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Thank you for your prompt reply :) and it helps me to proceed further. But still I am missing some thing.

Output of the command " sed "s%$(head -1 file1.txt)%#\!$(which ruby)%g" file1.txt " is...

Can any one tell me how to replace a shebang line of a file using sed?

Eg: If a file contains the following shebang line

#!C:/InstantRails/ruby/bin/ruby

I would like to replace it with
...