P. S. NARAYANA, J. ( 1 ) INTRODUCTORY facts : C. Pattabhirama Rao, the unsuccessful plaintiff in O. S. No. 434/88 on the file of II additional Subordinate Judge, Visakhapatnam preferred this appeal aggrieved by the dismissal of the suit. The said pattabhirama Rao, appellant/plaintiff filed the aforesaid suit for recovery of a sum of Rs. 2,66,000/- together with subsequent interest and costs of the suit. The respondents herein, the New India Assurance Company Limited and the syndicate Bank are shown as defendants 1 and 2 in the said suit. The relief of recovery was prayed for as against the 1st respondent herein/1st defendant in the suit. The learned Judge on appreciation of evidence of P. W. 1, P. W. 2, D. W. 1, Exs. A-1 to A-19 and Exs. B-1 to B-4 and Ex. X-1 recorded findings that even on the strength of the Surveyor s report the relief cannot be granted and even otherwise Ex. A-1 Insurance policy is only a Fire policy and not Fire-A policy and hence the New india Assurance Company Limited cannot be fastened with liability inasmuch as such risk is not covered by the policy ex. A-1. Hence the Appeal. ( 2 ) PLEADINGS of the parties : The plaintiff averred in the plaint as here under : the plaintiff as a sole proprietor started a concern under the name and style of Ravi Food Products. The plaintiff wanted to construct a biscuit factory and carry on business of manu facture and sale of biscuits and stalled a small scale industry. The District Industrial officer. Visakhapatnam granted a licence for the said small scale industry under Unit no. 01 -20 2865 on 7-7-1982. After obtaining licence the plaintiff approached the 2nd defendant for the purpose of financial aid. The 2nd defendant granted the said financial assistance after due hypothecation of the movable property consisting of machinery; furniture and stock in trade and in addition as per the loan agreement between the parties i. e. , between the plaintiff and the 2nd defendant. The said industrial unit should be comprehensively insured for all risks as envisaged under Fire-A Policy covering all risks as detailed in the standard policy which includes 9 risks as detailed in Fire-A policy. The said industrial unit should be comprehensively insured for all risks as envisaged under Fire-A Policy covering all risks as detailed in the standard policy which includes 9 risks as detailed in Fire-A policy. It was also agreed between the plaintiff and the 2nd defendant that the 2nd defendant as bankers who gave financial assistance should themselves pay the premium to the concerned Insurance Company and receive the policy. The plaintiff s unit including building, machinery and stock-in-trade was insured by the 2nd defendant on behalf of the plaintiff with the 1st defendant for a total sum of rs. 3,10,000/- and a Policy No. 1 2564-005053 was issued by the 1st defendant company to the plaintiff. The 1st defendant company issued the policy for the period commencing from 26-1-1986 to 25-1-1987. The 2nd defendant also collected from the 1sl defendant company a sum of Rs. 592/- for the total insured sum of Rs. 3,10,000/ -. The policy was issued and kept in the files of the 2nd defendant and all were under the impression that it was issued under Fire-A policy. Unfortunately due to heavy rains and floods during the first week of October 1986 the entire building where the biscuit factory of the plaintiff was situate collapsed on 6-10-1986. Consequently, the machinery situate inside the building for manufacture of biscuits was also badly damaged. The collapse of the building and the damage of machinery was all of a sudden on account of heavy rains and uncontrollable hood water. The plaintiff immediately informed the said incident on 7-10-1986 itself to both the defendants. The 1st defendant deputed a Surveyor to assess the damage both to the building and the machinery. The plaintiff is given to understand that the said Surveyor had recommended payment of compensation to a tune of Rs. 2,00,000/- after due and proper inspection and survey. The 2nd defendant who are the bankers of the plaintiff who are also interested for the said settlement of claim have addressed many letters to the 1st defendant and also to the Divisional Office and Branch Office of the 1st defendant. Peculiarly the plaintiff was informed by the 1st defendant that the policy under which the building and the machinery were insured, did not cover the risks of subsidence, cyclone, flood and inundation and as such the plaintiff is not entitled for compensation. Peculiarly the plaintiff was informed by the 1st defendant that the policy under which the building and the machinery were insured, did not cover the risks of subsidence, cyclone, flood and inundation and as such the plaintiff is not entitled for compensation. The premium that was collected under the present policy is far excess. In fact even if the Fire-A policy for an amount of Rs. 3,10,0007- the premium will be Rs. 310/- and after deduction of commission it comes to Rs. 294/ -. Peculiarly the 1st defendant company collected an amount of Rs. 5 92/- towards the premium. Hence the policy issued and contracted between the parties is a Fire-A Policy and not an ordinary Fire policy. Hence the 1st defendant is liable to pay a sum of Rs. 2,00,000/- towards compensation to the plaintiff. The plaintiff got issued a registered lawyer s notice dated 28-12-1987 to the 1st defendant. The 1st defendant received the said notice but did not issue any reply. As far as the 2nd defendant is concerned, the negligence on the part of the 2nd defendant is not immediately returning the ordinary Fire policy and getting a fire-A policy. Hence the 2nd defendant is a necessary party to the suit and the plaintiff reserves his right to proceed against the 2nd defendant at a later stage if he is not compensated by the 1st defendant. The filling up of the forms for issuance of a policy is an offer. Payment of the premium is also an offer. When once the premium is accepted and encashed, the contract of insurance comes into existence as the amount of premium that is paid at Rs. 592/- being the premium for Fire-A policy and as the said amount had been accepted by the 1st defendant Insurance Company, the contract of insurance of Fire-A policy is sprung into existence which binds both the parties. The issuance of formal printed policy is only a subsequent event in confirmation of the original contract of insurance. As the suit transaction is a commercial transaction the plaintiff is entitled to claim interest as claimed by him i. e. , at the rate of 18% per annum from 6-10-1986. Hence the suit to recover a sum of Rs. 2,66,000/- from the 1st defendant together with costs and subsequent interest. As the suit transaction is a commercial transaction the plaintiff is entitled to claim interest as claimed by him i. e. , at the rate of 18% per annum from 6-10-1986. Hence the suit to recover a sum of Rs. 2,66,000/- from the 1st defendant together with costs and subsequent interest. The 1st defendant filed written statement denying material allegations and also pleading as hereunder : the 1st defendant Insurance Company had collected rs. 592/- and had issued a policy. The policy issued was only fire policy and not Fire-A policy. The plaintiff had been trying to interpret the nature of the contract and gain unlawfully by way of misrepresentation. The contract that was entered into between the plaintiff and the 1st defendant is clearly a Fire policy and not Fire-A policy as claimed by the plaintiff. The allegations that the biscuit factory of the plaintiff collapsed on 6-10-1986 are not known to the 1st defendant. The allegations that the machinery situate inside the building was damaged and that there was heavy rain and uncontrolled flood water are all not known to the 1st defendant. It is true that the Surveyor was appointed by the 1st defendant and it is only in the usual course of business that the 1st defendant had appointed the said Surveyor. Even the recommendations of the said Surveyor clearly establishes that it was only due to the structural weakness that the building collapsed but not due to cyclone or flood. Even if the loss was to be attributed to the flood or cyclone, the policy issued by the 1st defendant did not cover the said risk. The allegation that the surveyor had recommended payment of Rs. 2,00,000/- as compensation is an utter falsehood invented by the plaintiff. The Surveyor is not the authority to decide the payment. The policy did not cover the risk of cyclone or flood and as such the 1st defendant rightly repudiated the claim of the plaintiff. The 1st defendant issued a reply notice to the notice issued by the plaintiff. The contention of the plaintiff that Fire-A policy sprung into existence and that it is binding on the 1st defendant are all vague and are untenable. The 1st defendant issued a reply notice to the notice issued by the plaintiff. The contention of the plaintiff that Fire-A policy sprung into existence and that it is binding on the 1st defendant are all vague and are untenable. The policy No. 12564-00538 was a standard Fire policy issued by the 1st defendant covering the building and machinery against fire, RSD and MD risks for a period of one year from 25-1-1985 to 25-1-1986 and the policy never covered the risks of damage due to flood or cyclone. As such the suit is not maintainable under law and prayed to dismiss the suit with costs. The 2nd defendant/syndicate Bank filed written statement denying the allegations as specified hereunder : the suit against the 2nd defendant as framed is not legally maintainable and in fact no prayer had been asked for passing a decree against the 2nd defendant and as such the 2nd defendant is not a necessary party and is unnecessarily added. It is true that the plaintiff availed the loan facilities from the 2nd defendant as a small scale industry and the 2nd defendant required the plaintiff for insurance with all comprehensive benefits and risks including Fire policy. The plaintiff got the policy covering all the risks as required by the 2nd defendant and insured the same with the 1st defendan: The plaintiff in order to cover the insurance risk asked the 2nd defendant to pay the premium sums on behalf of the plaintiff and the amount as required by the 1st defendant for the comprehensive risk policy was paid. The 2nd defendant also was made to understand that all the nine risks under the standard policy of fire-A policy was covered and the premium for the comprehensive policy was paid by the 2nd defendant on behalf of the plaintiff. After issuing the policy the subsequent premium for high amount covering all the risks was paid and the policy was in vogue and is in subsistence when the machinery etc. , caused lot of damage due to heavy rains and floods. Hence the coverage of risk has to be answered by the 1st defendant as per the assessment of the Surveyors of the 1st defendant and the damage caused consequent of floods and heavy rains has got to be compensated properly by the 1st defendant to the plaintiff. , caused lot of damage due to heavy rains and floods. Hence the coverage of risk has to be answered by the 1st defendant as per the assessment of the Surveyors of the 1st defendant and the damage caused consequent of floods and heavy rains has got to be compensated properly by the 1st defendant to the plaintiff. The privity of contract is primarily between the plaintiff and the 1st defendant and the 2nd defendant being a Banker wanted to cover all the risks by insurance Policy taken for the 1st defendant. The 1st defendant, therefore, in any event, is liable to pay the loan amount taken by the plaintiff to the 2nd defendant. The 2nd defendant cannot be called upon to compensate the plaintiff in the event of non-compliance by the 1st defendant. On that ground the 2nd defendant denies all responsibility or liability arising under the Fire policy and it is a matter exclusively to he decided interse between the plaintiff and the 1st defendant. The 2nd defendant therefore pleaded that under no circumstances the plaintiff can be given option to proceed against the 2nd defendant at a later stage. There is no cause of action for the plaintiff against the 2nd defendant and prayed to dismiss the suit against the 2nd defendant with costs. ( 3 ) ISSUES settled by the trial Court: The following Issues were settled by the trial Court on the respective pleadings of the parties : 1. Whether the policy issued by the 1st defendant to the plaintiff is only fire policy and not fire-A policy ? 2. Whether the Surveyor of the 1st defendant has recommended for the compensation of Rs. 2,00,000/- to the plaintiff? 3. Whether the plaintiff is not entitied to claim the compensation of Rs. 2,00,000/- from the 1st defendant ? 4. Whether the plaintiff is entitled to claim interest from the 1st defendant ? 5. If so, to what relief ? ( 4 )