(ix) It has been argued that the instructions in the
circular dated 12th October 2022 come into
force prospectively. This argument must also be
rejected. The IRDAI has been prompted to
issue the directions in the circular for the sole
reason that it was observed by the regulatory
authority that various insurers were repudiating
the claims on the pretext of the so called
‘exclusions’ in the policy document and hence
the regulatory authority was compelled to issue
the said directions. Thus, it stands to reason
that the directions have been issued to rectify
the arbitrary refusal of claims. Hence, the same
obviously applies to past refusals on the grounds
as mentioned in the circular.
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 2839 OF 2021
Rita Kirit Joshi Vs NEW INDIA ASSURANCE COMPANY,
CORAM : G.S.Patel & Neela Gokhale, JJ.
PRONOUNCED ON : 1st March 2023
JUDGMENT ( Per Neela Gokhale J) :-
Citation: 2023 Lawweb (Bom HC ) 12.
1. Rule. Rule made returnable forthwith. Heard the Writ
Petition finally on merits with the consent of the Learned counsel
appearing for the Petitioner and the Respondent Nos. 1 and 3.
Though served, Respondent No. 2 is absent.
2. The present petition under Article 226 of the Constitution of
India seeks a declaration that under Clause No. 3.11 of a particular
insurance policy, the Petitioner is entitled to a recovery of all the
expenses she incurred for the treatment of her new-born twin
babies. She seeks a mandamus to the Respondent No. 1 insurance
company to disburse the amounts of her claim. The prayers in the
amended writ petition read thus:
“A. That this Hon'ble Court be pleased to issue a writ of
Mandamus or Certiorari or any other appropriate writ,
order or direction in the nature of a writ of Mandamus or
Certiorari or any appropriate writ, order or direction under
Articles 226 r/w Articles 14 & 21 of the Constitution of
India, to hold and declare that under Clause 3.11 of the
Mediclaim policies bearing Nos.: 14220034179500003932
& 1422003417780000676, the Petitioner would be entitled
to all the expenses incurred by her for the treatment of her
new born twin babies in terms of her claims amounting to
Rs. 11,05,593/-; AND may further be pleased to quash and
set aside the impugned communication dated Nil (which is
at EXHIBIT - "H" to the petition) and the rejection / non
acceptance of her claims under her Mediclaim Policies;
AND further direct the Respondent No. 1 to reimburse the
total expenses/claims submitted by the Petitioner for
treatment of her twin babies under the Mediclaim policies
bearing Nos.: 14220034179500003932 & 14220034177800
00676 amounting to Rs.11,05,593/- along with interest @
18% from the date of refusal i.e. December–2018 till the date
of actual payment to the Petitioner.”
3. FACTUAL MATRIX
A) In 2007, the Petitioner took Mediclaim Policies Nos.
14220034179500003932 and 14220034177800003932
for Rs. 20 Lakhs from the Respondent No. 1 in the
year 2007. These policies were renewed periodically.
The Petitioner regularly paid the premia.
B) On 3rd September 2018, the Petitioner delivered twin
baby boys at 30 weeks’ gestation in an Emergency
Lower Segment Caesarean Section (LSCS). Since the
babies were premature, they had to be admitted to the
Neo Natal Intensive Care Unit (NICU) at Surya
Hospital for life-saving treatment. After their discharge
from the hospital, the Petitioner submitted a claim to
the 1st Respondent under the insurance policies
claiming the expenses she had incurred at the NICU
for the twins. For Twin Baby 1, the claim was Rs.
5,55,378/-. For Twin Baby 2, it was Rs. 5,52,565/-. The
aggregate claim was Rs. 11,05,953/-.
C) Vide its undated letter, a copy of which is at Exhibit
“H” to the Petition, the Respondent No.1 repudiated
the Petitioner’s claim, citing Clause 3.11 of the policy
document. As regards Twin Baby 1, the 1st Respondent
said that firstly, any 'expenses incurred towards postnatal
care, pre-term or pre-mature care or any such
expense incurred in connection with delivery of such
New Born Baby would not be covered, and, secondly, a
Congenital Eternal Anomaly of the New Born Baby
was also not covered under the policy. As regards Twin
Baby 2, there was no immediate communication.
However, it was later conveyed that the claim for Twin
Baby 2 also stood repudiated on identical grounds.
D) Thereafter, the Petitioner and her father-in-law
repeatedly made enquiries with the Respondent No.1.
They requested the Respondent No.1 to reconsider its
interpretation of Clause 3.11 of the policy. However,
the Company refused to alter its decision and the
Petitioner was told that since it was a term of the
policy, nothing could be done in the matter, which
should be considered as closed. The Petitioner was
suffering from post-partum depression, not unusual
after delivery. and was also on a break from her
profession as a legal practitioner. She has also suffered
great financial difficulties on account of the expenses of
medical treatment, especially since the Respondent
No.1 company refused to settle her legitimate claims.
The very purpose for which she had taken out the said
insurance policy was defeated by the repudiation of her
claims by the insurer.
E) The submission by Mr Shetty on behalf of the
Petitioner is that having regularly paid the premium on
the policy and having renewed it from time to time, the
impugned repudiation, especially on such flimsy,
restrictive, unilateral, untenable, incorrect and facially
arbitrary exclusions by the Respondent No.1 company
violates the fundamental rights under Articles 14 and
21 of the Constitution of India, not only of the
Petitioner but also of her new born babies. Hence this
Writ Petition.
F) The Respondent No.1 appeared in the proceedings and
filed its reply. Both parties filed various affidavits from
time to time and also relied on various documents. The
Petitioner filed affidavits dated 16th March 2021, 10th
January 2022, 29th January 2022, 25th April 2022 and
additional documents dated 5th January 2023. Per
contra, the Respondent No.1 filed affidavits dated 10th
March 2021, 7th January 2022, 27th January 2022,
additional documents dated 18th January 2022, and,
finally, an additional affidavit dated 20th July 2022.
G) Thereafter the rival parties made detailed submissions.
Vide order dated 10th February 2023, the parties were
given liberty to file brief written submissions by 17th
February 2023. Accordingly, the Petitioner and the
Respondent No.1 have filed their respective written
submissions.
4. SUBMISSIONS O F THE PETITIONER:
A) Appearing for the Petitioner, Mr Ashok Shetty
contended that any clause in a Mediclaim policy has to
withstand the test of reasonableness, fairness, nonarbitrariness
and non-discrimination. It is a contract of
the utmost good faith, a contract uberrimae fidei.
Therefore, ex hypothesi, it cannot contain restrictive or
unconscionable clauses that are opposed to public
policy.
B) On facts, he pointed out that the exclusion clause did
not exist when the Petitioner purchased the insurance
policies. Even upon renewal, the Petitioner was not
informed about the same.
C) He submitted that Clause 3.11 was hit by the Contra
Proferentum rule: being ambiguous, it had to be
interpreted in favour of the insured.
D) Mr Shetty also laid emphasis on the IRDAI guidelines
which are binding on the Respondent No.1. These have
defined ‘New Born Baby’ to mean a baby born during
the policy period and up to 90 days in age. He drew our
attention to Clauses 3(2) and 4(1), and to Chapter III,
Regulations 11(c) and 13 of the IRDAI Notification, and
to the Master Circular dated 29th July 2016, also issued
by IRDAI, followed by its clarification circulars dated
22nd July 2020 and 12th October 2022.
E) He submitted that the Circular dated 12th October
2022 clearly mentions that all insurance products
which cover newborn/unborn must comply with the
above referred provisions without any deviation and
provide coverage from day one without imposing any
waiting periods/sub-limits or any other restrictive
conditions.
F) Mr Shetty relied upon the fact that corporate group
insurance policies have no clause similar or akin to
Clause 3.11, but the insured still get benefits for
premature new-born babies, a fact not disputed by the
Respondent. Thus, he contended, there is clear
discrimination and manifest arbitrariness within the
meaning of Article 14 of the Constitution of India.
There was no rational classification, nor intelligible
differentia between new-born and premature babies.
G) He also submitted that the repudiation of the claim and
the policy was also contrary to IRDAI guidelines,
which have the force of law.
H) Resultantly, there was also a violation of Article 21 of
the Constitution of India.
I) The Petitioner also relied upon various judgments of
the apex courts in support of her case.
J) The Petitioner thus contended that the repudiation of
the claim by the Respondent No.1 Company is unlawful
and arbitrary and sought relief as prayed in the petition.
5. SUBMISSIONS O F THE RESPONDENT:
A) Shri Joshi on behalf of Respondent No.1 submitted that
the dispute raised in the Writ Petition regarding
repudiation of claim of the petitioner lodged under
Mediclaim Policy is purely contractual in nature and
the Respondent No.1, though a public sector insurance
company cannot be regarded as ‘State’ within the
meaning of Article 12 of the Constitution of India since
the dispute does not relate to statutory or governmental
function carried out by the Respondent No.1. It was
thus argued that the Petitioner has equally efficacious
and alternate remedy in contractual law and hence the
writ petition is not maintainable.
B) The second ground justifying the repudiation raised by
the Respondent No.1 was that the bare reading of
Clause 3.11 clearly indicated that no claim was
admissible for post-natal care and as per the policy
terms and conditions, pre and post-natal expenses are
not payable. It was further canvassed that the terms of
the insurance policy are required to be read as it is
without any addition or subtraction from them.
C) The Respondent No.1 filed an additional affidavit dated
27th January 2022 in pursuance of Order dated 18th
January 2022, permitting the Respondent No.1 to place
on record an affidavit annexing opinion of three
medical practitioners. All the three doctors consulted
by the Respondent No.1 have opined that the
complications in the new-born babies were developed
due to their premature birth and the said complications
would usually not occur in baby born full term. The
Respondent No.1 in its written submissions have also
relied upon expert opinion of Dr Salama Rayani Khan,
a Medico Legal Expert. She has opined that the
sentence in clause 3.11 of the policy regarding coverage
and exclusion have to be read together for
interpretation and cannot read in isolation. She has also
opined that had this case not been a case of pre-term
birth and instead a normal or caesarean delivery at fullterm,
the rest of the complications mentioned in the
discharge summary would not have occurred and hence
the claim does not come within the purview of the
policy terms and conditions.
D) It was also contended on behalf of the Respondent
No.1 that the New India Mediclaim 2012 policy terms
were revised by the Respondent No. 1 in the year 2017
and all the existing policy holders were intimated of the
same by separate letters through RPAD. However, the
letter purported to have been issued to the petitioner is
not placed on record. We were told that this was
because, considering the high volume of issuance of
such letters, it was practically difficult for the Insurance
Company to retain office copies of the same. The
Respondent No.1 sought to rely upon one such letter
issued by it to another policy holder, which has no
connection with the present Petitioner.
E) In a separate affidavit, it has been stated by the
Respondent that coverage for new born babies was
introduced for the first time in the year in which the
twins of the Petitioner were born and the benefit was
extended to all policy holders in the said year, without
payment of additional premium and for subsequent
years, the coverage was extendable subject to payment
of additional premium by including names of new born
babies in the policy.
F) The Respondent No.1, vide its written submissions has
also contested the value of the policy. It is its
submission that the original policy covered the risk to
the limited extent of Rs. One Lakh only. The
Respondent No.1 has contested the claim of the
Petitioner regarding the benefits available under the
original policy stating that the top-up policy was issued
by collecting premium only for the Petitioner and her
husband whereas the new coverage was introduced for
new-born babies without additional premium in the
original policy. It is the contention of the Respondent
No.1 that the policy terms attached with the top-up
policy does not include the coverage for the new-born
babies.
G) Thus, the Respondent No.1 company defended the
repudiation of the claim and reiterated that the terms
and conditions being contractual, the writ petition was
not maintainable and hence this Court, in the exercise
of its extra ordinary writ jurisdiction, may not interfere
with the same.
6. ANALYSIS
A) Maintainability of the petition
(i) Turning first to the issue of maintainability, the
submission on behalf of the Respondent No.1 that the
writ court will normally not entertain contractual
disputes is doubtless correct. However, the question in
the present matter is not one of the jurisdiction of the
Court, but of whether the discretionary power under
Article 226 of the Constitution ought to be exercised in
the particular case.
(ii) The question was considered in some detail in Life
Insurance Corporation of India & Ors v Asha Goel & Anr1.
This Court had allowed a writ petition against the
appellant. The insurance company contended that the
writ court ought not to have entertained a contractual
dispute. The Supreme Court held as follows:
1 (2001) 2 SCC 160.
“10. Article 226 of the Constitution confers extraordinary
jurisdiction on the High Court to issue high prerogative
writs for enforcement of the fundamental rights or for
any other purpose. It is wide and expansive. The
Constitution does not place any fetters on the exercise of
the extra ordinary jurisdiction. It is left to the discretion
of the High Court. Therefore, it cannot be laid down as
a general proposition of law that in no case the High
court can entertain a writ petition under Article 225
of the Constitution to enforce a claim under a life
insurance policy. It is neither possible not proper to
enumerate exhaustively the circumstances in which such
a claim can or cannot be enforced by filing a writ petition.
The determination of the question depends on
consideration of several factors like, whether a writ
petition is merely attempting to enforce his/her
contractual rights or the case raises important
questions of law and constitutional issues, the
nature of the dispute raised; the nature of inquiry
necessary for determination of the dispute etc. The
matter is to be considered in the facts and
circumstances of each case….. The courts have
consistently taken the view that in a case where for
determination of the dispute raised, it is necessary to
inquire into facts for determination of which it may
become necessary to record oral evidence a proceedings
under Article 226 of the Constitution, is not the
appropriate forum…
11. The position that emerges from the discussion in the
decided cases is that ordinarily the High Court should
not entertain a writ petition filed under Article 226 of
the Constitution for mere enforcement of a claim under
the contract if insurance. Where an insurer has
repudiated the claim, in case such a writ petition is
filed, the High Court has to consider the facts and
circumstances of the case, the nature of the dispute
raised and the nature of the inquiry necessary to be
made for determination of the questions raised and
other relevant factors before taking a decision
whether it should entertain the writ petition or reject
it as not maintainable. It has also to be kept in mind
that in case an insured or nominee of the deceased
insures is refused relief merely on the ground that the
claim related to contractual rights and obligations
and he/she is driven to a long-drawn litigation in the
civil court it will cause serious prejudice to the
claimant/other beneficiaries of the policy. The pros
and cons of the matter in the context of the factsituation
of the case should be carefully weighed and
appropriate decision should be taken. In a case where
claim by an insured or a nominee is repudiated raising a
serious dispute and the Court finds the dispute to be a
bona fide one which requires oral and documentary
evidence for its determination then the appropriate
remedy is a civil suit and not a writ petition under
Article 226 of the Constitution. Similarly, where a
plea of fraud is pleaded by the insurer and on
examination is found prima facie to have merit and
oral and documentary evidence may become
necessary for determination of the issue raised, then
a writ petition is not an appropriate remedy.”
(Emphasis supplied)
(iii) In Biman Krishna Bose v United India Insurance Co. Ltd,2
the Supreme Court held that insurance companies
acquiring the trappings of the “State” as other
authorities under Article 12 of the Constitution, and
ought to act reasonably and fairly while dealing with
customers. This judgment makes it clear that the
actions of insurance companies can be tested in writ
proceedings, and set aside, if found to be arbitrary.
(iv) In the present matter, the relief sought by the petitioner
does not merely arise out of the contract of insurance.
It is more a question of an interpretation of Clause 3.11
of the policy. The facts in the present case are not in
serious dispute. The issuance of the policy, renewal of
2 (2001) 6 SCC 477.
the policy, regular payment of premiums or disclosure
of relevant details by the insured are all not
contentious.
(v) The nature of the dispute in the present case only
raises an interpretation of the relevant clause. Neither a
fact-finding exercise nor an inquiry are required to
determine the factual matrix in the present case.
Moreover, the Petitioner is not merely trying to enforce
her contractual rights but has sought a direction to the
Insurance company to act in aid of the terms and
conditions of its policy.
(vi) Thus, applying the principles laid down in the above
cited judgments, we are of the view that the writ
petition cannot be dismissed on the grounds of
maintainability. The petition has been filed to challenge
the decision of a ‘State’ instrumentality as arbitrary,
and the Petition can be decided in accordance with the
principles which govern exercise of jurisdiction under
Article 226 of the Constitution. We hold that the
Petition is maintainable.
B) On Merits:
(i) The principal bone of contention between the
rival parties is the interpretation of Clause
3.11 of the policy. Clause 3.11 reads as thus:
“3.11 DAY ONE BABY COVER
A New Born Baby is covered for any
Illness or Injury from the date of birth till
the expiry of this Policy, within the terms
of this Policy. Any expense incurred
towards post natal care, pre-term or premature
care or any such expense incurred
in connection with delivery of such New
Born Baby would not be covered.
Congenital External Anomaly of the New
Born Baby is covered only after 36 months
Waiting Period. Waiting Period for
Congenital Internal Disease would not
apply to a New Born Baby during the year
of Birth and also subsequent renewals, if
Premium is paid for such New Born Baby
and the renewals are effected before or
within thirty days of expiry of the Policy.
Any Illness or Disease will be covered
within the Sum Insured of the mother till
the expiry of the Policy and No coverage
for the New Born Baby would be available
during subsequent renewals unless the
child is declared for insurance and
covered as an Insured Person.
Note: New Born Baby means a baby born
during the Policy Period to a female
Insured Person, who has twenty-four
months of Continuous Coverage with us.”
(ii) It is relevant to note at this juncture that
coverage for new born babies was introduced for
the first time in the year in which the twins of
the Petitioner were born and the benefit was
extended to all policy holders in the said year,
without payment of additional premium. For
subsequent years, the coverage was extendable
subject to payment of additional premium by
including names of new born babies in the
policy. Thus, it is undisputed that the new-born
twins were also covered under the said policy,
being born in the same year. For this reason, the
contention of the Respondent No.1 that the topup
policy includes the names of the Petitioner
and her spouse only and does not include the
coverage for new-born baby is not relevant.
(iii) A bare reading of the entire policy document
clearly reveals that the term ‘new-born’ has not
been defined in the original policy document.
However, clause 3.11 admittedly covers a newborn
baby for any illness or injury.
(iv) An argument is sought to be made between
‘expenses relating to illness or injury to the new-
born’ as distinct from ‘expenses relating to postnatal
care, pre-term or premature’. This is a
distinction without a difference. None can
explain what the distinction is. Post-natal care
postulates a new-born. One born before term is
a ‘pre-term’ or ‘premature’ baby. ‘Care’
includes tending to illness or injury. Thus, the
only logical reading is that expenses relating to
illness or injury is the same as expenses relating
to post-natal care, pre-term or premature
babies. The submissions needs noted only to be
stated to be rejected.
(v) Further, the words ‘illness’ and ‘injury’ are not
exhaustive. The injury can be on account of the
baby being born premature or pre-term. It is
impossible to accept such a distinction in order
to justify the repudiation. The further
distinction between a ‘new-born’ and a
‘premature baby’ or a baby born ‘pre-term’ is
also baseless as a new-born baby can be one
which is born ‘full term’ or ‘pre-term’. A fullterm
baby does not become more ‘newer’ any
more than a ‘pre-term’ baby becomes an ‘earlier
born’ or, to make it even more pointed, ‘old
born’. The approach is unreasonable, unjust
and contrary to the fundamental utmost goodfaith
ethic of an insurance policy. These
submissions are the sheerest casuistry. They
cannot be allowed to succeed.
(vi) The Petitioner has also placed on record a
circular dated 22nd July 2020, issued by the
regulator of the Respondent No.1 and other
insurance companies namely the Insurance
Regulatory and Development Authority of
India, the Respondent No.3 herein. The said
circular is the master Circular on
Standardization of health Insurance Products.
Clause 29 of the said circular defines the term
‘new-born baby’ to mean ‘baby born during the
policy period and is aged up to 90 days.’ Thus
the new-born twin babies of the petitioner are
clearly included in the definition of the said
clause.
(vii) The Petitioner has further placed on record
another circular dated 12th October 2022 issued
by the IRDAI, containing instructions to
CEO’s/CMD’s of All Insurance Companies
(except ECGC and AIC). The said circular
further issues a clarification to all concerned and
which settles the issue once and for all. The
instructions contained in the said circular read
as thus:
“To
CEOS/CMDs of All Insurance Companies
(except ECGC and AIC)
Re: Insurance cover for new-borns/infants
under health insurance policies :
1. Reference is invited to the Clause (1)
of Chapter -II on 'exclusions not allowed
under health insurance policies' issued vide
Master circular on Standardisation in Health
insurance Business dated 22nd July 2022
wherein it has been mandated that internal
congenital diseases, genetic diseases or
disorders are not allowed to be incorporated
as exclusions in the terms and conditions of
the policy contract. The intent of the above
provision is to cover newborns with internal
congenital birth defects from day one (1).
2. However, it is observed that many
health insurance products that are marketed
by insurers are not providing cover to
newborns/infants with internal congenital
birth defects from day one(1) thus going
against the true spirit of the above referred
clause.
3. In view of the above, it is reiterated
that all insurance products that cover
newborns/unborns shall comply with the
above referred provisions without any
deviation and provide, coverage from day
one (1) without imposing any waiting
periods/sub-limits or any other restrictive
conditions.
4. These instructions shall come into
force with immediate effect.
(YEGNA PRIYA BHARATH)
CHIEF GENERAL MANAGER”
(viii) The aforesaid instructions to insurers are
specifically intended to cover new-borns/infants
with internal congenital birth defects from day
one. The further directions clearly mandate all
insurers to comply with the said directions
without any deviations and provide coverage
from day one without imposing any waiting
periods/sub-limits or any other restrictive
conditions. The regulator therefore has sought
to remind the insurers the true spirit of the
clause.
(ix) It has been argued that the instructions in the
circular dated 12th October 2022 come into
force prospectively. This argument must also be
rejected. The IRDAI has been prompted to
issue the directions in the circular for the sole
reason that it was observed by the regulatory
authority that various insurers were repudiating
the claims on the pretext of the so called
‘exclusions’ in the policy document and hence
the regulatory authority was compelled to issue
the said directions. Thus, it stands to reason
that the directions have been issued to rectify
the arbitrary refusal of claims. Hence, the same
obviously applies to past refusals on the grounds
as mentioned in the circular.
(x) The peripheral reliance by the Respondent No.1
on the opinion of the three medical
practitioners is not relevant in the present
context, since we have already held that ‘newborn
baby’ includes a pre-term/premature born
baby. For this reason also, the opinion of Dr
Salama Rayani Khan, the Medico Legal Expert
is not relevant. Since the illness/injury to the
new born, arising on account of the timing of
their birth is irrelevant.
7. For the reasons stated hereinabove, we are of the view that
the impugned communication, dated Nil, issued by the Respondent,
conveying the rejection of the claim of the Petitioner is contrary to
law, unreasonable and arbitrary, and liable to be set aside.
8. The writ petition is therefore allowed. Accordingly, Rule is
made absolute in terms of prayer clause A. The impugned
communication is set aside. The Respondent is directed to honour
the Petitioner’s claims arising out of the Insurance Policy Nos.
14220034179500003932 & 14220034177800003932 to the extent of
the collective claim/s of Rs.11,05,593/- and pay the said amount to
her along with simple interest at 9 per cent per annum, from the
date of claim till the said amount is actually paid to her.
9. Lastly, we must note that it has taken the Petitioner, a young
mother and a professional, considerable trials and tribulations and
the roller coaster litigation process to bring the matter to its logical
conclusion. The aim of reposing faith in the insurance company, is
pre-eminently to guard/provide against dangers which beset human
life and dealings, by agreeing to pay the consideration in the form of
premiums, as per the terms of the policy. The Petitioner mother had
not even had the time to revel in the birth of her twin babies and
nurse them to health, when she faced the rude shock of rejection of
her legitimate claim/s by the Insurance company. The Insurance
Company, on the other hand appears to have stuck to its dogged
determination in refusing to honour the claim and even refusing to
act in aid of the directions issued by its own Regulating authority.
10. The Respondent No. 1 cannot be permitted to play fast and
loose with the faith reposed by the insured, and that too, supported
by regular renewals and payments of premium, by attempting to
interpret clauses in its policies, contrary to their true spirit and only
with a view to avoid honouring claims. Hence, we deem it fit and
proper, in the interests of justice, to direct the Respondent No.1 to
pay an amount of Rs. 5 Lakhs as costs of litigation, prompted in
addition by its defiance in obeying the directives of its own
Regulator.
11. All amounts are to be paid out in full within four weeks from
today.
12. The Petition is disposed of in these terms.
13. All concerned will act on production of an authenticated copy.
(Neela Gokhale, J) (G. S. Patel, J)
1st March 2023
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