JUDGMENT : VENUTHURUMALLI GOPALA KRISHNA RAO, J. 1. Aggrieved against the judgment and decree dated 06-11-2002 in O.S. No. 18 of 1996 passed by the Principal Senior Civil Judge, Eluru, West Godavari District, the 1st defendant/Insurance Company filed the appeal and the cross-objections are filed by the plaintiff challenging the rate of interest of 6% per annum awarded by the trial Court from the date of suit till the date of realization. The 2nd respondent herein is the 2nd defendant/bank in the said suit. 2. The parties will hereinafter be referred to as arrayed before the trial Court. 3. The brief averments in the plaint are as follows: (a) The plaintiff as a proprietary concern carrying on tobacco industries from 1984 onwards in the premises bearing Door No. 16B-2-2, Thangellamudi, belongs to one Razia Begum. During the year 1987, one Srilakshmi, plaintiff’s mother, purchased a vacant site of 268 square yards situated in Kandrikagudem. The plaintiff’s sister also purchased another extent of 536 square yards to the east of the plot of the plaintiff’s mother. Both the sites are continues as one block. The plaintiff’s mother gifted the site with tiled shed therein to the plaintiff in the year 1983. The plaintiff also took on lease the sites and sheds therein belong to his sister Prameela Devi and shifted his business in 1988 to the new premises. The said two plots being continues bearing Door Nos.1-333 and 1-333. (b) The plaintiff used to avail open cash credit facility from the 2nd defendant/Bank from 1984 onwards and the loan limit was enhanced from time to time and ultimately enhanced to Rs.1,30,000/-in the year 1993. (c) The cash credit facility was extended to the plaintiff by the 2nd defendant against the hypothecation of the stock in trade kept in the premises of the plaintiff. As per the guidelines of the Reserve Bank of India, the 2nd defendant/Bank insured the stock and paid the premium giving due credit to the account of the plaintiff. Accordingly, the 2nd defendant/Bank on behalf of the plaintiff obtained the insurance policy from the 1st defendant/Insurance Company for the period from 12-12-1992 to 11-12-1993 for a sum of Rs.1,30,000/- and the premium was paid by the Bank. On 23-4-1993 around 12.45 Noon, there was a fire accident in the plaintiff’s new premises due to electrical short-circuit and the entire stock was burnt. On 23-4-1993 around 12.45 Noon, there was a fire accident in the plaintiff’s new premises due to electrical short-circuit and the entire stock was burnt. The plaintiff informed the same to both the Bank and Insurance Company. After the fire accident, the 1st defendant’s Surveyor also visited the premises and estimated the loss. The Field Officer of the Bank also visited the premises and took note of the fact that the entire tobacco stock was reduced into ashes. When the plaintiff made a claim, he was informed through letter dated 27-4-1993 by the 1st defendant that his claim was repudiated on the ground that the door number mentioned in the proposal form is at variance with the door number of the premises where the fire accident took place. (d) Further, the Bank as well as Insurance Company is quite aware of his shifting of old premises in the year 1993. The correspondence between the plaintiff and the 2nd defendant itself discloses that he is carrying on business with Door Nos.1-333 and 1-333/1. The 1st defendant/Insurance Company with a dishonest intention, taking advantage of the wrongly noted door number by the 2nd defendant in the proposal, it repudiated his claim. He never made any fraudulent misrepresentation or suppressed any material fact from the knowledge of the Insurance Company and it has only dishonestly declined and repudiated the claim. Even the 2nd defendant/Bank is liable to compensate the plaintiff in damages estimated to Rs.1,30,000/- along with interest at 15.5% per annum. Therefore, the plaintiff was constrained to file the suit against both the defendants. 4. The 1st defendant/Insurance Company filed a written statement contending that their staff inspected the hypothecated stock of the plaintiff, but the insurer agent has not verified the stock before accepting the claim of the fire accident. The 2nd defendant insured tobacco stocks worth Rs.1,30,000/- belonging to the plaintiff with this defendant lying in the premises bearing Door No. 16B-2-2, Tangellamudi as per the instructions given by the 2nd defendant. Soon after the insurance was effected, a cover note was issued to the 2nd defendant who has got insurable interest in the property insured. What is covered under the policy is the stocks stored in the premises mentioned in the policy. The fire policy does not cover the stocks stored elsewhere and it may be stored any number of places. Soon after the insurance was effected, a cover note was issued to the 2nd defendant who has got insurable interest in the property insured. What is covered under the policy is the stocks stored in the premises mentioned in the policy. The fire policy does not cover the stocks stored elsewhere and it may be stored any number of places. The cover note was issued for four months prior to the date of fire accident. During these four months neither the 2nd defendant nor the plaintiff raised any objections. The Insurance Company repudiated the claim of the plaintiff bona fidely as per the terms and conditions of the cover note. 5. The 1st defendant also filed additional written statement. It is pleaded that the plaintiff has abandoned the suit claim by not preferring the claim within the stipulated period of 12 months as per the terms and conditions of the policy. The negligence, if any, is on the part of 2nd defendant and not this defendant. Therefore, the plaintiff is not entitled to seek any relief from the 1st defendant. 6. The 2nd defendant/Bank filed a written statement contending that the Bank has advanced a sum of Rs.1,30,000/- during the year 1992-93 and the same was renewed from time to time and the limit was enhanced. The staff of the 1st defendant are entering into the contract only after physical verification of the stock held by the plaintiff. The burden of verifying the stock position is more on the 1st defendant while issuing policy where the burden of such verification lies on this defendant since the bank is taking 100% security for the amounts advanced by it other than the stock hypothecated. The plaintiff did not bring change in the door number specifically to the notice of the staff of this defendant. As the loan sanctioned to the plaintiff during 1992-93 is renewal, no fresh documentation is taken by the staff of this defendant except verifying the stock. The contract of insurance is in between the 1st defendant and the plaintiff. This defendant has paid premium on behalf of the plaintiff only. Mere payment of premium on behalf of the plaintiff will not give any cause of action against the Bank. In fact, the plaintiff is the beneficiary under the agreement and the 1st defendant is liable to fulfil its obligation towards the plaintiff. This defendant has paid premium on behalf of the plaintiff only. Mere payment of premium on behalf of the plaintiff will not give any cause of action against the Bank. In fact, the plaintiff is the beneficiary under the agreement and the 1st defendant is liable to fulfil its obligation towards the plaintiff. Further, the suit is barred by claim since the suit has to be filed within one year from the date of repudiation. In fact, the 2nd defendant is not a necessary party to the suit and therefore, the suit is liable to be dismissed. 7. Based on the above pleadings, the following issues are settled for trial by the trial Court: (1) Whether the plaintiff is entitled for recovery of the damages of Rs.2,00,200/- from the defendants? (2) Whether the 2nd defendant is liable for the negligence and the plaintiff is entitled for compensation from the 2nd defendant? (3) Whether the suit is barred by limitation? (4) To what relief? 8. During the course of trial, on behalf of the plaintiff, the plaintiff was examined himself as PW-1 and marked Ex.A-1. Assistant Manager of the 2nd defendant/Bank was examined as DW-1 and Administrative Officer of the 1st defendant/Insurance Company was examined as DW-2 and Ex.B-1 was marked. 9. After completion of the trial and hearing the arguments of both sides, the trial Court decreed the suit for Rs.2,00,200/- directing the 1st defendant/Insurance Company to pay the said sum to the plaintiff along with subsequent interest at 6% per annum from the date of suit till the date of realisation on the principal sum of Rs.1,30,000/- and also directing the 2nd defendant/Bank to pay costs to both the plaintiff and the 1st defendant and to bear its own costs. 10. Heard Sri Srinivasa Rao Vutla, learned Standing Counsel for the appellant/1st defendant (Insurance Company) and Sri B.V. Krishna Reddy, learned counsel for the 1st respondent/plaintiff. None appeared on behalf of the 2nd respondent/Bank. 11. Now, the points for determination are: 1. Whether the judgment and decree passed by the trial Court needs any interference? 2. To what extent? 12. Point No. 1: Whether the judgment and decree passed by the trial Court needs any interference? The admitted facts are that the plaintiff is a proprietary concern carrying on tobacco industries from 1984 onwards in the premises bearing Door No. 16B-2-2, Thangellamudi, belongs to one Razia Begum. 2. To what extent? 12. Point No. 1: Whether the judgment and decree passed by the trial Court needs any interference? The admitted facts are that the plaintiff is a proprietary concern carrying on tobacco industries from 1984 onwards in the premises bearing Door No. 16B-2-2, Thangellamudi, belongs to one Razia Begum. It is the case of the plaintiff that the plaintiff also took neighbouring site of the said premises on lease and the said two plots being continues bearing Door Nos.1-333 and 1-333/1, Kandrikagudem, hamlet of Thangellamudi. It is not in dispute that cash credit facility was extended to the plaintiff by the 2nd defendant/Bank against the hypothecation of stock-in-trade kept in the premises of the plaintiff. As per the guidelines of Reserve Bank of India, the 2nd defendant/Bank insured the stock and paid premium by giving due credit to the account of plaintiff. It is not in dispute that the 2nd defendant/Bank on behalf of the plaintiff obtained insurance policy from the 1st defendant/Insurance Company for the period covering from 12-12-1992 to 11-12-1993 for a sum of Rs.1,30,000/-and premium was also paid by the Bank. The fire accident was taken place on 23-4-1993 around 12.45 Noon at day time due to electrical short circuit and the entire stock was burnt. The same is not in dispute by both sides. It is also not in dispute that the plaintiff informed the same to both the defendants and after the fire accident, the Surveyor of the 1st defendant/Insurance Company also visited the premises and estimated the losses; likewise, the Field Officer of the 2nd defendant/Bank also visited the premises and took note of the fact that the entire tobacco stock was reduced into ashes. Consequently, when the plaintiff made a claim, he was informed through letter dated 27-4-1993 by the 1st defendant that his claim was repudiated on the ground that the door number mentioned in the proposal form is at variance with the door number of the premises where the fire accident took place. 13. Consequently, when the plaintiff made a claim, he was informed through letter dated 27-4-1993 by the 1st defendant that his claim was repudiated on the ground that the door number mentioned in the proposal form is at variance with the door number of the premises where the fire accident took place. 13. In the case on hand, the case of the plaintiff is that there was letter correspondence between the plaintiff and the 2nd defendant, the same is disclosed that the plaintiff is carrying on business in Door Nos.1-333 and 1-333/1 and the 1st defendant/Insurance Company, with a dishonest intention taking advantage of wrongful door number made by the 2nd defendant in the proposal form, the Insurance Company repudiated the claim of plaintiff. The material on record further reveals that the 1st defendant/ Insurance Company and the 2nd defendant/Bank finding fault against each other for wrongful noting of the door number in the policy. DW-1, Administrative Officer of the 2nd defendant/Bank, stated in his evidence that there was no change of address, which was furnished by the plaintiff, on record during the loan of 1992-93. In cross-examination, he admits that the bank used to send insurance proposals on behalf of the loanee, has not included the case by the date of loan. The Administrative Officer of the 1st defendant/ Insurance Company pleaded that either of the officials of 1st defendant or 2nd defendant visited the actual premises where the stock of plaintiff was stored that was intended to insure. The material on record reveals that the plaintiff availing loan right from the year 1994 onwards and the 2nd defendant renewing the same from time to time and they have also processed the loan during the year 1993-94 and sent proposals to the 1st defendant with old Door No. 16B-2-2, whereas the plaintiff was shifted to Door Nos.1-333 and 1-333/1. It is the duty of the 1st defendant and the 1st defendant is having obligation to verify and make physical verification of the stock and the premises at the time of entering into the contract, but they failed to do so. It is not in dispute that the 2nd defendant/Bank obtained a policy with regard to stock of the plaintiff company for a sum of R.1,30,000/- and premium was also paid. It is not in dispute that the 2nd defendant/Bank obtained a policy with regard to stock of the plaintiff company for a sum of R.1,30,000/- and premium was also paid. In fact, it is not at all disputed by the defendants 1 and 2 about the occurrence of fire accident and damage of stock sustained by the plaintiff. It is also not the case of both the defendants that the plaintiff made a fraudulent claim. In the case on hand, the material on record reveals that the fire accident took place four months after the policy was obtained by the Bank on behalf of the plaintiff by insuring the stock of plaintiff with the 1st defendant/ Insurance Company. Therefore, I am of the considered view that the plaintiff is entitled to the total policy amount of Rs.1,30,000/- by way of damages from the 1st defendant/Insurance Company. 14. It was pleaded by the plaintiff that the trial Court awarded subsequent interest of 6% per annum from the date of suit till the date of realisation on the principal amount of Rs.1,30,000/-. The plaint averment reveals that the plaintiff claimed interest more than 12% per annum on Rs.1,30,000/- till the date of suit. The plaintiff claimed interest of 15% per annum from the date of repudiation i.e. from 27-4-1993 till the date of filing of the suit, the same is awarded by the trial Court. It is well settled that the use of word “may” in Section 34 of CPC confers discretion of the Court to award or not to award interest or to award interest at such rate as it deems fit. But, the said discretion has to be exercised judiciously. Here, in the case on hand, the 1st defendant is a nationalised insurance company and the 2nd defendant is a nationalised bank, therefore, on considering the circumstances of the case, the rate of interest of 15.5% per annum awarded by the trial Court from 27-4-1993 till the date of filing of the suit is modified as 12% per annum. Here, in the case on hand, the 1st defendant is a nationalised insurance company and the 2nd defendant is a nationalised bank, therefore, on considering the circumstances of the case, the rate of interest of 15.5% per annum awarded by the trial Court from 27-4-1993 till the date of filing of the suit is modified as 12% per annum. In the case on hand, the rate of interest of 6% per annum was awarded by the trial Court from the date of suit till the date of realisation on the principal amount of Rs.1,30,000/-, since the 1st defendant did not pay claim amount after the proposal made by the bank for payment of amount on behalf of the plaintiff, therefore, the plaintiff is entitled to interest of 12% per annum on the principal amount of Rs.1,30,000/- from the date of suit till the date of decree and thereafter at 6% per annum on Rs.1,30,000/- till the date of realisation. 15. Point No. 2: To what extent? For the foregoing reasons, the appeal and cross-objections are disposed of by modifying the judgment and decree, dated 06-11-2002, in O.S. No. 18 of 1996, passed by the learned Principal Senior Civil Judge, Eluru, as the 1st defendant/Insurance Company do pay a sum of Rs.1,30,000/- (Rupees one lakh and thirty thousand only) to the plaintiff along with subsequent interest of 12% per annum from 27-4-1993 till the date of decree and thereafter at 6% per annum on principal sum of Rs.1,30,000/- till the date of realisation. Pending applications, if any, shall stand closed. No costs.