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Judgment
Krishnaswami Nayudu, J.—These are appeals against the order of the Master dismissing the applications taken out by the 1st and 2nd
defendants separately, for leave to defend but on practically the same grounds.
The plaintiffs belong to New York; the 1st defendant is the Express Newspapers Limited, and the 2nd defendant is the Managing Director of
the 1st defendant. The plaintiffs were acting as the representatives of the 1st defendant at New York. The defendants entered into a contract with
one Ben Shulman of New York for the purchase of a printing press and asked the plaintiffs, their business representatives at New York, to
advance a sum of 10,000/- dollars towards the cost of the machinery. Defendants executed a promissory note in favour of the plaintiffs for
10,000/- dollars on 9-4-1947. The present suit is on that promissory note,
The defence as disclosed in the affidavit filed in support of the application for leave to defend is that the suit promissory note was not intended to
be acted upon, that the defendants placed an order through the plaintiffs with one Ben Shulman of New York for purchase on behalf of the
defendants a printing machinery valued at 1,35,000 dollars and that on hearing from the plaintiffs and the seller Ben Shulman, a letter of credit was
sent on 20-11-1947 on the understanding that the machinery was ready for shipment. A sum of 10,000/- dollars had to be paid as advance and
the plaintiffs were to pay that amount in the first instance and recover the same from the amount of the letter of credit to be opened by the
defendants in favour of Ben Shulman. The defendants accordingly provided the funds to open a letter of credit in favour of Ben Shulman in which
the amount of advance by the plaintiffs, namely 10,000/- dollars, was also included. In the meanwhile, there were some disputes after the shipment
of the machinery as to an alleged breach on the part of the sellers of the contract of sale. The defendants state that under the arrangement between
the parties, the plaintiffs have to receive 10,000/- dollars, in respect of which the suit promissory note was executed, from Ben Shulman, more so
especially when the amount has been already paid to Ben Shulman and included in the letter of credit. In effect, they plead discharge by the
arrangement alleged. The plaintiffs'' case is that the letters of credit should be opened in their name and that the 2nd defendant agreed that ail letters
of credit would be opened in the plaintiffs'' name, but when the time came to open the letters of credit, the 2nd defendant did not do so, but
opened them in favour of Ben Shulman. They take up the position that they are not concerned with the arrangement that the defendants may have
made with Ben Shulman. They state that they are not parties to any such arrangement. Though it is stated by the defendants in the affidavit that the
pronote was not intended to be acted upon, the real defence seems to be, as could be gathered from the allegations in the affidavit, that the
pronote was discharged by the opening of the letter of credit in favour of Ben Shulman including the pronote amount. That is in pursuance of an
arrangement, which is pleaded by the defendants, to which, it is stated, the plaintiffs were a party, that the plaintiffs would receive this 10,000/-
dollars from Ben Shulman, instead of directly from the defendants.
Three letters in the correspondence between the parties may be referred to for the purpose of ascertaining whether there is a real defence to the
suit. On the same date as the pronote, that is on 9-4-1947, the 2nd defendant writes to the plaintiffs requesting them to pay 10,000/- dollars to
Mr. Ben Shulman and stating that he will reimburse the amount as soon as he could arrange it. There is also mention in that letter that the 2nd
defendant has cabled that day to open another letter of credit for 10,000/- dollars in respect of an item of machinery different from the one in
respect of which the amount of 10,000/- dollars was advanced. It is also indicated in that letter that the letter of credit would be opened in favour
of the plaintiffs. On 8-10-1947, the plaintiffs write to the 2nd defendant in regard to various matters, and while referring to the fees payable in
respect of their acting as the representatives of the defendants, there is a demand made as to several items and it is stated within brackets that
those items are beside ""the US 10,000 dollars payment made to Ben Shulman which was to be included in the general letter of credit covering this
press."" It is therefore clear from these two letters that the letter of credit to be issued to the plaintiffs should include these 10,000 dollars, but the
question is whether in variation of that arrangement, the letter of credit could be issued for these 10,000 dollars to Ben Shulman instead of the
plaintiffs. The defendants say that this change was agreed to and acquiesced in by the plaintiffs. In the letter dated 3-11-1947 written by the
defendants to the plaintiffs, there is a reference to the Shulman shipment, where the defendants say:
We have taken steps to open the credit for Jackson Ville Press and also for the Steroplant. We have included in this letter of credit 10000 dollars
advanced by you to Mr. Shulman for this transaction. We are requesting Mr. Shulman to receive 10000 dollars from the Bank and pay it to you.
There is therefore an intimation at any rate on 3-11-1947 that the amount of the pronote has been paid, though not directly paid to the plaintiffs,
with direction to the plaintiffs to receive 10000 dollars from Ben Shulman and a corresponding direction to Shulman to receive the amount from the
Bank and pay it over to the plaintiffs.
The question that would arise for determination in this suit is whether the arrangement pleaded by the defendants is true. There is some support
for the contention and it is not totally without foundation, because subsequent to that in the correspondence, the plaintiffs did not protest to the
letter of credit being opened in the name of Ben Shulman and have acquiesced in it. I should consider that, on this material, it should be held that
the defence is a real defence to the suit and equally a ''bona fide'' defence. There is the pronote; execution and consideration are admitted;
practically discharge is pleaded by payment of the amount of the suit pronote to a person in New York, from whom the plaintiffs, who are the
representatives of the defendants, were asked to receive the amount as the same had been paid to a person with whom certain transactions were
entered into by the defendants, the plaintiffs acting as their representatives.
The learned Master, however, examined the documentary evidence in detail, and, after an elaborate enquiry, has found that there is no basis at
all, on the facts, for the suggestion that there could have been any ''novatio'' by reason of the entire documentary evidence in this case. The learned
Master examined the contentions with reference to the documents and the probabilities of the case and held that the defence had no basis. While
he observes that
the inclusion of the amount in the letter of credit was obviously intended to be a mode by which the plaintiff was to be paid the money due to him
under the note"",
he however states that ""it was never contemplated that it should automatically discharge me promissory note."" I consider these are all matters for
consideration not for a Court hearing an application for leave to defend, taut really for the trial Judge hearing the suit to examine the defence and
decide the case on its merits. It appears to me that the learned Master has missed the mode of approach to an application of this nature. It is not
the province of the Court hearing an application for leave to defend to examine the defence. If there is one, and find out the truth or otherwise of
the defence, but only to consider whether there is a real defence to the suit, and if it is satisfied that the defence is not imaginary, speculative or
fanciful, but real and ''bona fide'', there is no other source open to it except to grant leave to defend. In an application for leave to defend, the
applicant has only to satisfy the Court that he has got a real defence to the suit and not that he has got a complete answer to the plaintiffs'' case.
That is legitimately the province of the trial Court and not of the Court hearing an application for leave to defend. It is not for the applicant to satisfy
the Court hearing an application for leave to defend that he would in any event succeed in the defence which he has raised. Much of the elaborate
enquiry in this application could have been avoided, If the real scope of such an application had been correctly appreciated. I have no doubt that,
on the facts placed before me, there is a real defence to the suit. The fact that the pronote amount has been sent to Ben Shulman and an
arrangement is pleaded, whereby the plaintiffs have agreed to receive the amount from Ben Shulman, in sufficient, to constitute a real and ''bona
fide'' defence. It is not possible to lay down a rule of thumb in what cases leave to defend should be granted; each case has however to be decided
on the particular facts and circumstances. But this must be borne in mind that what the applicant praying for leave to defend should establish is that
he has really got a defence, and not that he would succeed in the defence raised by him.
The appeals are allowed. Leave to defend is granted. Costs will be costs in the cause.