Per R.M.S.Khandeparkar, J.

1. Heard. Rule. The learned Advocates appearing for the respondents waive service. By consent, rule made returnable forthwith.

2. By the present petition, the petitioners while challenging the decision of the respondent No.2 to treat the Policy Nos.111100/11/04/00831 and 111100/11/05/00800 as policies based on market value basis, seek direction to the respondent No.2 to sanction the petitioners’ claim on reinstatement value basis and to continue to treat the said policies to be issued on reinstatement value basis.

3. The petitioners submitted the proposal for Standard Fire and Special Perils Policy to the respondent No.1 on 15-9-2003 pursuant to which the respondent No.2 issued Policy bearing No.1111/11/03/00852 for a period commencing from 15-9-2003 till 14-9-2004 insuring the petitioners’ building known as "Marwah Centre", Marwah Estate, K.M. Marg, Andheri (East), Mumbai together with the plant and machineries, equipments, electrical installations, etc., for a total sum of Rs.18,00,00,000/- against fire, earthquake, flood and other risks as per the forms attached. On the expiry of the said policy, the same was renewed for another year, namely 15-9-2004 to 14-9-2005 being Police bearing No.111100/11/04/00831 by the respondent No.2.

4. On 26-7-2005 water inundated the petitioners’ factory because of floods due to unprecedented rains in Mumbai causing damage to the petitioners’ property. The petitioners thereupon informed the loss suffered by them to the respondent No.2 and submitted their claim in the prescribed form on 1-9-2005. The respondent No.2 appointed M/s. M.R. Jhalani & Associates as Surveyors to inspect the property and to assess the loss. On receipt of the report of the Surveyors, the respondent No.2 offered a sum of Rs.35,00,000/- for the loss or damage by the floods to the petitioners which have occurred on 26-7-2005. The said amount was duly received by the petitioners under the receipt dated 10-10-2005 being the payment of the Claim No.111100/11/0055/00057 under the Policy No.111100/11/04/00831.

5. On 24-11-2005 the petitioners addressed a letter to the respondent No.2 claiming that as against their claim for a total amount of Rs.71,93,017.84 the respondent No.2 had released interim amount of Rs.35,00,000/-. They were therefore requested to settle their claim for releasing the balance amount of Rs.36,93,017.84 ps. A further letter was addressed by the petitioners to the respondents on 15-12-2005 stating that in their claim dated 24-11-2005, due to oversight, one bill of Dataxcess Integrated Technology Limited dated 28-10-2005 for Rs.40,539/- was not added in the claim and pursuant to the above addition, the total claim was to be Rs.72,33,556.84 ps. The respondent No.2, on the other hand, responded to the petitioners on 29-3-2006 that the gross loss assessed regarding the claim by the petitioners was Rs.71,99,206/- from which the depreciation to the extent of Rs.3,43,732/-, salvage amount of Rs.59,000/- and excess 5% to the tune of Rs.3,39,824/- were deducted and after further deduction of the amount of Rs.35,00,000/-, which was already paid, it was informed that the net balance amount payable was Rs.29,56,550/-.

6. The respondents accepted the said amount of Rs.29,56,550/- allegedly in full and final satisfaction and discharge of their claim under the Policy No.No.111100/11/04/00831. It was thereafter that the petitioners under the letter dated 11-4-2006 sought to dispute the disallowance of sum of Rs.3,43,732/- on account of depreciation and further informed the respondent No.2 that their attention was drawn after filing the claim that their proposal for issuance of insurance policy clearly stated that the policy was to be on the reinstatement value basis. However, factually the policy document did not mention that the same was issued on reinstatement value basis. It was, therefore, requested by the petitioners to the respondents that the original proposal be called for and ve