JUDGMENT

K.G. Balakrishnan, J.-The appellant is a manufacturer of cotton, polyester, woollen and viscose yarns and their blends. It is a hundred per cent export-oriented unit and has got two manufacturing mills, one engaged in the manufacture of spinning acrylic yarn (Mill A) and the other for spinning cotton yarn and various blended yarn (Mill B). Appellant started production of these yarns in 1994 and in the same year had taken 12 fire insurance policies for a total assured sum of Rs. 125.72 crores. These policies were initially valid from January 1994 to October 1995 and were later renewed from time to time. These policies covered raw materials, stocks, plant and machinery, accessories, spares, building etc. While issuing the policies, the officials of the respondent Insurance Company had visited the premises of the appellant factory and inspected machinery, building, stock etc. and the premia payable by the appellant were fixed accordingly. Mill B has a Blow-room since cotton processing requires the said facility. The officials of the respondent Insurance Company inspected and verified the Blow-room and the respondent informed the appellant on 22.11.1994 that the property situ