JUDGMENT - Vazifdar S.J., J.:-The suit is filed to recover a sum of Rs. 3,84,019=08 ps. with interest under two insurance certificates issued by the defendant under an open cover policy. The plaintiff claim that the loss suffered by it arose as a result of the damage and short delivery of the cargo insured by it with the defendant under the two insurance certificate. 2.The plaintiff's case is that in July, 1978, it entered into two contracts with Doolan Steel Export Company, a company incorporated in U.S.A. for the purchase of defective C.R.C. sheets (hereinafter referred to as the "said goods"). In respect of both the contracts, the plaintiff informed the defendant that it had booked the said orders with Doolan Steel Export Company for the purchase of the said goods for the sum US$ 30,252.60 (equivalent to Rs. 2,42,757=28) and US$ 1,63,954/- (equivalent to Rs. 13,26,488=67). By its applications both dated 25th July, 1978, the plaintiff requested the defendant to issue an insurance policy covering the C. F. value, 50% profit and custom duty. The defendant pursuant to this request, issued an open cover policy bearing No. 256050177 in respect of the said consignments to be shipped from New Jersey to Ghaziabad. I will refer to the relevant clause of the open cover policy later at the appropriate stage as the construction thereof is a question of considerable importance. Doolan Steel Export Company shipped the said goods under two orders on board the vessel s.s. S.P. Kommuny under separate bills of lading. The plaintiff informed the defendant of the same. The defendant in turn issued two insurance certificates in respect of the consignments. The vessel arrived in Bombay on 30th March, 1979. The plaintiff filed bills of entry for home consumption for clearing the goods. The goods were shipped under two bills of the lading dated 30th October, 1978 and 15th November, 1978. The net weight of the goods covered by the bill of lading dated 30th October, 1978 was 125.783 metric tonnes (hereinafter referred to as the "larger consignment") and the goods weight of the goods shipped under the bill of lading dated 15th November, 1978 was 693.383 metric tonnes (hereinafter referred to as the "smaller consignment"). In respect of the larger consignment, the Defendant issued an insurance certificate bearing No. 3560520486. In respect of the larger consignment, the Defendant issued an insurance certificate bearing No. 3560520486. Prior to this, the defendant had in respect of the larger consignment issued a temporary cover note No. 89071. In respect of smaller consignment, the defendant issued an insurance certificate bearing No. 3560520487. Both insurance certificate were dated 28th February, 1979. 3.After the consignments landed in Bombay, the plaintiff noticed that the consignments had been discharged in a damaged condition and that there was shortage in their content. 4.The plaintiff accordingly by a letter dated 17th April, 1979 informed the defendant of the same and requested the defendant to depute its representative to carry out the survey. The plaintiff asked the defendant to treat the letter as a formal claim stating that the final claim would be submitted after the survey by the defendant's representative. By a letter dated 24th April, 1979 M/s. Transocean Shipping Agency Pvt. Ltd. requested M/s. Eriscon and Richards to hold a survey of the consignments. The endorsement on this letter by M/s. Eriscon and Richards reads as under:- "Survey granted as a special case and without prejudice to question of liability, survey having been applied for after the prescribed time limit." The endorsement by Transocean Shipping Agency Pvt. Ltd. at the foot of the letter states that it was with reference to the plaintiff's letter dated 23 April, 1979. It will come to the significance of this endorsement while dealing with one of Mr. Makhija's submission. It appears, however, that M/s Ericson and Richards ultimately did not conduct the survey. Ultimately, M/s. Metcalfe Hodgkinsons (Pvt.) Ltd. (hereinafter referred to as the surveyors") carried out the survey in respect of both the consignments. The Survey Report in respect of the larger consignment has not been produced though it has been deposed to by the plaintiff's witness. The Survey Report in respect of the smaller consignment has been relied upon by the plaintiff. This Survey Report dated 31st July, 1979 has been relied upon the plaintiff in respect of its contention regarding damage to the smaller consignment. I will refer to the details of the report while dealing with the issue whether the goods were in fact damaged in transit entitling the plaintiff to make a claim under the insurance policy. This Survey Report dated 31st July, 1979 has been relied upon the plaintiff in respect of its contention regarding damage to the smaller consignment. I will refer to the details of the report while dealing with the issue whether the goods were in fact damaged in transit entitling the plaintiff to make a claim under the insurance policy. 5.Thereafter considerable correspondence ensued between the parties wherein the plaintiff forwarded its debit note and in turn was called upon by the defendant to furnish several documents and details which it did. As the plaintiff's claim was not paid, it filed this suit on 1st June, 1981. The defendant has denied in its written statement, the plaintiff's contention that it suffered any loss either by way of damages or for shortage in delivery. The defendant further contended that the loss, if any, has not been proved. The particulars regarding the consignments as pleaded by the plaintiff are also generally denied. The defendant's main contention however, is that the plaintiff had not taken any action against the carriers for shortage in or damage to the goods. It was submitted that the plaintiff failed and neglected to properly preserve and exercise its rights against the carriers and the Bombay Port Trust by allowing the claim against them to be extinguished by not filing a suit against them. 6.D.B. Bhosale, J., on 25th October, 2001 framed the following issues: 1. Whether the plaintiffs imported goods of the quality and quantity as stated in paragraphs 3 and 4 of the plaint? 2. Whether the goods imported by the plaintiffs were discharged in a damaged condition as alleged in paragraph 4 of the plaint? 3. Whether the plaintiffs suffered loss/damages of the value of Rs. 2,33,922.02 paise and Rs. 1,07,909.80 paise respectively in respect of the two consignments as alleged in paragraph 4 of the plaint? 4. Whether defendants prove that the plaintiffs committed breaches by allowing their alleged claim, if any, to get barred as against the shipping company and the Trustees of the Port of Bombay and the defendants are therefore not liable as alleged in paragraphs 4 and 7 of the written statement? 5. Whether the plaintiffs prove that the survey was carried out and/or conducted by the Surveyor M/s. Matcale and Hodgkinson Pvt. Ltd. on 25th April, 1979 and the Survey Report is correct? 6. What reliefs, if any, are the plaintiffs entitled? 5. Whether the plaintiffs prove that the survey was carried out and/or conducted by the Surveyor M/s. Matcale and Hodgkinson Pvt. Ltd. on 25th April, 1979 and the Survey Report is correct? 6. What reliefs, if any, are the plaintiffs entitled? Issue No. 1 7.The bills of lading evidence the quality, quantity and price of the said goods. The plaintiff has set out the details thereof in the plaint. The plaintiff led the evidence of its Export Manager, Rajender Katial. The defendant did not lead any oral evidence. The witness I must state gave evidence in the most honest and straight forward manner. Not once was there any indication that he even remotely tried to say anything but the truth. 8.Neither in the written statement nor in the cross-examination did the defendant seriously suggest that the details in this regard forwarded by the plaintiff were incorrect or inaccurate. Issue No. 1 is therefore answered in the affirmative. Issue Nos. 2 and 5 9.As stated earlier, the question of damage to the said goods is restricted to the smaller consignment. 10.Mr. Shah firstly relied upon the evidence of the witness. The witness deposed that these goods were in a damaged condition. He was cross-examined on this aspect. In his cross-examination, he fairly stated that he was connected with ordering the consignments. However, he stated that after the goods landed in Mumbai, he observed that a part of the consignment was in damaged condition. He had a temporary permit to enter the dock. He also stated that he observed that there was a shortage in respect of the consignment. He stated that he appointed a clearing agent M/s. Morarji Umarshi Co. on behalf of the plaintiff. He saw the consignment for the first time in the first week of April, 1979 at the docks. He observed that the goods were damaged, water had entered the crates, that some of the goods had water stains on them and that due to the crates breaking, some of the goods had partly come out of the crates. Mr. Shah relied upon this part of the witnesses' deposition in support of his submission. 11.Mr. Shah also relied upon the Survey Report, which in so far as it is relevant, read as under:- "7-DAMAGEa) 1. Denting and Bending 2. Staining and Rusting (c) DESCRIPTION of damagesb) 1. Mr. Shah relied upon this part of the witnesses' deposition in support of his submission. 11.Mr. Shah also relied upon the Survey Report, which in so far as it is relevant, read as under:- "7-DAMAGEa) 1. Denting and Bending 2. Staining and Rusting (c) DESCRIPTION of damagesb) 1. Falls or blows received during transit (c) CAUSE, after examination, 2. Contact with fresh water in transit attributed to (Chemical Test Mode)" .......................................................................................................................... 101 BundlesBundles partly burst, hoops broken and/or missing and part contents loose. Part contents (sheets) dented and/or bent it edges and/or at corners and more or less rusted and/or water stained. To facilitate weighment, all the 101 bun-dles were repacked and locally hooped. 12.Mr. Makhija, submitted that the Survey Report had not been proved. The surveyors had not been examined. The fact that the Survey Report was prepared has not been denied. The truth of the contents of the Survey Report, however, he submitted cannot be proved by mere proof of the Survey Report itself. Moreover, the witness in paragraph 52 of his cross-examination fairly stated that he did not remember the name of the persons, who conducted the survey on behalf of the surveyors. He was unable to identify the signature of the person who had signed the Survey Report. He again fairly conceded that the survey report was not prepared in his presence, though he was present when the survey was conducted. 13.There is considerable force in Mr. Makhija's submission regarding the Survey Report. That the Survey Report was prepared is not disputed. That the Survey Report tendered in evidence is the Survey Report, is not indispute. However, the opinion of the surveyors contained in the report has not been proved. The person, who conducted the survey was not examined. The defendant did not have an opportunity of testing the surveyor's evidence contained in Clause 7 above. The witness did not suggest that he was personally aware of the truth or the accuracy of the contents of the Survey Report. Thus Mr. Shah's reliance upon the Survey Report is unfounded. Issue No. 5 is therefore, answered in the negative. 14.For the same reason the report of the Assistant Manager of the BFT is of no assistance to the plaintiff. Moreover, this report does not even establish that the damage occurred during transit or on landing. 15.I am however, inclined to accept Mr. Shah's reliance upon the Survey Report is unfounded. Issue No. 5 is therefore, answered in the negative. 14.For the same reason the report of the Assistant Manager of the BFT is of no assistance to the plaintiff. Moreover, this report does not even establish that the damage occurred during transit or on landing. 15.I am however, inclined to accept Mr. Shah's submission that issue No. 2 ought to be answered in the affirmative on the basis of the witnesses evidence. Even if the surveyor's report is not taken into consideration, the witness saw the consignment immediately after it landed in Bombay. He was present when the survey was conducted. He deposed to the shortage in and the damage to the consignments. 16.Let me pause here to interpolate Mr. Makhija's submission that the inherent nature of the consignment was that it comprised of defective goods viz. defective C.R. sheets. Thus, he submitted that the mere fact that the goods upon landing were found to contain defects, would not be of any assistance to the plaintiff. The plaintiff must prove that the cause of the defects or further defects arose as a result of that which took place during the course of shipment or upon landing. The argument though attractive at first blush is without force. It is true that the mere fact that the consignment contained defects, would not be of any assistance to the plaintiff for considering the nature of the goods. These defects were bound to be present on landing. However in my opinion, the evidence of the witness substantiates Mr. Shah's contention that further defects occurred as a result of the damage suffered by the consignment during transit or upon landing. This is clear from the witnesses' deposition that the crates were damaged, that water had entered the creates, that the goods had water stains on them and that some of the goods had come out of the crates. The cross-examination did not shake this part of the testimony. The witnesses' deposition effectively establishes that further stains/defects occurred as a result of the seepage of water and the crates containing them, breaking. Issue No. 2 is therefore answered in the affirmative. The question, whether the plaintiff has proved the extent of damage and quantum of loss is a different matter altogether which I shall deal with next. Issue No. 3 17.This issue is relevant to both the consignments. Issue No. 2 is therefore answered in the affirmative. The question, whether the plaintiff has proved the extent of damage and quantum of loss is a different matter altogether which I shall deal with next. Issue No. 3 17.This issue is relevant to both the consignments. I will consider the smaller consignment first. 18.I have held while dealing with issue No. 2 that the plaintiff has proved its case regarding damage to the smaller consignment in transit or on landing. However, the plaintiff has not led any evidence to establish the extent of such damage entitling it to sustain a claim under the insurance policy. In respect of such a claim, it would be essential for the claimant to establish the extent of damage. Mere fact of damage would not suffice. For instance, it may well have been the case that only minimal damage was caused in transit. That by itself would not entitle the plaintiff to make a claim for the insured amount. Indeed the plaintiff has not even sought to do so. It has merely quantified its claim on the basis of the Survey Report. The contents of the Survey Report, I have already held, have not been established. Even the particulars contained in the Survey Report do not indicate the extent of damage caused in transit. If the damage was minimal, the insured may not even suffer any loss. Mere damage would not necessarily result in a loss. 19.The plaintiff did not even seek to establish the loss suffered by it as a result of the damage. The measure of damages in this case would be the difference between the price at which the plaintiff purchased the goods and the price at which the plaintiff sold the same. No evidence was led of the further sale by the plaintiff. It is important to note that the witness in paragraph 39 of his cross-examination admitted that the damaged goods were sold by the plaintiff. He stated that they were sold in the condition which they were received. He did not remember when the sale took place, though he stated that the goods were sold before the suit was filed. He however, stated that he did not know at what price the sale took place. There is thus no evidence even of the fact of any loss to the plaintiff much less of the quantum of such loss. He did not remember when the sale took place, though he stated that the goods were sold before the suit was filed. He however, stated that he did not know at what price the sale took place. There is thus no evidence even of the fact of any loss to the plaintiff much less of the quantum of such loss. Thus, as far as the smaller consignment is concerned, it must be held that the plaintiff has not proved that it suffered any loss arising form the damage caused to the same. Issue No. 3 is therefore, answered in the negative as far as the smaller consignment is concerned. 20.This leaves for consideration issue No. 3 qua the larger consignment. This requires a consideration of whether the plaintiff has proved that there was a shortage and if so, the extent of such shortage. It is true as submitted by Mr. Makhija that the Survey Report in respect of larger consignment has not been produced. But that would not come in the plaintiff's way. As rightly pointed but by Mr. Shah, the evidence of the plaintiff's witness establishes both, the fact of shortage as well as the extent of such shortage qua the larger consignment. In paragraph 18 of his affidavit in lieu of examination-in-chief, the witness stated that the original customs Investigation Examination Report for shortage of 56.909 M.T. had been submitted to the Customs Authorities and a photocopy thereof had been forwarded to the defendant. By a letter dated 19th September, 1980, the plaintiff pointed out that in respect of the larger consignment, the plaintiff had even received the refund of the custom duty from the Customs Authorities as a result of the shortage of 56.909 M.T. A photocopy of the refund order dated 11th September, 1980 was enclosed alongwith this letter. There was no response from the defendant. Nor was there any cross-examination to discredit the same. Indeed the cross-examination on this point buttresses the plaintiff's case. The witness, as I have observed earlier, arranged for customs clearance of the consignments. There was no response from the defendant. Nor was there any cross-examination to discredit the same. Indeed the cross-examination on this point buttresses the plaintiff's case. The witness, as I have observed earlier, arranged for customs clearance of the consignments. The witness stated that the customs duty was paid on the basis of the value of the consignment, the plaintiff obtained a refund of the customs duty as result of the shortage and in the weight and that the claims in respect of the larger consignment was not merely on the basis of the Survey Report but on the basis of actual short delivery. Thus the fact that there was shortage in delivery as far as the larger consignment is concerned, as clearly established. 21.On the basis of the quantum of shortage viz. 56 M.T., the value of the quantum and loss suffered by the plaintiff with respect thereto is a matter of simple arithmetic. I however do not intend quantifying the same as in the ultimate analysis, I have decided to dismiss the suit. I would only state further that what the plaintiff has claimed is loss only of the extent of 30% of the value of the consignment, whereas in fact the shortage is to the extent of 40% of the consignment. This the plaintiff appears to have done on the basis of the Survey Report. The mistake, if any, is to the benefit of the defendant. Thus the quantum of the claim to this extent cannot be faulted. 22.However, Mr. Makhija rightly pointed out that the quantum of the plaintiff's claim in respect of the larger consignment would have to be scaled down. The debit note (Exhibit A-23) correctly worked out the proportionate cost of 56.909 M.T. at Rs. 1,71,610=45 ps. It however, added a sum of Rs. 61,771=57 ps. on the basis of the Surveyor's Report recommending a 30% allowance on account of damage. The Survey Report has not even been produced. Whether or not the said 56.909 M.T. was damaged is of academic interest in any event. For had the plaintiff succeeded in the suit it would have been entitled to the value of the goods on the ground of short delivery anyway. In that event there would have been no question of paying the plaintiff any amount on account of damage. It would be a duplication. 23.Mr. For had the plaintiff succeeded in the suit it would have been entitled to the value of the goods on the ground of short delivery anyway. In that event there would have been no question of paying the plaintiff any amount on account of damage. It would be a duplication. 23.Mr. Makhija further rightly submitted that the plaintiff's claim for shortage in respect of the larger consignment would have to be reduced to the extent of the custom duty refunded to the plaintiff in respect of the 56.909 M.T. The plaintiff would have in any event had to pay the customs duty even if it had received the 56 M.Ts. Thus if the plaintiff receives the value thereof from the defendant pursuant to a claim under the insurance policy, it would have to give the defendant credit for customs duty refund received by it. In this view of the matter, I do not find it necessary to deal with Mr. Makhija's further contention that the plaintiff cannot claim 50% of profit in view of the terms of the present policy. Thus Issue No. 3 is answered in the affirmative so far as the consignment is concerned, but only to the extent of Rs. 1,71.610=45 ps. Issue No. 4 24.This brings me to the main question in the present suit. The issue requires the determination of an important question of law. Both the insurance certificates expressly state that the consignments are insured under and subject to all the terms and conditions of the open policy. The open policy in turn is subject to the conditions and clauses printed overleaf and the clauses attached thereto. It is necessary, therefore to set out the relevant clause of the open policy. Clause 9 of "INSTITUTE CARGO CLAUSES (W.A.)" attached to and incorporated by reference in the open policy reads as under:- "It is the duty of the assured and their agents, in all cases, to take such measures as may be reasonable for that purpose of averting or minimising a loss and to ensure that all right against carriers, bailees or other third parties are properly preserved and exercised." (emphasis supplied) Mr. Makhija submitted that the plaintiff by having failed and neglected to file a suit or adopt and other legal proceedings against the Bombay Port Trust and the carriers has disentitled itself to be paid any amount under the insurance policy. Makhija submitted that the plaintiff by having failed and neglected to file a suit or adopt and other legal proceedings against the Bombay Port Trust and the carriers has disentitled itself to be paid any amount under the insurance policy. It is common ground that the plaintiff has not to date filed and such proceedings against the carrier, bailee or third party and that a claim against them would today be time-barred. 25.The determination of this issue involves in turn a consideration of the scope and ambit of the expression "preserved and exercised". Do these terms mandate and assured filing a suit or adopting other legal proceedings against the carriers, bailees or other third parties in order to entitle them to claim under the insurance policy is the question that falls for determination. 26.It will be useful firstly to set out a few lexical and statutory definitions of the terms. BLACK'S LAW DICTIONARY (6th Edition): "Preservation -Keeping safe from harm; avoiding injury, destruction, or decay; maintenance. It is not creation, but the saving of that which already exists, and implies the continuance of what previously existed. See Maintenance." P. Ramanatha Aiyar's The Law Lexicon:- "Preserve- The word "preserve" means to keep; to secure; to uphold; and when used in a statute intended to preserve the public peace it means to secure that quiet order and freedom from agitation or disturbance which is guaranteed by the laws. 1 ............................ 2. to manage or retain for the rightful owner, to keep safe from harm or injury (S. 168, Indian Contract Act, S. 209 (4-A), Prov. Companies Act and Art. 60. Const.)"] BLACK'S LAW DICTIONARY (6TH EDITION):- "Exercise. To make use of . Thus, to exercise a right or power is to do something which it enables the holder to do; e.g. exercising option to purchase stock. To put in action or practice, to carry on something, to transact or execute." P. Ramanatha Aiyar's The Law Lexicon: "Exercise, in the Patents, C., Act, 1883 (See Saccharin Corporation v. Reitmyer Co.)1, 1990(2) Ch.K 659. 1. Regular or repeated appropriate use of a faculty, power or body organ (S. 39(d), Army Act); 2. To bring into play; to realize in action (S. 57 (e), T.P. Act); (s. 11(1) (g), prevention of Cruelty of Animals Act 1960); (Art. 19(3), Const.)" 27.Mr. 1. Regular or repeated appropriate use of a faculty, power or body organ (S. 39(d), Army Act); 2. To bring into play; to realize in action (S. 57 (e), T.P. Act); (s. 11(1) (g), prevention of Cruelty of Animals Act 1960); (Art. 19(3), Const.)" 27.Mr. Makhija submitted that the plaintiff had failed to preserve and exercise its rights as required by Clause 9 of the open policy, as it did not file a suit or adopt any other legal proceedings against the ship owner or the B.P.T. The damage or loss, if any, he submitted, must have occurred while the consignments were in the custody of either the carrier of the B.P.T. 28.The determination of the ambit and the scope of the terms 'reserved' and 'exercised' when considered independent of each other may cause some difficulty. It would be a moot point whether the duty to preserve entails an obligation to adopt legal proceedings or whether it merely requires the insured to do everything necessary such as preservation of the documents and evidence, lodging a claim and in short keeping intact the right to sue. In other words, whether the obligation is to do everything just short of actually filing an action for recovery against the carriers, bailees or third parties. It may well be argued that if an action is not filed either in a Court of competent jurisdiction or before an appropriate forum or authority within the prescribed period of limitation the insurers right to recover could not be said to be preserved. I shall shortly state why it is not necessary for me to determine the ambit to this term. 29.Similarly, it is a moot point whether the term 'exercised' used by itself mandates such a obligation on the part of the insurer. While the term 'exercised' no doubt would in certain contexts include the filing of an action, as is clear from the definitions of the term I have referred to, it is not necessarily so in every context. For instance, a person may be entitled to exercise a right of pre-emption or a right to subscribe to stock. Used in this context there is no question of filing an action. 30.There is however an important aspect about the term 'exercised'. Where the term 'exercised' requires the assured to file an action, it would also require the rights to be preserved by the assured. Used in this context there is no question of filing an action. 30.There is however an important aspect about the term 'exercised'. Where the term 'exercised' requires the assured to file an action, it would also require the rights to be preserved by the assured. This is axiomatic, for if the rights of the assured are not preserved there can be no valid exercise thereof. It can hardly be argued that whether the exercise is valid or not is immaterial. Such a view would be against common sense. The term exercised would thus encompassed within its scope all that the assured must do to preserve the right to file an action. Thus, where the term 'exercised contemplates the filing of an action it would be a universal set of which the term 'preserved' would be a sub-set. 31.This approach to my places the terms in their proper perspective for the reason that each of them in fact is part of a composite expression and not an independent term. That is how they are used and that then is how they must be construed. This approach does away with much of the difficulty which arise in determining the scope of each of the terms in isolation and independent of the other. 32.Let me summarise what I have stated thus far. It is not necessary to determine the scope of the term preserved. Depending on the context in which it is used the term exercised may or may not imply an obligation to file an action. The exercise of a right covers within its scope the preservation of the right. The ambit of the terms must be determined in the context in which they are used viz. as part of a composite expression and not each independent of the other. The last two requirements constitute the key to the determination of the question under consideration. 33.The use of both the terms as part of one expression leads to the inescapable conclusion that the term exercised requires an insured to file an action meaning thereby a suit or other legal proceedings against the carriers, bailees or third parties for the purpose of making a valid claim against the insurer. To hold to the contrary would render the use of the term 'exercised' in addition to the term 'preserved' otiose. To hold to the contrary would render the use of the term 'exercised' in addition to the term 'preserved' otiose. The requirement of doing everything necessary just short of filing such an action is covered by the expression 'preserved'. If by the use of the further term exercised this is all that was required there would have been no need to use the term at all. It did not require anything less. It could not have required the same for then the term would have been surplus age. It must therefore have required something more. That could in the context of Clause 9 only be the filing of an action. There is no other reason for the parties to have supplemented the requirement of preserving the right with the requirement of exercising that right. I hold therefore that under Clause 9 the plaintiff was bound to have filed a suit against the carrier and the Bombay Port Trust. Having failed to do so, the plaintiff is disentitled to its claim in suit. 34.Mr. Shah relied upon an attachment to the open cover policy. The title and opening part thereof reads as under:- "IMPORTANT" PROCEDURE IN THE EVENT OF LOSS OR DAMAGE FOR WHICH UNDERWRITERS MAY BE LIABLE LIABILITY OF CARRIERS, BAILEES OR OTHER THIRD PARTIES It is the duty of the assured and their agents, in all cases to take such measures as may be reasonable for the purpose of averting or minimising a loss and to ensue that rights against carriers, bailees or other third parties are properly preserved and exercised. In particular, the assured or their agents are required: ............................................................................................................... He submitted that the five requirements stated therein do not include the obligation to file an action. I am not prepared to accept this submission for the reason that the five requirements mentioned therein are only inclusive. This is clear from the use of the words "In particular, the assured or their Agents are required :-" The attachment therefore which undoubtedly stands incorporated in the open cover policy does not support Mr. Shah's contention that the expression "preserved and exercised" did not require the plaintiff to file an action against the carriers, bailees or other third party. 35-A.After I dictated the judgment in open Court, I noticed a judgment of the Privy Council referred to in Arnould which to my mind supports the view I have taken. Shah's contention that the expression "preserved and exercised" did not require the plaintiff to file an action against the carriers, bailees or other third party. 35-A.After I dictated the judgment in open Court, I noticed a judgment of the Privy Council referred to in Arnould which to my mind supports the view I have taken. As the judgment was not cited before me I placed the matter on board to invite submissions from Counsel on it. In (Netherlands Insce Co.)2, 1986(2) Lloyd's Rep. 19, the Privy Council had before it an appeal from the judgment of the Court of appeal of the Republic of Singapore. The respondent as consignees of goods insured by the appellant under a policy of marine insurance claimed in respect of shortage in and damage to the goods. The respondent commenced proceedings against the carrier in Japan in order to preserve the time bar. The policy was subject to the 1st January, 1963 edition of the Institute Cargo Clauses (All Risks), Clause 9 whereof, known as the "Bailee Clause", was verbatim Clause 9 in the present case. It reads as under:- 9. Bailee Clause: "It is the duty of the assured and their agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimising a loss and to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised. (emphasis supplied) 35-B.The respondent claims for shortage and damage were resolved. There remained outstanding however the question of the costs incurred by the respondent in commencing the proceedings against the carrier in Japan. The main question decided by the Privy Council was whether it was implicit in the terms of the policy that the appellants were bound to indemnify the respondents against the expenditure incurred in adopting the proceedings in Japan against the carrier. In deciding the questions the Privy Council held as follows:- "If the claim against the carriers was to be preserved, it was plain that proceedings must be commenced against them without delay". ........................................................................................................................... "Their Lordships therefore turn to the second issue on the appeal which, in their opinion, is the crucial issue in the case. In deciding the questions the Privy Council held as follows:- "If the claim against the carriers was to be preserved, it was plain that proceedings must be commenced against them without delay". ........................................................................................................................... "Their Lordships therefore turn to the second issue on the appeal which, in their opinion, is the crucial issue in the case. Before their Lordships, the appellants submitted first that, under the bailee clause, the respondents were under a duty to commence the Japanese proceedings in order to ensure that all rights against the carriers were properly preserved; and further that, under the clause, there was no express obligation upon the appellant to indemnify the respondents against any expenditure thereby incurred. With those submissions, their Lordships agree." I am not concerned here with the question whether the assured is entitled to reimbursement of the costs incurred while discharging their duty under Clause 9 to preserve and exercise their rights. The Privy Council has thus clearly interpreted the clause to mandate an obligation on the part of the assured to adopt proceedings against third parties in order to ensure that all rights against them are preserved. 36.I am also supported in this view by a judgment of the Madras High Court in the case of (E.I.D. Parry (India) Limited v. Far Eastern Marine Transport Co. Ltd.)3, 1988 Mad.L.J. R. 144. In that case the insurer contended that the plaintiff had allowed the liability of the carrier to become extinguished by its failure to file a suit within the prescribed period of limitation. The insurance policy there required the assured to take measures as may be reasonable for the purpose of averting or minimising a loss and to ensure that all the rights against the carriers, bailees or other third parties are properly observed and exercised. The clause in the case before me is identical to the one before the Madras High Court. Upholding the contention of the insurer, it was held as under:- "In the instant case, the plaintiff by its failure to institute this action in time against the first defendant-carrier has lost its remedy against the carrier and consequently the third defendant-insurer is deprived of its right of indemnity against the carrier. It is therefore open to the third defendant insurer to repudiate the claim under the policy of insurance, and the suit against the third defendant must therefore fail. It is therefore open to the third defendant insurer to repudiate the claim under the policy of insurance, and the suit against the third defendant must therefore fail. The issue is held in favour of the third defendant." I am in respectful agreement with these observations which apply to this case. I must clarify that I read this ratio as having been laid down. In view of the express provision in the policy of insurance before the Madras High Court, identical to the one in Clause 9 before me and not as a general rule in the absence of such a provision. 37.The following comment on the bailee clause extracted by me above in paragraph 1320 from Arnould-Law of Marine Insurance and Average, 16th Edition, Volume 2 also supports my view: "1320........................................................................................................................... Although it is clear that the assured must not actively prejudice the right of subrogation, it appears that there is no obligation on the assured, apart from express provisions in the policy, to take any active steps to prosecute claims, or to preserve time-limits, before his claim under the policy has been paid. There is, however, an express obligation on the assured under the Bailee Clause in the Institute Cargo Clauses to "ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised." It is submitted that the effect of this important clause is to give the underwriter a cross-claim for damages, which in appropriate circumstances may amount to a full defence to a claim under the policy, in any case where the assured has failed to preserve a time-limit against the third party, or has committed some other breach of the obligations imposed by the clause." 38.Paragraph 16 of the 1982 Cargo Clauses contains an identical provision in so far as the clause in question is concerned. It goes further in providing the entitlement of the assured to be reimbursed for any charges properly and reasonably incurred in pursuance of the duties of the assured to preserve and exercise all rights against carriers, bailees or other third parties. With this amendment however I am not concerned. Clause 16 of the 1982 Cargo Clauses reads as under: "16.MINIMISING LOSSES : DUTY OF ASSURED CLAUSE : It is the duty of the assured and their servants and agents in respect of loss recoverable hereunder. 16.1. With this amendment however I am not concerned. Clause 16 of the 1982 Cargo Clauses reads as under: "16.MINIMISING LOSSES : DUTY OF ASSURED CLAUSE : It is the duty of the assured and their servants and agents in respect of loss recoverable hereunder. 16.1. to take such measures as may be reasonable for the purpose of adverting or minimising such loss, and 16.2. to ensure that all rights against carriers, bailees or other third parties are properly preserved and exercised and the underwriters Will, in addition to any loss recoverable hereunder, reimburse the assured for any charges properly and reasonably incurred in pursuance of these duties." (emphasis supplied) Clause 16.2 is again identical to Clause 9 of the open cover policy. The commentary in Arnould's Law of Marine Insurance and Average, 16th Edition- Volume 3, paragraph 302 which deals with Clause 16.2 read as under : "302. Clause 16.2 imposes an express duty to preserve and exercise rights against third parties, which is similar in nature to but goes beyond the duty to avert or minimise loss, under section 78(4) of the Act and Clause 16.1. In the absence of such an express provision, while the assured would owe a duty not to take any steps which would actively prejudice the insurers rights of subrogation, there would appear to be no obligation to take any positive steps to preserve or exercise rights against third parties. " (emphasis supplied). The extract clearly construes Clause 16.2 as requiring the assured to file an action. 39.Mr. Makhija, relied upon the judgment in (Noble Resources Ltd. Unirise Development Ltd. v. George Albert Greenwood (The "Vasso")4, 1993(2) Lloyd's L.R. 309. In that case, the Cargo was loaded on board the vessel M.V. Vasso in South Africa for carriage to China. The vessel and the cargo were lost. The plaintiffs were the owners the cargo and were insured under a certificate of insurance policy issued pursuant to an open cover. The underwriters refused to meet the plaintiffs claim and the plaintiffs sued a representative of Lloyd's underwriter for damages for failing to meet its obligation to indemnify the plaintiffs. The defendant contended that the plaintiffs were in breach of Clause 16 of the Institute Cargo Clauses (A) which was incorporated into the cover. I have already reproduced this clause above. The underwriters refused to meet the plaintiffs claim and the plaintiffs sued a representative of Lloyd's underwriter for damages for failing to meet its obligation to indemnify the plaintiffs. The defendant contended that the plaintiffs were in breach of Clause 16 of the Institute Cargo Clauses (A) which was incorporated into the cover. I have already reproduced this clause above. 40.The underwriters submitted that it was the duty of the plaintiffs under Clause 16 to apply for a Mareva injunction with a view to preventing the shipowners from removing any insurance proceeds form the jurisdiction. It was submitted that failure to do so amounted to a breach of the above clause entitling the under writers to discharge them from all further liability under the cover. It was found by the Court on merits that the plaintiff rightly did not apply for a Mareva injunction in view of the facts which are not relevant for our purpose. It was contended that it was the duty of the assured under Clause 16.2 to ensure that all rights against the carrier were property exercised and that to that end the clause required that an application for a Mareva injunction be made even though it is believed that it will not succeed because, to apply for a Mareva injunction is part of the exercise of all rights against the carrier and the clause requires the assured to ensure that every such step be taken albeit that it will be futile. It is important to note that paragraph 1320 from Arnould a part of which I have extracted above was cited with approval. Thus, Clause 16.2 there which is identical to Clause 9 of the open cover policy here was construed to imply an obligation to file an action. However, on the finding that an action for a Mareva injunction was in the facts and circumstances of that case rightly not filed, this contention was negatived. It was held that neither under the statute nor under the clause is the assured require to act unreasonably or to undertake any step other than one which could reasonably be expected to result in the avoidance or reduction of the loss. It was also held that on a correct construction of the clause more has to be shown than merely that some step was not taken. It was also held that on a correct construction of the clause more has to be shown than merely that some step was not taken. Underwriters have to show that the step was a proper one which a reasonable assured having regard to the interests of himself and the insurers and to the provisions of the policy, should have taken. Thus, the only reason the plaintiff succeeded however was because it established that in the facts and circumstances of that case, it was held that the filing of the action would have been futile. That is not the case before me. There was no suggestion either in the pleadings or in the evidence before me, to this effect to wit that the filing of an action against the carrier or other third party was not possible or that it would have been futile. In the circumstances, Issue No. 4 is answered in the affirmative. 41.In this view of the matter, I find it unnecessary to decide Mr. Makhija's further submission that the defendant has also committed a breach of Clause 1 of the terms attached to and incorporated in the open cover policy, the opening part whereof I have extracted, by not claiming immediately on the carriers, port authorities or other bailees for any missing packages. 42.Before concluding this judgment, I must refer to Mr. Makhija's submission that the period under the open policy was from 15th March, 1978 to 15th March, 1979. There is no evidence that the period of the open policy was extended. The loss he argued, occurred after 15th March, 1979. Thus, he submitted that the plaintiff is not entitled to claim under the policy as the period of validity thereof had expired. 43.I am afraid it is not open to the defendant to raise this plea. It is not pleaded. No issue in this regard has been raised. Thus the plaintiff has been deprived the opportunity of establishing when the loss actually occurred. The presumption that the loss occurred after 5-3-1979 is unfounded. It could well have occurred during the subsistence of the policy. Merely because the goods landed on 30th March, 1979, it does not follow that the loss occurred only thereafter. I am therefore not inclined to accept the submission. In circumstances, the suit is dismissed with costs. The presumption that the loss occurred after 5-3-1979 is unfounded. It could well have occurred during the subsistence of the policy. Merely because the goods landed on 30th March, 1979, it does not follow that the loss occurred only thereafter. I am therefore not inclined to accept the submission. In circumstances, the suit is dismissed with costs. Parties to act on an ordinary copy of this order duly authenticated by the Associate/Court Stenographer of this Court. -----