New India Assurance Co. Ltd vs M/S. Balaji Hospital

The complainant/respondent obtained an Electronic Equipment Insurance Policy from the appellant for the period from 7.7.2012 to 6.7.2013. During the subsistence of the aforesaid policy, the Cardiac Cathlab Machine which was covered under the said policy stopped functioning. On inspection by the service engineer, it was revealed that the X-ray tube of the said Cardiac Cathlab Machine had failed and required replacement. On intimation being given to the appellant, a surveyor was appointed to inspect the machine. The surveyor vide his report dated 6.10.2012, interalia reported that since the damaged tube was more than 60 months old and more than 40,000 exposures, the claim could not be indemnified in accordance with the terms and conditions of TAC Circular dated 13.6.2001. Upon receipt of the report of the surveyor, the claim was repudiated by the appellant vide its letter dated 7.12.2012 which to the extent, it is relevant reads as under:-

"Electronic Equipment Policy is issued as per Terms and Conditions laid down by Tariff Advisory Committee known as TAC wide Form No.MACH.19 (TAC), copy enclosed.

Please refer to exclusion (i) under section 1 - Material Damage (Equipments) which states the Company shall not be liable for "loss or damage to bulbs, valves, tubes........"

However, this exclusion is relaxed by Endorsement No.1 for cover of Valves and Tubes which states that "it is agreed and understood that otherwise subjects to Terms, Exclusions, Provisions and Conditions contained in policy or endorsement thereon, this insurance shall be extended to include loss or damage to valves and tubes and indemnification shall be limited to the actual value of such items as laid down in Endorsement No.1 (1-7, copy enclosed) immediately prior to the occurrence to the loss or damage. Actual value in % of New Replacement Value as per Age of Equipments or Nos. of Exposures, whichever result in lower actual value exposure or age wise will be consider.

In your case value as per said endorsement is Zero on both the counts."

Being aggrieved from the repudiation of the claim, the respondent approached the concerned State Commission by way of a consumer complaint. The complaint was resisted by the appellant primarily on the ground on which the claim had been repudiated.

The State Commission, vide impugned order dated 5.12.2017, allowed the complaint and directed the appellant to pay a sum of Rs.4145499/- to the respondent along with interest @ 9% p.a. and compensation quantified at Rs.5 lakhs besides the cost of litigation quantified at Rs.10000/-. Being aggrieved from the order passed by the State Commission, the appellant is before this Commission by way of this appeal.

The first contention of the learned counsel for the respondent / complainant is that there was no endorsement annexed to the insurance policy as would be evident from a bare perusal of the policy which contains no endorsement number or endorsement title. Though the case of the appellant is that an endorsement covering the tube to the extent specified therein was actually issued by it, if I proceed on the assumption that there was no such endorsement, the loss to the complainant is not at all covered under the insurance policy since special exclusion to Section 1, clearly states that the company shall not be liable for loss or damage to bulbs, valves, tubes.............etc. Therefore, in the absence of an endorsement specifically covering the X-ray tube, the loss to the complainant would be excluded from the ambit of the insurance policy and consequently would not be reimbursable.

If I proceed on the basis that the endorsement as claimed by the appellant was actually issued, it is evident from a bare perusal of the said endorsement that the value payable to the insured was zero per cent in case the age of the tube was more than 6 months or more than 40000 exposures had already been taken using the said tube. It is an admitted position that before the said machine stopped functioning on 21.7.2012 it had been used for 87 months and it had already taken 117790 exposures.

The learned counsel for the respondent has referred to the decision of this Commission in First Appeal No.741 of 2007 - New India Assurance Co. Ltd. Vs. M/s Kamboj Ultra Sound & Diagnostic Pvt. Ltd. decided on 27.8.2014. I have perused the aforesaid judgement. The said judgement would show that the surveyor of the insurer had submitted an Inspection Cum Valuation report to the Insurance Co. before the insurance policy was issued. As per the report of the surveyor, the X-ray tube had already completed 42470 slices on the date of inspection. The surveyor despite the machine having completed 42470 slices, reported that the highest tube life in India was 3 lakh slices and therefore it was a good risk which could be accepted by the Insurance Co. under the standard terms and conditions. It was on receipt of the aforesaid inspection report that the insurer accepted the proposal and issued the insurance policy. This Commission, therefore, felt that having issued the policy on replacement basis, there was no question of endorsement regarding compensation on depreciation basis based on number of exposures.

The learned counsel for the complainant states that the Cardiac Cathlab Machine in question along with the X-ray tube in respect of which insurance cover was taken was purchased vide invoice dated 9.11.2004 as would be evident from a bare perusal of item No.21 of Section 1 of the insurance policy which gives details of the equipment covered under the insurance policy. The year of make is also given as 2004 in the said endorsement. The learned counsel for the complainant also states that the said machine was continuously insured by the appellant since the time it was purchased and installed in the hospital. However, the said assertion made by the learned counsel for the complainant needs verification by way of evidence, though prima facie, it appears from Sl. No.21 of Section 1 of the insurance policy that Cardiac Cathlab Machine with all accessories was purchased in the year 2004.

Also there is no evidence as regards the date from which the Cardiac Cathlab Machine was continuously insured by the complainant with the appellant. The benefit of decision of this Commission in Kamboj Ultra Sound & Diagnostic Pvt. Ltd. (supra) would be available to the complainant if it is shown that the Cardiac Cathlab Machine including X-ray tube replacement of which has been sought by the complainant / respondent had been insured by the appellant company for the period from 7.7.2012 to 6.7.2013 despite its knowing its age and the number of exposures already taken from it. If it is found that the above-referred X-ray tube had been replaced at any point of time, prior to the date on which the loss occurred and the replaced tube had not been used for at least 5 years from the date of replacement and more than 40000 exposures had not been taken from it, by the time the insurance policy for the period from 7.7.2012 to 6.7.2013 came to be issued, the complainant / respondent will not be entitled to any reimbursement.

For the reasons stated hereinabove, the impugned order is set aside. The parties are directed to appear before the State Commission on 27.11.2018. The State Commission shall decide the complaint afresh after giving opportunity to the parties to lead evidence in terms of direction contained in this order. The appeal stands disposed of.