O R D E R
By Sri.C.T.Sabu, President
The case of the complainant is that he is a service oriented hospital rendering service to the people. The 1st opposite party is United India Insurance Co. Ltd. having its registered head office at Chennai. The 2nd opposite party is the branch office of the 1st opposite party at Cochin doing business on behalf of the 1st opposite party. 3rd opposite party is the branch office of 1st opposite party conducting business at Irinjalakuda which is within the jurisdiction of this Forum. The 4th opposite party is the recognized insurance broker of United India Insurance Co. Ltd. and the 4th opposite party have its office at Thrissur within the jurisdiction of this Forum. 5th opposite party is the manufacturer of hospital equipments. The complainant hospital took an insurance policy from the 3rd opposite party for the electronic equipment ARTIS ZEE FLOOR used in relation with the service oriented treatment to the public. The complainant bought ARTIS ZEE FLOOR SIEMENS CATH LAB SYSTEM, latest version on 15/12/2010 from SIEMENS, Navi Mumbai, for an amount of Rs.2,05,00,000/- and installed it at the hospital. This equipment being one of the most expensive equipment, the complainant took all prudent steps to conserve the equipment to function in its full accuracy and competency as per the guide lines of the manufacturer 5th opposite party and the complainant hospital engaged experts to manage working of the machinery. This being used in the field of hospital Sector for the diagnosis, the complainant took all the sufficient safety measures for the smooth functioning of the equipment. This equipment will normally function smoothly without any problem for 5 or 6 years. The complainant took policy of the 1st, 2nd and 3rd opposite parties through 4th opposite party who is the registered insurance broker of United India Insurance Co. Ltd. The 4th opposite party earlier issued policy from 3rd opposite party branch and later issued policy from 2nd opposite party branch. The 1st opposite party issued policy certificate to the complainant as policy No.100104/44/1275830000101 dt. 29/6/2012 valid upto 28/6/2013. The complainant paid Rs.2,30,338/- for the insurance coverage of risk of the equipment ARTIS ZEE FLOOR SIEMENS CATH LAB SYSTEM from any damages for the said period. In order to safeguard the above said equipment from any damages the complainant took an insurance policy of the 1st opposite party through 2nd opposite party. 3rd opposite party is the branch office of the 1st opposite party at Irinjalakuda where the complainant submitted his entire papers. Trichur Heart Hospital Ltd., is also known as Sun Medical and Research Centre as its brand name. It is understood and agreed that otherwise subject to the terms, exclusions, provisions and conditions contained in the policy or endorsed thereon, this insurance shall be extended to include loss of or damages to valves and tubes, the insurer also indemnified the insured in respect of loss of or damages to the electrical equipment which are fitted with lightning and over voltage protection devices and alarm system and these have been installed and maintained in accordance with recommendation made by manufacturers of electronic equipment. This equipment went out of order on 26/9/2012 and complainant intimated the opposite parties and also the Siemens service centre, Ernakulam and on 26/9/2012 itself one Mr.A.Prabin, the Service Engineer Siemens from Ernakulam, conducted the inspections and a service report stating the defect occurred to the machine was submitted by him. According to his findings the ‘Megalix Cat’ is defective and the same need replacement and that has been replaced to the complainant. The ‘Megalix Cat’ will fetch an amount of Rs.42,20,344/- from the market which being a component of ARTIS ZEE FLOOR SIEMENS CATH LAB SYSTEM. On the very same day on which the equipment went down the complainant intimated the same to the Manager, United India Insurance Co. Ltd., Irinjalakuda. One insurance surveyor the 3rd opposite party named Mr.K.V.Varunny came for inspection as per the instruction of the 2nd opposite party on 28/9/2012, 3/10/2012, 12/10/2012. He put up certain questions to the 5th opposite party, the manufacturer of the damaged goods and reported the whole matter after getting the questions answered by the 5th opposite party manufacturer, the Siemens. The manufacturer of the equipments clearly reported that the defective machine part has to be replaced and the cost for replacement is given as Rs.42,20,344/- and they replaced the said defective machine for Rs.10,50,000- including VAT, since the equipment was damaged within a short span of period from its installation. The defective machine part is an important equipment is used in the service of health care which is necessary in the daily use. As per the request of the complainant as the machinery was a new one, the 5th opposite party, the manufacturer Siemens Health Care, replaced the defective equipment. Instead of charging the original price of Rs.42,20,344/- the 5th opposite party charged an amount of Rs.10,50,000/-. The complainant paid the amount Rs.10,50,000/- on 27/9/2012. The1st, 2nd and 3rd opposite parties being the insurer had the duty to approve the replacement cost incurred by the complainant as per the insurance agreement entered between them. The failure of allowing the claim to the insured is a deficiency in service and is an unfair trade practice. While joining in the insurance policy with United India Insurance Co. Ltd., the 2nd opposite party made this complainant believe that, whatever damages caused to the instrument will be replaced and whatever amount expensed will be reimbursed on submission of claim. The 1st, 2nd and 3rd opposite parties violated the policy agreements by repudiating the claim without any basis and hence this complaint.
1st, 2nd and 3rd opposite parties filed version. In their version dated 20/10/2014 they admit that they have issued an Electronic Equipment policy No.100104/44/12/58/30000017 for a period 29/6/2012 to 28/6/2013 in the name of the complainant hospital. Their contention is that as per the special exclusion to Section-1 i)of the electronic equipment policy, loss of damage to bulbs, valves, tubes, ribbons, fuses, seals, belts, wires, chairs, rubber tyres, exchangeable tools, engraved cylinders, objects made of glass, porcelain or ceramic, sieves or fabrics or any operating media (e.g. Lubrication oils fuel, chemicals) are excluded. Further it is mentioned in the policy that in respect of parts mentioned under j) This opposite party shall be liable to provide compensation in the event that such parts are affected by an indemnifiable loss or damage to the insured items. The 1st, 2nd and 3rd opposite parties denies that the device has got damaged due to sudden spike in the power supply system, the components to be damaged first are the delicate components installed in the control circuit and the power supply system, and not the filament. In this machine, not a single component other than the filament has been damaged. Furthermore 1st to 3rd opposite parties says that the equipment was commissioned on 15/6/2011 and the alleged tube failed on 26/6/2012 just after working 15 months. Normally the tube performs well for a minimum period of 3 years. So the main contention of the opposite parties 1 to 3 that the failure of the equipment is most likely due to manufacturing defect and not due to spike. 1st to 3rd opposite parties raises the contention that as the 5th opposite party company confirmed that they have to salvage all the reusable parts and reintroduce all the reusable parts and components back into manufacturing process, in accordance with the environmental policy of the European Union, the equipment supplied by the 5th opposite party would have supplied equipment manufactured with salvaged parts, in which case the tube must have been in operation for a considerable long time . Furthermore, their contentions is that they are surprised to hear that the 5th opposite party had replaced the tube for an amount of Rs.10,50,000/- when the actual cost of the tube is about Rs.42,20,344/-/ The 5th opposite party has also refused the bill of entry (issued by the Customs Department) without any reason. Henceforth, the opposite parties 1 to 3 repudiated the claim that the part MEGALIX CAT (‘X’ ray tube), was not damaged due to power fluctuation (spike) as reported by Siemens Engineer and the failure of the equipment is most likely due to manufacturing defect and not due to “spike”. So as per special exclusion to section-1, i) loss of damage to valves, is excluded and these opposite parties shall be liable to provide compensation in the event that such parts are effected by an indemnifiable loss or damage to the insured items. They further content that they are not liable to pay any amount as per the conditions in the policy and also towards any compensation and the complaint has to be dismissed against them.
The 4th opposite party is the insurance broker. The 4th opposite party’s contentions are as follows: The 4th opposite party contents and supports the version about the damage caused by electrical spike. The 4th opposite party contents that they have written mandate from the complainant to represent them in matters of insurance relating to their business with the insurance company. The 4th opposite party raise the contention that the insurance broker represents the policy holder not the insurance company. The 4th opposite party raise the contention that according to provision 3(j) and (k) schedule III of IRDAI (Insurance brokers) regulations 2002 code of conduct in the matter of claims, the function of a direct broker is assisting the client in the regulations of claims and maintaining proper record of claims. Furthermore, the 4th opposite party contents that claim has been repudiated based on the special exclusion under Sec.I of the policy which stated that the company shall not, however, be liable for (i) loss of or damage to bulbs, valves, tubes, ribbons, fuses, seats, belts, wires, chains, rubber tyres, exchangeable tools, engraved cylinders, objects made of glass porcelain or ceramics seivers or fabrics or any operating media. But this special exclusion is over ridden by TAC Circular Enng/Gen-16/2001/26 dated 13th June 2001. The 4th opposite party upholds the claim of the complainant that the claim is maintainable against the insurance company.
Even though the 5th opposite party received the notice issued to them, they have failed to appear before this Commission and was set exparte.
Points for consideration are :
1)Is there any deficiency in service on the part of opposite parties?
2)If so, reliefs and costs
Complainant filed proof affidavit and 19 documents produced, which are marked as Exts.P1 to P19. From the side of complainant the HR Manager was cross examined as PW1. 1st to 3rd Opposite parties filed counter proof affidavit and 16 documents marked as Exts.R1 toR16. The 4th opposite party also filed counter proof affidavit and 2 documents, marked as Exts.R17 and R18. One witness was examined as RW1 from the side of opposite parties.
We have meticulously gone through the averments of the complaint and version. Examined evidence adduced and contentions raised in the affidavit filed by all the parties. Perused all documents produced in this case.
The insured equipment went out of order on 26/9/12 and indicated the insurers on the same day and inspected by the opposite parties on 28/9/12, 3/10/12 and 12/10/12. The claim is repudiated only on the reason that defect on the machine is a manufacturing defect and as per the Exclusion Clause of the insurance policy opposite parties 1 to 3 are not entitled to indemnify the complainant. According to engineering circular Engg/Gen-16/2001/26 dated 13/6/01 Annexure to item-8© of 192 & Cir.No.26 of 13/6/2001 under the sub heading cover of valves and tubes it is stated that it is agreed and understood that otherwise subject to the terms, exclusions, provisions and conditions contained in the policy or endorsed thereon, this insurance shall be extended to include loss of or damage to valves and tubes. So the opposite party insurance company cannot take a contention that the tubes and valves are not covered under the policy. From the part of the complainant the HR Manager was examined as PW1. While in the box during the cross examination PW1 gave appropriate answer to the question raised by the opposite party counsel and was not able to disprove the contentions of the complainant. “complaint നെ സംബന്ധിച്ചു manufacturing company എന്താണ് പറഞ്ഞത് ? manufacturing defect അല്ല എന്ന് പറഞ്ഞു”. In the Ext.R7 reply 5th opposite party clearly stated the defect. In their reply they have stated small focus filament inside the tube has gone defective (filament broken). Due to the electrical failure power supply fluctuations or spikes is the cause for this failure. And there is no manufacturing defect. Ext.R7 document is not challenged by the 1st to 3rd opposite parties. The document Ext.P8 is sufficient to prove the case of the complainant. Even though the actual expense come to Rs.42,20,344/- how it was reduced to Rs.10,50,000/- is explained in Ext.P8 document.
On going through the documents produced it is evident that the complainant incurred the amount claimed by them for replacement for the defective part of the cath lab. 1st to 3rd opposite parties admitted the policy and the payment of bill by the complainant. The complainant established a cogent case warranting interference of this Commission. 1st to 3rd opposite parties being the insurer had the duty to approve replacement cost incurred by the complainant as per the insurance agreement entered between them. The failure of allowing the claim to the insured is a deficiency in service and is an unfair trade practice. 4th opposite party is only a broker is assisting the client and represents the policy holder and not the insurance company. Hence no liability to indemnify the loss caused to the complainant. 5th opposite party even though as set exparte, from the evidences it is crystal clear that the defects was not caused out of any manufacturing defect. 1st to 3rd opposite parties also failed to prove any manufacturing defect. Hence the 5th opposite party also is not liable to indemnify complainant. In our opinion as per the insurance agreement, 1st to 3rd opposite parties are liable to indemnify the insured, the complainant. And we are inclined to allow this complaint against them.
In the result complaint is allowed and the 1st to 3rd opposite parties are directed to pay Rs.10,50,000/- (Rupees Ten lakh and fifty thousand only) with interest @ 9% per annum from the date of repudiation of the claim till realization. The opposite parties are also directed to pay Rs.15,000/- (Rupees Fifteen thousand only) as cost of this complaint. Order has to be complied within 30 days from the date of receipt of copy of this order.
Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Commission this the 31st day of December 2021.
Ext.P1 Copy of insurance policy schedule, Ext.P2 copy of delivery challan cum invoice, Ext.P3 copy of certificate of ownership, Ext.P4 copy of policy certificate, Ext.P5 copy of service report cum invoice, Ext.P6 copy of lr. dtd.26/9/12, Ext.P7 copy of notification of loss or damage, Ext.P8 copy of lr. dtd. 27/9/12, Ext.P9 copy of lr. dt. 3/10/12, Ext.P10 copy of invoice dt.11/10/12, Ext.P11 copy of lr. dtd.30/11/12, Ext.P12 copy of lr. dtd. 18/12/13,Ext.P13 copy of lr. dtd.21/12/12, Ext.P14 copy of survey report dt. 1/1/13, Ext.P15 copy of lr. dt. 20/3/13, Ext.P16 copy of lr. dt.17/6/13, Ext.P17copy of lr. dt.23/8/13, Ext.P18 Board resolution passed at the Board meeting held on 1/7/15, Ext.P19 all engineering circulars in 2001.
PW1 – Jimmy John K
Opposite Parties Exhibits
Ext.R1 Service report cum invoice, Ext.R2 letter dtd. 3/10/12, Ext.R3 Lr. dtd. 18/12/12, Ext.R4 Lr. dtd. 27/9/12, Ext.R5 Lr. dtd.21/12/12, Ext.R6 delivery challan cum invoice dt.11/10/12, Ext.R7 Lr. dtd 30/11/12, Ext.R8 lr. dtd.30/11/10, Ext.R9 Notification of loss or damage, Ext.R10 Lr. dtd. 3/10/12, Ext.R11survey report, dtd. 1/1/13, Ext.R12 claim note 19/3/13, Ext/R13 electronic equipment insurance policy, Ext.R14 Lr. dtd. 17/6/13, Ext.R15 Lr. dtd. 23/8/13, Ext.R16 Lr. dtd.31/3/14.
Opposite Parties Witness
RW1 – Satheesh.K.U