisdiction in the nature of
habeas corpus, mandamus, certiorari, prohibition, and quo -warranto. Our judicial
system commands that there is supremacy of law in country and no one is above
whether its government or its organ everyone have to be accountable towards the
judiciary therefore this shows that our judicial system is independent of any other
influences.
Thus the Merits of the establishment of the Supreme Court in the country includes –
13
7. Enabled judiciary to control executive.
The Governor General and council was authorized to make and issue rules, ordinances
and regulations for the good of civil government of company’s settlements at Fort
William and other subordinate factories and places.[25]
The significance of the Regulating Act is that it brought the Company affairs under the
control, regulation and overlook of the Parliament. Besides, it proved that the Parliament
of England was concerned about the welfare of Indians and their livelihood and
sustenance.
The greatest merit of this Act is that it put an end to the arbitrary rule of the Company
and provided a framework for all future enactments relating to the governing of India.
The autocratic rule by any governor general thereafter was not possible to survive.[26]
This act undoubtedly established the supremacy of the Presidency of Bengal over the
others. In matters of foreign policy, the Regulating Act made the presidencies of Bombay
and Madras, subordinate to the Governor General and his council. Now, no other
presidency could give orders for commencing hostilities with the Indian Princes, declare
a war or negotiate a treaty.[27]
14
THE CONTRIBUTION OF THE ACT TO THE INDIAN LEGAL HISTORY.
Despite these glaring defects, the Regulating Act was of great constitutional
importance. It constituted a great landmark in the constitutional history of India
because of following reasons:
For the first time, it was recognized that the East India Company was not a mere
commercial body. The Act made it crystal clear that it was a Political Organization whose
functions also were political in nature. [30]
15
It was the first of a series of parliamentary enactments which brought the control of
Indian affairs in the hands of the Parliament.
The Act is deemed as significant because it was the first measure of its kind which
allowed a European government to assume the responsibility for governing territories
outside Europe. Such an attempt was not made by any other European nation so far. [31]
The Act put an end to scandalous misrule and corruption which was prevalent amongst
the servants of the Company. No person in the Indian service was henceforth allowed to
fill his coffers with alluring presents of the natives or amass huge fortunes. Even the
Governor-General, his Council or the judges of the Supreme Court were prevented from
succumbing to such temptations.[32]
It was the Act of 1773 that for the first time, the British nation, as a nation, assumed the
actual responsibility of the government of the territories won by the servants of the
trading corporation.[33] There was a gradual growth of feeling that the Britishers through
their Parliament should be responsible for the British rule in India.
The researcher would like to conclude with the words of Prof. Keith -“The act altered
the constitution of the Company at home, changed the structure of the Company in
India, subjected in some degree the whole of territories to some supreme control in
India, and provided in a very efficient manner for the supervision of the Company by
the Ministry.
The objective of the Regulating Act was commendable, but system that it established
was inept. The act was a jar of inconstancies with numerous deficiencies.
Firstly, the act made the Governor General powerless before his colleagues because he
had no veto power. This brought difficult and unmanageable times for Warren
Hastings. He was outvoted and overruled for most of the times by the members of his
council. Further, some of the members were hostile towards Warren Hastings.
16
Governor-General had no free hand to give an independent decision, the council used
the Governor-General as the puppet to make their decision.[35]
Secondly, the provisions regarding the Supreme Court at Fort Will iams were vague
and ambiguous. The law did not mention anything regarding the jurisdiction of the
Supreme Court. It also did not demarcate the lines between powers of Governor and
Supreme Court. The actions of the servants of the company were brought under the
Supreme Court but this again was a point of tussle between Governor General and the
court.[36]
Thirdly, the presidencies of Bombay and Madras continued to act on their discretion
on pretext of emergencies. They also continued wars and alliances without caring in
the least bit to Presidency of Bengal. Though the Governors were subordinate to the
GG in actual practice, led to the ultimate power in the hands of the Governor and his
subordinates resulting in widespread corruption and weakening of the administration
at lower levels.[37]
Fourthly, the parliamentary control was inefficient in the sense that there was no
concrete arrangements to study, examine and scrutinize the reports and data sent by
the Governor General in council.[38]
Lastly, there was nothing in the act which could address the people of India, who were
paying revenue to the company but now were dying in starvation in Bengal, Bihar and
Orissa due to the famine that wiped off more than 10 million people. [39]
Some of these problems were addressed in an amendment of the Regulating Act in the
form of Amending Act 1781 and other acts which followed it.
17
The Amending Act of 1781 reduced the powers of Supreme Court much below Governor
General in Council.[40]
The Pitts India Act 1784 gave veto power to the Governor General and the presidencies
were made subordinate to the Governor General.[41]
The Regulating Act of 1773 has been a motivation and an inspiration for the
government of this era to prevent, prohibit and restrain the government officials from
engaging into the illegal, immoral, unethical and illicit act of corruption.”Bakshish,”
“Expectations,” “Chai-Pani” are words that most Indians are familiar with and, often,
accept as a way of life. But this has got to change now as the society is progressing
from being oriented to a single fellow to the one concerning the society as a whole;
from imperialism to parliamentarianism. Thus, th e government in this era is a dynamic
one concerned with rooting the evil of corruption and bribery out from the society
with specific focus on the public servants. As a result of this motive in mind, the
government has formed several organisations, commit tees and laws so as to restrict
this practise from the society which are as follows -
In the wake of numerous scams being unearthed in India over the past decade, the
enforcement agencies have been proactive in terms of monitoring c ompliance under
relevant anti-corruption and bribery laws and taking action against violations
thereof.[42]
The Prevention of Corruption Act 1988 is the principal anti-corruption law. It penalises
offences committed by public servants in relation to the acceptance or attempted
18
acceptance of any form of illegal gratification (i.e. anything of value other than a legal
entitlement). A bribe giver may also be prosecuted if it is proven that he or she was
involved in the abetment of the offence committed by the public servant.[43]
The Penal Code 1860 is the penal law of India and sets out provisions which are
interpreted to cover bribery and fraud matters, including those committed in the private
sector. Its provisions include offences relating to cheating and dishonestly inducing
delivery of property and criminal breach of trust.[44]
The Companies Act 2013 contains certain provisions to prevent corruption and fraud in
the corporate sector, including:
o the duty of statutory auditors to disclose any instances of fraud (which covers
instances of corruption and bribery) committed by company employees;[45]
o increased penalties for fraud offences (up to 10 years of imprisonment and a fine
of up to three times the amount involved in the relevant fraudulent
transaction);[46]
o vesting increased powers (eg, power to arrest) with the SFIO;
o provisions for the establishment of vigilance mechanisms and audit committees;
and
o increased responsibilities of independent directors.
The Whistle-blowers’ Protection Act 2011 is primarily intended to protect whistle-
blowers with respect to disclosure of acts of corruption, wilful misuse of power, wilful
misuse of discretion or the commission of attempted commission of a criminal offence by
a public servant.[47]
The Lokpal and Lokayuktas Act 2013 establishes the offices of the nodal ombudsman
for the central and state governments (Lokpal and Lokayuktas, respectively) and accords
relevant powers to these bodies to unearth and investigate cases of corruption in the
public sector in India (eg, the authority to provisionally attach property pending
proceeding). [48]
The Foreign Contribution (Regulation) Act 2010 regulates the acceptance and use of
foreign contributions and hospitality by corporate entities and individuals. Receipt of
foreign contributions requires prior registration with or approval of the Ministry of Home
19
Affairs. In the absence of such registration or approval, receipt of foreign contributions
may be considered illegal and punishable.[49]
The Prevention of Money Laundering Act 2002 aims to prevent instances of money
laundering and prohibit use of the proceeds of crime in India. It prescribes strict penalties
for violation of its provisions, including imprisonment of up to 10 years and the
attachment or confiscation of tainted property.[50]
The Benami Transactions (Prohibition) Act, 1988 prohibits any benami transaction
(purchase of property in false name of another person who does not pay for the property)
except when a person purchases property in his wife’s or unmarried daughter’s name.
Any person who enters into a benami transaction shall be punishable with imprisonment
of upto three years and/or a fine. All properties that are held to be benami can be acquired
by a prescribed authority and no money shall be paid for such acquisition.[51]
The Central Vigilance Commission (CVC) is the nodal statutory body that supervises
investigation of corruption (under the Prevention of Corruption Act 1988 and the Penal
Code 1860) in central government departments, government companies and local
government bodies, and among public servants. The CVC can refer cases to either the
central vigilance officer of the relevant government department or the Central Bureau of
Investigation (CBI) for investigation.[52]
The CBI and the Anti-corruption Bureau (ACB) are also investigative authorities for
corruption under the Prevention of Corruption Act 1988 and the Penal Code 1860. While
the CBI’s jurisdiction covers the central government and union territories, the ACB
investigates cases within the states. However, the CBI has recently sought guidance from
the Supreme Court regarding the permission required from a state government to conduct
an inquiry into an offence relating to the state.[53]
The Serious Fraud Investigation Office (SFIO) is set up under the Ministry of
Corporate Affairs and investigates the affairs of companies based on an order from the
central government:[54]
20
o on receipt of an application from the competent regulatory authority or
government department;
o at the request of the concerned company;
o in cases of public interest on a suo moto basis (ie, of its own accord).
Lokpal also has the power of superintendence over the CBI, if it refers any case to
CBI. Lokayuktas are state-level counterparts of the Lokpal, and certain Indian states
have appointed officers for this position.[57]
21
The Income Tax department has been appointed as the authority in cases pertaining to
the BenamiTransactions (Prohibition) Amendment Act 2016, by virtue of which it can
attach and confiscate benami properties.[59]
Thus, The REGULATING ACT of 1773 has been a constant source of motivation,
inspiration and a driving force for the government of the present times to restric t and
restrain the behaviour and conduct of the government officials and to prevent them
from being a part of this illegal practise of corruption. It’s a menace as well as an evil
of our society that can only be dealt if all of us contribute and realise th e inherent
defects and malice that it encompasses.
The government is thankful to the Regulating Act because it made them realise the
importance of a sensible and sensitive government official who works for the public
welfare and not for his own self-interests .Truly the regulating act has been a source
of motivation and a reason of commitment by the government against the curse of
corruption.
22
CONCLUSION
It was first landmark in the constitutional development of India. It was through this
Act that the British Parliament for the first time interfered into the affairs of India, to
control the Company’s administration. This Act remodelled the constitution of the
Company both in England and in India, and then it was brought under the subjection
of some degree of control.[61]
Generally The British Regulating Act can be considered as the initial Endorsement of
the British government into the control of the Indian Subcontinent .[62]
The provisions of the Act clearly indicate that it was directed mainly to the
malpractice and corruption of the company officials. The Act, however, failed to stop
corruption and it was practised rampantly by all from the Governor General at the
top to the lowest district officials.[63] Major charges brought against Hastings in his
impeachment trial were those on corruption. Corruption divided the Council into
two mutually hostile factions- the Hastings group and Francis group. The issues of
their fighting were corruption charges against each other. [64]
The Regulating Act was not without limitation. The defects and weaknesses of the
Regulating Act of 1773 emerged once the Act was put to practice. Consequently,
Pitt’s India act, 1784 had to be enacted to fight corruption and to do that an
incorruptible person, lord Cornwallis, was appointed with specific references t o bring
order in the corruption ridden polity established by the company. [65]
23
The defects of the Act were removed by the Declaratory Act 1781, The Pitt’s India
Act 1784 and the Amendment Act of 1786.
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banglapedia.org
historyhome.co.uk
unacademy.com
[10] Penderel Moon, “Warren Hastings and British India”, 1962.Pg no.92.
24
[11] https://www.vskills.in/certification/blog/regulating -act-1773/ (visited on 24.11.2018)
[25] http://www.historydiscussion.net/british-india/administration-of-the-east-india-
company-and-crown-during-the-british-rule-in-india/712 (visited on 27.11.2018)
25
[26] https://www.brainkart.com/article/The-Regulating-Act-of-1773-and-Merits-and-
Demerits-of-the-Act_1310/ (visited on 23.11.2018)
[30] Mazhar Kirbiya “GANDHI AND THE INDIAN FREEDOM STRUGGLE”,1 S T ed.1999,pg
no 109.
[32] http://docplayer.net/84295001-Interferences-of-british-parliament-in-east-india-
company-s-administration-in-india.html (visited on 23.11.2018)
26
[41] https://selfstudyhistory.com/2015/01/31/the -pitts-india-act-1784/ (VISITED ON
25.11.2018)
[50] http://www.mondaq.com/india/x/245524/White+Collar+Crime+Fraud/Law+Of+MoneyLa
undering+In+India (visited on 27.11.2018)
[51]http://www.prsindia.org/administrator/uploads/general/1302844978_PRS%20Note%20on
%20corruption%20laws.pdf (visited on 28.11.2018)
27
[55] http://kgritzy.blogspot.com/2016/ (VISITED ON 28.11.2018)
[61] http://www.shareyouressays.com/essays/the-regulating-act-1773-summary/89892
(visited on 27.11.2018)
28
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