JUDGMENT - S.M. DAUD, J.:---This is an action for recovery of compensation on the basis of a contract of insurance against the risk of damage by fire.

2. The pre-nationalisation, Vulcan Insurance Co. (Vulcan) was in the business of general insurance. It had branch offices at Bombay and Jalgaon. The latter office was looking after operations in the adjacent district of Khandwa. That district was and is a part of the State of Madhya Pradesh. After nationalisation, Vulcan is part of the defendant. Plaintiff No. 1 is a co-operative society based at Harsud and Plaintiff No. 2 a co-operative bank with its head quarters at Khandwa. Plaintiff No. 1 was in the cotton business and Plaintiff No. 2 was advancing money to it under different heads.

3. Plaintiff No. 1 - hereinafter to be referred to as the society - had in 1970 - 71 purchased raw cotton worth Rs. 10,00,000/-. The residue of the ginning operation left it with cotton seeds worth about Rs. 3,50,000/-. The said seeds were stored in a godown of the society near the Harsud Railway Station which the society had taken on rent from Ratilal Gujarthi. These goods were pledged with plaintiff No. 2 (bank) against certain credit facilities gran

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