trying to configure http health monitor

Google Cloud Apigee
1

Hi All, I am trying to configure HTTP health monitoring using two target servers. The issue i am facing is when i configure max failures i get 503 error code(no active targets) but when i remove it the proxy works fine. Could someone point out the mistake i am making?.Any help on this would be appreciated. attaching my config. Thanks.

2 
<?xml version="1.0" encoding="UTF-8" standalone="yes"?>
<TargetEndpoint name="default">
    <Description/>
    <PreFlow name="PreFlow">
        <Request/>
        <Response/>
    </PreFlow>
    <Flows/>
    <PostFlow name="PostFlow">
        <Request/>
        <Response/>
    </PostFlow>
    <HTTPTargetConnection>
        <Properties/>
        <LoadBalancer>
            <Algorithm>Weighted</Algorithm>
            <Server name="target1">
                <Weight>1</Weight>
            </Server>
            <Server name="target2">
                <Weight>1</Weight>
            </Server>
            <MaxFailures>2</MaxFailures>
            <ServerUnhealthyResponse>
                <ResponseCode>500</ResponseCode>
                <ResponseCode>502</ResponseCode>
                <ResponseCode>503</ResponseCode>
                <ResponseCode>504</ResponseCode>
            </ServerUnhealthyResponse>
        </LoadBalancer>
        <Path>/a***/f*****/d****</Path>
       <HealthMonitor>
            <IsEnabled>true</IsEnabled>
            <IntervalInSec>3</IntervalInSec>
            <HTTPMonitor>
                <Request>
                    <ConnectTimeoutInSec>10</ConnectTimeoutInSec>
                    <SocketReadTimeoutInSec>30</SocketReadTimeoutInSec>
                    <Verb>GET</Verb>
                    <Path>/webservice/status</Path>
                </Request>
                <SuccessResponse>
                    <ResponseCode>200</ResponseCode>
                </SuccessResponse>
            </HTTPMonitor>
        </HealthMonitor>
    </HTTPTargetConnection>
</TargetEndpoint>