(1) STOCKS of rice and paddy belonging to the respondent Mill were insured with the appellant for a sum of Rs 27.50 lakhs under a policy of insurance issued by the appellant which also covered the risk of damage/loss from flood and cyclone. Kakinada town where the respondent Mill is situated was hit by cyclone and heavy rains between 9-5-1990 and 13-5-1990 as a result of which the stock of rice and paddy of the respondent Mill was damaged. The matter was reported to the appellant who appointed Mr M.V. Subba Rao as a surveyor. He conducted a preliminary survey on 10-5-1990 and submitted his report indicating the loss and damage to the stock of paddy and rice due to cyclone and heavy rains. The appellant, thereafter, appointed two surveyors to carry out joint and final survey of the loss occasioned to the respondent. The two surveyors were (7) M/s Vardhman Insurance Service Pvt. Ltd., and (2) Shri Nageswara Rao.

(2) ON 5-11-1990 Shri Nageswara Rao submitted his report assessing the loss at Rs 5.25 lakhs. On 12-11-1990 M/s Vardhman Insurance Service Pvt. Ltd. submitted their report assessing the loss at Rs 23.30 lakhs. In view of the huge divergence in the two reports s