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the answer is C and not D [edited]
see in the first step, CHCl3 add up to ring as CHCl2-
in second step, one of the -Cl is replaces by -CN
final step, -CN gives acid, and -Cl being a better leaving group gets out and gives place for -OH
the reason is that -OH is a better activating grp as compared to -CH3 so subsn shud take place in acc with -OH group and hence subn will take place at o- group to -OH
the coloured part is edited one
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