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 granted to it. In keeping with its usual practice the seeds were last insured with the Vulcan on 18-2-1972. - the cover being for Rs. 3,00,000/-. Mrs. K.L. Bansal, an agent of Vulcan booked the business and after receipt of the premium, issued a cover note bearing No. 77388. The same day seeds lying in the compound of the society's factory were insured through the same agent under cover note No. 77389. The day after taking out the insurance i.e. on 19-2-1972, a fire broke out in the godown and the goods stored there were considerably damaged. Vulcan's Jalgaon office was telegraphically informed of the mishap. As directed by the then Jalgaon branch manager Bhandari, the damaged seeds were placed in separate heaps on 23-1-1972. The gradation was according to quality in preparation for further steps. Vulcan was called upon by letter dated 19-3-1972 to pay the sum of Rs. 3,00,000/- for the loss occasioned by the fire. Vulcan on April 1, 1972 repudiated the liability and maintained this stand till the very end. Thereupon plaintiffs notified Vulcan of their desire to auction the salvaged seeds. The sale was duly notified and took place between June and December 1972. The auction fetched a sum of Rs. 1,03,204.69 ps. Called upon to pay the balance of Rs. 1,96,910.31 ps. Vulcan declined, compelling plaintiffs to file this suit.

4. Defendant denies the correctness of any part of the factual narration of the claim summarised above. The cover note relied upon by plaintiffs was a fabricated document and the result of collusion between them and the husband and wife team of Bansals. Agents of Vulcan had no authority to collect premiums or issue cover notes. Inquires made by Vulcan appeared to indicate that the fire which took place on 19-2-1972 was due to spontaneous combustion. Storage conditions were responsible for this and the same had not been disclosed by the society. Therefore, even if the goods had been insured and the cover note gave rise to a binding contract, the fire was due to a cause outside the cover note. Alternatively, the claim was much inflated. The claim if genuine had to be brought within a year or three months of its rejection by Vulcan. That not having been done, the suit was not maintainable. It was also barred by limitation. Lastly, no part of the cause of action had arisen within the jurisdiction of this Court.

5. Pleadings set out above have occasioned the issues given below with my findings :---Issues Findings

(1) Whether the suit cotton seeds were covered against fire risk by a contract of insurance No. 77388 dated 18-2-1972 ? Yes.

(2) Whether the cover note for the contract was issued and premium accepted by a person authorised to do so on behalf

of Vulcan Insurance Co. ? Yes.

(3) Whether the suit cotton-seeds we

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