DESHMUKH D.K., J.:---The plaintiff is a Private Limited Company incorporated under the Companies Act, 1956. The business of the plaintiffs is of construction contractors. The defendant is a Company incorporated under the Companies Act. It is a Government of India enterprise and carries on business as Insurers. The plaintiffs have filed this suit for a money decree in the amount of Rs. 12,44,17,147.40 with interest.

2.The facts as disclosed in the plaint are that a contract was entered into between the Socialist Peoples Libyan Arab Jamshiriyah (Secretarist of Agarrian Reclamation and Land Reconstruction) and M/s. Kathmann A.G. Ltd. of Switzerland (for brevitys sake, hereinafter referred to as Kathmann) for construction of poultry farms in 42 sites in the State of Libya. The plaintiffs desired to participate in the said contract as Sub-contractors of Kathmann. At the relevant time the Reserve Bank of India had set up a Working Group for consideration of proposal for single window clearance. The plaintiffs submitted their proposal to the Working Group consisting of representatives of the R.B.I., I.D.B.I., the defendants and other Banks. The plaintiffs proposal was approved by the Working Group on 22nd September, 1980. The plaintiffs entered into the contract in writing with Kathmann on 9th December, 1980. By that contract, the plaintiffs took over all the liabilities and responsibilities of Kathmann under the contract dated 7th September, 1980 between the Kathmann and the State of Libya in so far as the transport from Central Stores in Libya, Civil Works and Erection works were concerned. The total value of the plaintiffs contract with Kathmann was Rs. 30,22,35,480/-. According to the plaintiffs, the work of the contract was to commence on 4th March, 1981 and the estimated date of the completion of the work was 4th November, 1982. According to the plaintiffs, in or about June 1981, the plaintiffs requested the defendants to send them a proposal for policy of insurance covering the said Contract. The defendants forwarded to the plaintiffs a form for issuance of Construction work Policy. The plaintiffs submitted the form to the defendants duly filed in. By letter dated 19th August, 1981, the defendants made an offer to insure the plaintiffs against 85% of the amount of any loss that may be sustained by them under the said contract. They requested the plaintiffs to pay the stipulated premium. According to the plaintiffs, the plaintiffs accepted the proposal and paid the premium. The date of payment of premium was 29th March, 1982 and the insurance policy was issued by the defendants to the plaintiffs on 12th April, 1982. The Insurance Policy was to indemnify the plaintiffs against the failure of the Kathmann to pay any sum due to the plaintiffs under the contract between Kathmann and plaintiffs. According to the plaintiffs, the plaintiffs proceeded with the work. The said Kathmann, between November, 1981 to May, 1982, paid aggregate amount of Libyan Dinars 1, 119,929 out of Libyan Dinars 4,457,206, which was due and payable, but failed and neglected to make payment of the balance amount. According to the plaintiffs, they submitted to the said Kathmann on 4th July, 1982 a detailed statement showing Erection and Civil Works done by them and payments due. As per that statement, balance amount was Libyan Dinars 3, 337,277. According to the plaintiffs, the said Kathmann who had received the full payment from the Libyan Government refused to make the payment and terminated the contract by giving false reasons by letter dated 21st July, 1982. It is further submitted by the plaintiffs that the said Kathmann also invoked the bank guarantee of about Rs. 4.14 crores furnished by the Indian Overseas Bank at the instance of the plaintiffs. According to the plaintiffs, thereafter the plaintiffs entered into negotiations with the said Kathmann for arriving at an amicable settlement, but no amicable settlement was arrived at. Ultimately, o