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REGISTRAR OF COMPANIES, U.P. & UTTARANCHAL, KANPUR versus M/S KAMAL INFOSYS LTD. AND OTHERS

High Court of Judicature at Allahabad

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Registrar Of Companies, U.P. & Uttaranchal, Kanpur v. M/S Kamal Infosys Ltd. And Others - COMPANY PETITION No. 57 of 2001 [2005] RD-AH 733 (14 March 2005)

 

This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).

HIGH COURT OF JUDICATURE OF ALLAHABAD

                    A.F.R.

 Reserved on 10.03.2005

Delivered on 14.03.2005

        COMPANY PETITION NO. 57  OF 2001

Registrar of Companies, U.P. &

Uttaranchal, Kanpur       -------------    Petitioners              

     Versus.

M/s. Kamal Infosys Ltd. & Ors.           -------------  Respondents

_________

Hon'ble Dr. B.S. Chauhan, J.

Hon'ble Dilip Gupta, J.

(By the Court)

A learned  Judge of this Court has  referred the following question to the Division Bench:-

"Whether this company petition filed for winding up of the company (M/s. Kamal INFOSYS Ltd., Respondent no.1) having its registered office at Lucknow is maintainable in the High Court at Allahabad."

The facts and circumstances giving rise to this case are that the Companies and their Directors are being prosecuted after investigation made by the C.B.I. for cheating several investors, Banks and financial institutions through forgery, corruption and illegal means. The C.B.I. had registered the cases against Directors of the said Companies. Company petitions were filed by the Registrar of the Companies before this Court and the same were advertised in accordance with Rule 24 of the Companies (Court) Rules, 1959, and notices were issued to the respondents. Appointment of the Official Liquidator of the Company was also made and further directions had been issued to him. However, the said orders have subsequently been kept in abeyance. The respondent-Companies have raised a preliminary objection regarding the jurisdiction of Allahabad High Court to entertain the said winding up petitions.

The learned Judge, after hearing the learned counsel for the parties, realised that the issue of jurisdiction of Allahabad High Court and its Bench at Lucknow had been considered several times. However, a Division Bench of this Court in  Sumac International Ltd. Vs. P.N.B. Capital Services Ltd., AIR 1997 All 424 had rejected the similar contention, holding that such Company matters can be heard only at Allahabad, and the jurisdiction of the Lucknow Bench stood excluded completely. Hence this Reference.

Shri Umesh Chandra, learned  Senior Counsel, appearing for the Companies has submitted that the Hon'ble Apex Court has considered the issue of jurisdiction of the Allahabad High Court and its Lucknow Bench in a large number of cases, and it has always been held that the jurisdiction will depend upon the cause of action arising, partly or fully, within the respective territorial jurisdiction of the High Court and its Bench. The jurisdiction of the Lucknow Bench in Company matters had been excluded by Notification dated 15.7.1949 issued by the Hon'ble Chief Justice under the second proviso to Clause 14 of the United Provinces High Courts (Amalgamation) Order, 1948 (hereinafter called the Amalgamation Order). However, the same stood restored vide Notification dated 5.8.1975, but the said Notification dated 5.8.1975 could not be brought to the notice of this Court while deciding Sumac International Ltd. (Supra). Therefore, the said judgment remains per in curium and does not have any binding force. Thus, the objections of the Companies should be allowed and the matter should be transferred to the Lucknow Bench for further proceedings till the winding up proceedings are completed.

Shri Subodh Kumar, learned counsel appearing for the Registrar of Companies and Shri Piyush Kumar Agrawal, learned  counsel for the Official Liquidator have submitted that while deciding the case in Sumac International Ltd. (Supra), the Division Bench had also considered other issues and held that it was merely a technical breach and the Allahabad High Court cannot be held to be patently lacking the jurisdiction, and their Lordships opined that even otherwise the cases could not be transferred to Lucknow Bench, and in view of the above, the objections are liable to be rejected.

We have considered the rival submissions made by the learned counsel for the parties and have perused the record.

As per the provisions of Section 10 of the Companies Act, 1956, the jurisdiction in Company matters lies with the High Court where the Company has its Registered Office. Therefore, as all the Companies are registered at Lucknow, the cases could have been filed only before the Lucknow Bench in ordinary circumstances. Sub-section (3) further provides that for the purpose of jurisdiction to wind up Companies, the expression 'Registered Office' means the place which has longest been the Registered Office of the Company during the six months immediately preceding the presentation of the petition for winding up.  The Hon'ble Supreme Court in Hanuman Prasad Gupta Vs. Hiralal, AIR 1971 SC 206; and H.S. Jaya Ram Vs. Indian Credit and Investment Corporation of India Ltd., AIR 2000 SC 579, while dealing with company matters, held that the jurisdiction of the Court is to be determined only by examining the territorial jurisdiction of the Court where the Registered Office of the Company is situated.

Learned  Counsel appearing for the Registrar of Companies and Official Liquidator have fairly conceded that the cause of action either fully or partly had not arisen within the territorial jurisdiction of this Court but had arisen only within the territorial jurisdiction of the Lucknow Bench. However, the matter was required to be examined in the light of the Notifications issued by the Hon'ble Chief Justice from time to time in exercise of the power under clause 14 of the Amalgamation Order excluding or including the jurisdiction of the Lucknow Bench in the Company matters. Clause 14 of the Amalgamation Order reads as under:-  

"14. The new High Court, and the Judges and division Courts thereof, shall sit at Allahabad or at such other places in the United Provinces as the Chief Justice may, with the approval of the Governor of the United Provinces, appoint:

Provided that unless the Governor of the United Provinces with the concurrence of the Chief Justice otherwise directs, such Judges of the new High Court, not less than two in number, as the Chief Justice may from time to time nominate, shall sit at Lucknow in order to exercise in respect of cases arising in such area in Oudh as the Chief Justice may direct, the jurisdiction and power for the time being vested in the new High Court:

Provided further that the Chief Justice may in his discretion order  that any case or class of cases arising in the said areas shall be heard at Allahabad."

The first proviso enables the Hon'ble Chief Justice to fix the territorial jurisdiction of the Lucknow Bench. However, second proviso confers the power to take away the jurisdiction of the Lucknow Bench in any case or class of cases arising in the said area, and to confer the same upon the Allahabad High Court.

Large number of Notifications have been issued in exercise of the power under the Amalgamation Order, particularly, Notifications dated 26.7.1948, 15.7.1949, 2nd July, 1954, 5th August, 1975, 4th January, 2003 and 14.1.2003. The issue of question of jurisdiction of the Lucknow Bench and this Court has been considered time and again by the Hon'ble Apex Court as well as by this Court.

A Constitution Bench of the Hon'ble Supreme Court in  Nasiruddin Vs. State Transport Appellate Tribunal, AIR 1976 SC 331 examined the correctness of the judgment of the Full Bench of this Court between the same parties, reported in AIR 1972 All 200. In that case, the question arose regarding grant of permits under the provisions of Motor Vehicles Act, 1939 by the Regional Transport Authority, Bareilly. Against the resolution of the RTA, appeals were preferred before the State Transport Appellate Tribunal, Lucknow, and against the orders passed by the Appellate Tribunal, writ petitions were filed before the Lucknow Bench. A question arose as to whether the cause of action arose at Bareilly, in spite of the fact that the appeals had been disposed of by the Tribunal at Lucknow and consequently as to whether the writ petitions could have been entertained by the Lucknow Bench for the reason that Bareilly was within the territorial jurisdiction of the Allahabad High Court. It was held that Lucknow Bench had territorial jurisdiction over 12 districts, namely, Lucknow, Faizabad, Sultanpur, Rai Bareli, Pratap Garh, Barabanki, Gonda, Baharaich, Sitapur, Kheri, Hardoi and Unnao, and the Lucknow Bench can entertain a petition if the cause of action had arisen partly or fully within those 12 districts. The Court held that it was immaterial that the original order had originated from Bareilly and as the appeal was decided by the Tribunal at Lucknow, it cannot be said that the cause of action had not partly arisen within the territorial jurisdiction of the Lucknow Bench. The Court held as under:-

"If the cause of action arises in part within the specified areas in Oudh it would be open to the litigant who is the dominus litis to have his forum conveniens. The litigant has the right to go to a Court where part of his cause of action arises. In such cases, it is incorrect to say that the litigant chooses any particular Court. The choice is by reason of the jurisdiction of the Court being attracted by part of cause of action arising within the jurisdiction of the Court. Similarly, if the cause of action can be said to have arisen partly within specified  areas in Oudh and partly outside the specified Oudh areas, the litigant will have the choice to institute proceedings either at Allahabad or Lucknow. The Court will find out in each case whether the jurisdiction of the Court is rightly attracted by the alleged cause of action."

The Hon'ble Apex Court had further held that in terms of the Clause 14 of the Amalgamation Order  once the Hon'ble Chief Justice had exercised the power fixing the territorial jurisdiction no further order can be passed in this respect, as the order had to be determined only once and there was no scope for changing the same. However, the Hon'ble Chief Justice had the power under second proviso to the said Clause to direct, in his discretion, that any case or class of cases arising in Oudh areas shall be heard at Allahabad. Hearing therein includes institution. Where the cause of action had arisen in respect of civil matters, it should be left to the litigant to institute cases at the Lucknow Bench or at the Allahabad High Court according to where the cause of action had arisen, wholly or in part. However, in cases where the cause of action had arisen in part within the jurisdiction of the Lucknow Bench as well as the Allahabad High Court, it must be left to the choice of the litigant to institute the proceedings either at Lucknow Bench or at Allahabad High Court.

In  U.P. Rashtiya Chini Mill Adhikari Parishad Vs. State of U.P., AIR 1995 SC 2148,  a similar question was raised. As the said Parishad wanted to dispose of the sugar factories, it invited the tenders by issuing the Notification from Lucknow. Though only one factory was situated within the Awadh area and the rest outside the said area, petitions were filed at Lucknow. While dealing with the matter the Hon'ble Apex Court, following its earlier decision in Nasiruddin (Supra), held that as the Notification had been issued at Lucknow and the parties could be aggrieved only by the said Notification, the  Lucknow Bench had the jurisdiction to deal with the matter as the cause of action had arisen at Lucknow. The Hon'ble Apex Court also held that the Amalgamation Order was a special law, and this being so must prevail over the general law. Therefore the jurisdiction is to be taken strictly as per the provisions of the Amalgamation Order.

Similar view has been reiterated by the Hon'ble Apex Court  in Rajasthan High Court Association Vs. Union of India & Ors., (2001) 2 SCC 294. The Jaipur Bench of Rajasthan High Court was established in 1976 and 11 districts had been placed in its territorial jurisdiction. The Court applied the same principle and held that if the cause of action either fully or partly had arisen in the district specified to the Jaipur Bench, it would have the competence as the territorial jurisdiction was bifurcated between the principal seat and the permanent Bench of the Rajasthan High Court, and therefore, their jurisdiction is to be determined strictly in view of the provisions of Clauses 1 and 2 of Article 226 of the Constitution of India.

The judgment in Ram Lakhan Saran Vs. Sunni central Board Waqf, AIR 1976 All 532 referred to by both the parties,  is not relevant for determining the controversy involved herein as the said judgment is only to the extent that once the Hon'ble Chief Justice  has fixed the territorial jurisdiction of the Lucknow Bench, it canot be changed.

The Hon'ble Supreme Court in Dr. Manju Verma Vs. State of U.P. & Ors., (2005) 1 SCC 73 considered the whole issue as well as the aforesaid judgments in Nasiruddin (Supra); Rajasthan High Court Association (Supra) and interpreted the provisions of Clause 14 of the Amalgamation Order holding that as in the said case the order had been issued by the State Government having a seat at Lucknow, the Lucknow Bench had the jurisdiction to entertain the petition, and by transferring the case to Allahabad High Court by passing a quasi-judicial order, the Hon'ble Chief Justice deprived the said petitioner of her right as dominus litis.

The issue similar to the one in hand was considered by the Rajasthan High Court in Bimal Kumar Vs. M/s. Bhilwara Wooltax Limited, (1993) 1 RLW 554. While considering the case of winding up petition of a Company, the Court held that in view of the provisions of Section 10, the winding up petition could be filed in the High Court in whose territorial jurisdiction the Registered Office of the Company is situated. In the said case it was in Bhilwara which was within the jurisdiction of the main seat at Jodhpur, and therefore, the Court directed that the matter be transferred. The Court held that it had wrongly been filed before the Jaipur Bench and direction was given to file the same at Jodhpur, the main seat of Rajasthan High Court, for the reason that the liquidation proceedings could not be allowed to continue at Jaipur as it was having no jurisdiction over the matter.

In view of the above, we reach the conclusion that the jurisdiction of the Lucknow Bench or this Court would depend in whose jurisdiction the cause of action  had arisen, partly or fully, and in case it has arisen partly within the territorial jurisdiction of both, the litigant has a right to choose the forum of his choice. However, it remains undisputed that in a matter like this, the Bench within whose jurisdiction the Company has its Registered Office will have the jurisdiction to entertain the petition unless the jurisdiction of the Lucknow Bench stands excluded by issuing a Notification in exercise of the power under the second proviso to Clause 14 of the Amalgamation Order. Thus, the said Notifications require examination.

Notification dated 26.07.1948:

"In exercise of the powers conferred by Art. 14 of the United Provinces High Courts (Amalgamation) Order, 1948, the Chief Justice of the High Court of Judicature at Allahabad is pleased to direct that as from the 26.7.1948 until furthe orders, the Bench of the High Court at Lucknow shall exercise the jurisdiction and powers vested under the said Order in the High Court in respect of cases arising in the whole of Oudh."

Notification dated 15.07.1949:

"In exercise of the powers conferred by Article 14 of the United Provinces High Courts (Amalgamation) Order, 1948, and in partial modification of the Court's notification no. 6103, dated July 26, 1948, as amended up-to-date, the Chief Justice of the High Court of Judicature at Allahabad is pleased to direct that with effect from July 25, 1949, the Lucknow Bench of the High Court of Judicature at Allahabad shall not exercise jurisdiction and power in respect of cases under the following Act arising within the existing territorial jurisdiction:-

 .......... .............

3.The Indian Companies Act, 1913 (Act VII of 1913)

.......... ...........

Provided that nothing herein contained shall affect the jurisdiction and power of the Lucknow Bench in respect of proceedings already pending before that Bench prior to the coming into force of this Notification."

Notification dated 05.08.1975:

"WHEREAS by notification No. 8427/Ib-39-49 dated the 15th of July, 1949, the Lucknow Bench of the High Court of Judicature at Allahabad was not to exercise the jurisdiction and power of the High Court in respect of cases arising in the areas of erstwhile Oudh under the following Acts and those cases were to be heard at Allahabad.

............ ..........

5. The Indian Companies Act 1913 (Act VII of 1913)

........... .........

AND WHEREAS by the subsequent notification No. 6948/Ib-39 dated the 2nd of July, 1954, the Lucknow Bench of the High Court of Judicature at Allahabad was to exercise the jurisdiction and power of the High Court in respect of the cases under the following Acts arising in the areas of erstwhile Oudh:

............... ..........

and the cases under the Indian Companies Act, 1913 (Act VII of 1913) and Indian Income Tax Act, 1922 (Act XI of 1922) arising in the areas of erstwhile  Oudh continued to be heard and decided at Allahabad and the Lucknow Bench was not to exercise jurisdiction and power of the High Court in respect to those class of cases.

AND WHEREAS it is desirable that the Lucknow Bench of the High Court of Judicature at Allahabad should exercise the jurisdiction and power of the High Court in respect of cases under the Income Tax Act, 1961 and under the Companies Act, 1956 up to the stage of winding up arising within the area of erstwhile Oudh.

1.The Income Tax Act, 1961 (Act No. XLIII of 1961)

2.The Companies Act, 1956 (Act No. 1 of 1956)

upto the stage of winding up i.e. upto the stage of proceedings under Section 439 Companies Act, 1956.

PROVIDED  that after the winding up order is passed the subsequent proceedings will be heard at Allahabad.

PROVIDED FURTHER that all proceedings under the above Acts instituted or commenced before the date of enforcement of this notification, shall continue to be heard at Allahabad. .........."

Notification dated 04.01.2003

"1. ..............

2.Taking into consideration the judgment rendered by a Division Bench of this court in the case of Sumac International Ltd. Vs. P.N.B. Capital Services Ltd., decided on July 2, 1997 reported in 1998 Company Cases Vo. 93 Page 236 as well as the judgment of this court rendered by another Division Bench in the case of Smt. Padmawati Vs. The Official Liquidator (Special Appeal No. 7 of 1979) connected with the case of Sri Jugal Kishore Vs. Official Liquidator dated 24.9.1982, which have since attained finality, specially the observations made therein, the position in regard to the exercise of jurisdiction, entertainment and disposal of the matters falling within the ambit of the Companies Act as enforced w.e.f. 25th July, 1949 shall stand restored in supersession of the intervening orders covering the subject passed thereafter.

3.Let the consequential steps be taken in the light of the observations made in para 39 of the judgment of this Court rendered by a Full Bench of five Judges in the case of Ram Lakhan Saran Vs. The Sunni Central Board of Waqf, U.P., Lucknow reported in A.I.R. 1976 Allahabad -532"

The Acting Chief Justice on being informed about the 1975 Order passed another order on 14.1.2003 modifying the earlier order dated 4.1.2003 to the extent that the figures 25.7.1949 be substituted  by 1.10.1975.

Thus, it is evident from the aforesaid that by the Notification dated 15.7.1949,  the Hon'ble Chief Justice in exercise of his powers under the second proviso to Clause 14 of the Amalgamation Order, had withdrawn the jurisdiction of the Lucknow Bench to deal with the matters under the Companies Act, but by the Notification dated 5.8.1975, the Hon'ble Chief Justice conferred the said jurisdiction under the Companies Act upon the Lucknow Bench up to the stage of winding up.

This Court in Sumac International Ltd. (Supra) decided the issue but the Notification dated 5th August, 1975 could not be brought to the notice of the Court. We are of the view that had it been so pointed out to the Bench, the judgment could have been otherwise. Thus, in view of the above the submission made by Shri Umesh Chandra, learned  Senior Counsel for the Company that the said judgment was rendered per in curium is worth acceptance.

"Incuria" literally means "carelessness". In practice, per incurium is taken to mean per ignoratium. Per-in-curium are decisions given in ignorance or forgetfulness of some statutory provisions or of some Authority binding on the Court concerned. In case a decision is rendered without considering the statutory bar, the same cannot have any precedent value. (Vide Mamleshwar Prasad & Ors. Vs. Kanhaiya Lal,  AIR 1975 SC 907; A.R. Antulay Vs. R.S. Nayak, AIR 1988 SC 1531;  Municipal Corporation of Delhi Vs. Gurnam Kaur, AIR 1989 SC 38; State of U.P. Vs. Synthetics and Chemicals Ltd., (1991) 4 SCC 139; Ram Gopal Baheti Vs. Giridharilal Soni & Ors., (1999) 3 SCC 112; Sarnam Singh Vs. Dy. Director of Consolidation & Ors., (1999) 5 SCC 638; Government of Andhra Pradesh Vs. B. Satyanarayana Rao, AIR 2000 SC 1729; Fuerst  Day Lawson Ltd. Vs. Jindal Exports Ltd., AIR 2001 SC 2293; Suganthi Suresh Kumar Vs. Jagdeeshan, AIR 2002 SC 681; Director of Settlements A.P. & Ors. Vs  M.R. Apparao & Anr., (2002) 4 SCC 638; State Vs. Ratan Lal Arora, (2004) 4 SCC 590; and Sunita Devi Vs. State of Bihar, (2005) 1 SCC 608).

The submission made by Shri Subodh Kumar and Shri Piyush Agrawal placing reliance on the observation made by this Court in Sumac International Ltd. (Supra), cannot be accepted. The relevant part of the judgment on which they placed reliance, is as under:-

"Even assuming for the sake of argument that the contention of learned counsel for the appellant is correct, as learned counsel does not dispute that the case can be lawfully heard at Allahabad, it shall be only a technical breach if the petition is instituted at Allahabad instead of Lucknow as it has to be ultimately heard at Allahabad and for this technical defect or reason, in our opinion, it shall not be appropriate to hold that the proceedings are not maintainable at Allahabad. If the petition is instituted and heard at Allahabad, it shall not be a case of total lack of jurisdiction. At the most it can be said to be a defective exercise of jurisdiction at one stage but which is rendered ineffective if the stage of hearing has come. Ultimately, both the Benches at Allahabad and Lucknow form one High Court."

The observations are only in respect of institution and hearing. Their Lordships have not observed that even otherwise, it could have been possible that the matter  be heard at Allahabad if the Notification dated 15th July, 1949 was not there. The observation was only to save the party from harassment that it was not desirable that they should file a petition at Lucknow and only then it could be transferred to Allahabad. It has not been held that had the Notification dated 15th July, 1949 been not there, the petition could be entertained by the Allahabad High Court.

After the judgment in Sumac International Ltd. (Supra) when the matter was placed before the Hon'ble Acting Chief Justice, His Lordship was pleased to pass an order dated 4.1.2003 providing for enforcement of the Notification dated 15th July, 1949. While passing the said order, the Hon'ble Acting Chief Justice had also taken note of decisions in other cases in Smt Padmawati and Shri Jugal Kishore referred to in that judgment. However, immediately thereafter, the notification dated 5.8.1975 issued under Clause 14 of the Amalgamation Order was brought to the notice of the  Acting Chief Justice and, therefore, His Lordship thought it necessary to pass the order dated 14.1.2003 in supersession of the earlier order dated 4.1.2003, and in view thereof, no room for doubt is left that the Acting Chief Justice had enforced the order dated 5th August, 1975. In view thereof the matter could have been filed only before the Lucknow Bench.

Very heavy reliance has been placed by Shri Subodh Kumar on the judgment of the Patna High Court in Bihar State Industrial Development Corporation Ltd. Vs. Presiding Officer & Ors., (2001) 105 Company Cases 435, wherein the issue arose regarding the transfer of the proceedings from the Ranchi Bench to Patna, in view of the provisions of High Court at Patna (Establishment of Permanent Bench at Ranchi) Act, 1976 and the Patna High Court Rules. In the said Act 1976 there had been analogous proviso enabling the Hon'ble Chief Justice to transfer a case from Ranchi Bench to Patna High Court but not vice versa, and the Court held that transferring a case from Patna to Ranchi was impermissible as it would amount to an illegality. However, the Court considering the provisions of Sections 448 and 449 of the Companies Act, 1956 held that winding up petitions should be filed where the official liquidator had the office and there cannot be different winding up proceedings within the same High Court away from the establishment of the official liquidator attached to the High Court.

We are of the opinion, with  all respect and humility at our command, that the Patna High Court failed to take into consideration the provisions of Section 10 of the Act 1956. More so, there can  be no difficulty for initiating the proceedings before the Lucknow Bench, at least upto the stage of winding up. Though it may be more expensive and may also amount to harassment of the parties, as has been noticed by this Court in Sumac International Ltd. (Supra), but as the matter raises the question of jurisdiction, the case requires to be decided seriously as an order without jurisdiction becomes a nullity. More so, there is also a clear distinction as the Patna High Court was dealing with the issue of transfer of a case. In the present case, transfer is not required at all if the Court comes to the conclusion that it has no jurisdiction, it has to return the plaint/petition to the petitioner concerned to present it before the Court of competent jurisdiction, in view of the principles enshrined in the provisions of Order 7, Rule 10 of the Code of Civil Procedure and the party may be entitled to the benefit of limitation as provided for under Section 14 of the Limitation Act.

To sum up, our conclusions are that in company matters, that Court has the jurisdiction in whose territorial jurisdiction the Company has the Registered Office. It is so necessary also for the reason that Directors of a Company may be prosecuted at hundred of places, as in a given case, share holders of the Company may file complaints at different places throughout India. Section 10 (3) of the Act, 1956 clarifies the necessity further, as the Company may change the location of its registered office. In the instant case, registered office of the Company is at Lucknow. Jurisdiction of the Lucknow Bench in Company matters ousted by the Notification dated 15.07.1949 has been restored vide Notification dated 05.08.1975. However, it is only upto the stage of winding up proceedings, and subsequent thereto, the case is required to be decided by this Court. This position is crystal clear from the Notifications dated 05.08.1975, 04.01.2003 and 14.01.2003. The petitions require to be returned to the petitioners to be presented before the Lucknow Bench.

In view of the above, we are of the opinion that the instant petition is not maintainable before this Court as the registered office of the Company is situated within the territorial jurisdiction of the Lucknow Bench. Reference is answered accordingly.

Send the papers back to the learned Judge.

March 14, 2005

AKSI/AHA


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