Judgment :- I.P. MUKERJI, J. This is a winding up application coming up for admission. It arises out of a contract dated 26th December 2006 between the parties. It was for supply of iron ore fines. The petitioning creditor was the buyer and the company, the supplier. In pursuance of this contract, the petitioning creditor 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 dispatched two wagons of these goods through the railways. This dispatch was under railway receipts issued by the South Eastern Railways, which are annexed to the petition. They are dated 14th January, 2007 and 19th January, 2007 respectively. 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 @ 24% per annum calculated up to 30th April 2010. The question is whether on a summary basis the court is able to adjudge that there is a debt owing by the company to the petitioning creditor. From one letter dated 7th June, 2007 of the company to the petitioning creditor it is very plain that there was indeed short delivery of the said goods of the amount claimed. The only defence taken in that letter was that the amount which was refundable “was adjusted against goods supplied to M/s. Jagwani Projects Private Limited”. There were no details of such goods or dates of supply and so on. Naturally, the petitioning creditor wrote back on 8th June 2007 saying “We have never authorised you to transfer the amount payable to us to M/s. Jagwani Projects Private Limited”. Now, at the time of hearing of this application the question arose as to such details. A supplementary affidavit was allowed by me to be filed by the company, so that the real controversy between the parties could come to the surface. Now, it is said before me that Jagwani Projects Private Ltd. was the agent of the petitioning creditor and that this company is controlled by one Mr. Gobardhan Jagwani. Further, Mr. Gobardhan Jagwani is also in control of an organization Laxmi Global Company. Now, it is said before me that Jagwani Projects Private Ltd. was the agent of the petitioning creditor and that this company is controlled by one Mr. Gobardhan Jagwani. Further, Mr. Gobardhan Jagwani is also in control of an organization Laxmi Global Company. This is stated in paragraph 4(b) of the affidavit-in-opposition. A letter dated 26th December 2006 of Laxmi Global Company to the respondent company is annexed to the supplementary affidavit. It is submitted on the basis of that document that the quantity of goods which were short was sent to the said Jagwani Projects Private Limited, as alleged in the letter dated 7th June 2007. 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 1st June 2007 a sum of Rs.7,99,506/- was acknowledged due and payable by the company to the petitioning creditor. In this particular case in paragraph 4(b) of the affidavit-in-opposition there is reference to Jagwani Projects Private Ltd., as the agent of the petitioning creditor. Further, there is reference to Laxmi Global Company. In the supplementary affidavit the letter dated 26th December 2006 of Laxmi Global Company has been annexed where there is reference to the petitioning creditor. That letter is signed by one G.D. Jagwani. There is mention of the third and fourth indent. No connection between the subject consignment and the alleged indents mentioned in that letter is indicated far less established. Further, it is also not established that the balance goods were supplied by the company to Laxmi Global Company or Jagwani Projects Private Ltd., as alleged. No record of any despatch of the goods which were short, to Jagwani Project Private Limited or Laxmi Global Company or G.D. Jagwani is on record, far less the details of such supply. But, some connection between the petitioning creditor and Jagwani is indicated. No record of any despatch of the goods which were short, to Jagwani Project Private Limited or Laxmi Global Company or G.D. Jagwani is on record, far less the details of such supply. But, some connection between the petitioning creditor and Jagwani is indicated. There is a line of cases which pronounce the principle that to succeed in a winding up application the respondent company has to show that their defence is substantial or prima facie tenable or likely to succeed on a point of law or such defence is bona fide or genuine (see M/s. Madhusudan Gordhandas & Co., - v – Madhu Woolen Industries Private Ltd. reported in AIR 1971 SC 2600 and Bengal Luxmi Cotton Mills Ltd. And others – v – Mahaluxmi Cotton Mills Ltd and others reported in AIR 1955 Cal 273 ) But, there is nevertheless, a long standing practice in our court to relegate the petitioning creditor to a suit upon 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. I think that the court in such cases should be guided by the principles of with regard to grant of summary judgment and leave to defend in M/s. Mechalec Engineers & Manufacturers – v – M/s. Basic Equipment Corporation, reported in AIR 1977 SC 577 . Delivering the judgment of the court, Justice M.H. Beg said the following in paragraph 8, following the ancient decision of our court in the case of Sm. Kiranmoyee Dassi v. Dr. J. Chatterjee, (1945) 49 Cal WN 246 at p. 253. ““8. In Sm. Kiranmoyee Dassi v. Dr. Delivering the judgment of the court, Justice M.H. Beg said the following in paragraph 8, following the ancient decision of our court in the case of Sm. Kiranmoyee Dassi v. Dr. J. Chatterjee, (1945) 49 Cal WN 246 at p. 253. ““8. In Sm. Kiranmoyee Dassi v. Dr. J. Chatterjee, (1945) 49 Cal WN 246 at p. 253, Das, J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by Order 37, C.P.C. in the form of the following propositions (at p. 253): “(a) If the defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend. (b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. (c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he had a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as 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. (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 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.” From the discussion above, it is quite plain that neither the company has a good defence nor has raised an issue which can be called triable. Neither has the company disclosed a defence in the nature of sub paragraph (c) of the above judgment. The defence put forward, in my opinion, falls under (d) or (e) of that judgment. Sub paragraph (e) of that judgment says that even if the defendant has no defence still the court can show mercy to him or her by enabling him or her “to try to prove a defence” in a suit. But the question is on what principles is the court to show mercy upon such defendant or company. If in each and every case where a defendant or company had no defence the court had the power to show mercy by asking them to furnish security, then the circumstances in which the court, could exercise such discretion would vary from case to case and from judge to judge. There must be some principles on which the discretion under sub paragraph (e) is to be exercised in a case where the defendant has no defence. Now, in a case like this on the existing evidence there is no prima facie defence, that is, the balance goods were delivered to Jagwani. However, there is a feeble thread linking the petitioning creditor with Laxmi Global Company and the respondent company, and reference to some transactions. Nothing else is even indicated. Winding up is a proceeding determined on affidavits. Therefore, upon perusal of affidavits, no defence is disclosed. However, there is a feeble thread linking the petitioning creditor with Laxmi Global Company and the respondent company, and reference to some transactions. Nothing else is even indicated. Winding up is a proceeding determined on affidavits. Therefore, upon perusal of affidavits, no defence is disclosed. Yet, there is some doubt in my mind or some remote 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. 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 for a sum of Rs.10,00,000/- within two weeks from the date of issuance of a copy of this order. The company will keep such bank guarantee renewed from time to time, subject to the orders of the civil court where the petitioning creditor is to file a suit in respect of the cause of action. b. The petitioning creditor will file a suit in respect of the above cause of action within a period of four weeks from the date of issuance of a copy of this order. The period during which this winding up application is pending will be excluded for the purpose of calculation of the period of limitation, under article 14 of the Limitation Act. c. If no bank guarantee is furnished as aforesaid, then the petitioner will be at liberty to apply before the court for immediate admission of the winding up petition and for issuance of advertisement. d. If the suit is not filed by the petitioning creditor, the company will be under no obligation to keep the bank guarantee alive. Till the suit is filed, the petitioner will not invoke the guarantee. After the suit is filed the continuance and encashment of the bank guarantee will be subject to orders of the civil court. d. If the suit is not filed by the petitioning creditor, the company will be under no obligation to keep the bank guarantee alive. Till the suit is filed, the petitioner will not invoke the guarantee. After the suit is filed the continuance and encashment of the bank guarantee will be subject to orders of the civil court. If the bank guarantee is not renewed, the petitioning creditor will have liberty to apply for admission of the winding up application and vacation of this order, irrespective of pendency of suit. This winding up application is disposed of accordingly. Urgent certified photocopy of this judgment and order, if applied for, to be provided upon complying with all formalities.