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TMI Blog2010 (8) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... or paid to the company Rs. 87,00,000 by demand draft. That sum represented the full price. There is no dispute regarding this. After receipt of such payment the company despatched two wagons of these goods through the railways. This despatch was under railway receipts issued by the South Eastern Railways, which are annexed to the petition. They are dated 14-1-2007 and 19-1-2007 respectively. 3. At the time of taking delivery of the goods by the petitioner, the dispute arose. Allegedly, goods worth Rs. 13,48,845 were short delivered. This is the dispute in this case. The petitioning creditor wants refund of this sum. They have also claimed damages of Rs. 8,40,000. Their aggregate claim is about Rs. 28,89,275 inclusive of interest at 24 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity of goods which were short was sent to the said Jagwani Projects Private Limited, as alleged in the letter dated 7-6-2007. 7. As I have said earlier it is established that the company sent a short quantity of goods to the petitioning creditor. Further, it is admitted that the petitioning creditor paid the entire price for the entire consignment. Therefore, by virtue of such short delivery the petitioning creditor became entitled to Rs. 13,48,848. However, according to Annexure E of the petition being a document dated 1-6-2007 a sum of Rs. 7,99,506 was acknowledged due and payable by the company to the petitioning creditor. 8. In this particular case in paragraph 4(b) of the affidavit-in-opposition there is reference to Jagwani Proj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the company securing the claim. Now, the question is how is such discretion, relegating the petitioning creditor to a suit subject to furnishing of security by the company to be exercised. According to the above authorities, if the company has no defence, it should be wound up. If it has a substantial defence the winding up application should be dismissed. Then, what is the circumstance in which the court is to relegate the petitioning creditor to a suit subject to the company furnishing security. 11. I think that the court in such cases should be guided by the principles with regard to grant of summary judgment and leave to defend in Mechelec Engineers & Mfrs. v. Basic Equipment Corpn. AIR 1977 SC 577. Delivering the judgment of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to payment into court or furnishing security. (d)If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend. (e)If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, only allowing the defence to proceed if the amount claimed is paid into the court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defence'." (p. 253) 12. From the discussion above, it is quite plain that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e possibility that the company would be able to tender evidence to show that the balance goods were delivered to Jagwani, as the agent or assignee of the petitioning creditor. In such a case, the court should exercise its discretion under sub paragraph (e). The category of cases when the court can exercise this discretion under sub paragraph (e) is never closed. I have tried to identify one circumstance when it would be applicable. In this case I exercise such discretion. 19. In the circumstances the petitioning creditor is relegated to a suit in respect of the cause of action in this winding up application subject to the following conditions : (a)The respondent-company will furnish a bank guarantee in favour of the petitioning creditor f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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