JUDGMENT T.C. Raghavan, J. 1. The decree holder, who is the appellant, sought to execute the decree against the surety, whose wife and legal representative is the respondent. The lower court held that the surety failed to establish that the decree was the result of fraud and collusion between the plaintiff and the defendant. Nevertheless, the lower court held that the surety was discharged because a decree without contest was not within the contemplation of the surety when the bond was executed and such a decree was excluded from the bond. 2. The surety was the paternal uncle of the defendant. The suit was instituted in forma pauperis for damages of Rs. 49,605/- or in the alternative for compensation of Rs. 31,579/-. The petition for suing as pauper was dismissed; and the plaintiff then paid court fee only on the amount of compensation and not on the damages claimed. The defendant filed his written statement, wherein he not only denied the suit claim but also claimed that he had to get some amounts from the plaintiff. A few days after the filing of the written statement, the plaintiff attached, before judgment, a coffee estate belonging to the defendant. The surety then gave the bond, Ext. D2, and got the attachment raised. The estate was then sold to third parties and the amount realised was taken by the surety towards amounts due to him from the defendant. The defendant subsequently filed I. A. No. 1599 of 1956, purporting to be under O.23 R.1 of the Code of Civil Procedure, withdrawing his defence; and the suit was then decreed as prayed for. Immediately thereafter the surety sought to get himself impleaded to contest the suit; but that was disallowed. He filed a Civil Revision Petition in the High Court, which was also dismissed with the observation that in view of Section 145 of the Civil Procedure Code the surety might raise his legitimate contentions when action was sought to be taken against him. It was thereafter that the execution petition was filed for executing the decree against the surety and the surety contested. 3. In the appeal the appellant seeks to reverse the order of the lower court refusing execution against the surety. It was thereafter that the execution petition was filed for executing the decree against the surety and the surety contested. 3. In the appeal the appellant seeks to reverse the order of the lower court refusing execution against the surety. In the memorandum of objection the respondent questions the correctness of the finding of the lower court that it was not established that the decree was the result of fraud and collusion. 4. The learned Advocate General, for the appellant, has drawn our attention to several decisions including the decision of this court in Chakkunny v Viswanatha Iyer ( AIR 1961 Ker. 312 ), to which one of us was a party. We think it is unnecessary to refer to those decisions in detail, because in the recent case in Raja Bahadur Dhanraj Giriji v Raja P. Parthasarathy Rayanim Garu (C. A. No. 345 of 1959; Blue Print) the Supreme Court has observed that indetermining the question as to whether liability under a surety bond is discharged by reason of the fact that a compromise decree had been passed in the judicial proceedings in which the surety bond came to be executed, it will always be necessary to examine the terms of the bond. Their Lordships have pointed out that the question will be whether the surety contemplated when he executed the bond that the dispute pending between the debtor and the creditor might be compromised or whether he contemplated that the dispute would and must be settled by the court and not compromised by the parties. They have further laid down that if the terms of the bond indicate that the surety undertook the liability on the basis that the dispute would be decided on merits by the court in invitum and would not be amicably settled, then the compromise of the dispute discharges the liability of the surety; but if from the terms of the bond it appears that it was within the contemplation of the parties including the surety that the dispute might be amicably settled and the surely executed the bond knowing that his liability might arise even under the compromise decree, then the passing of the compromise decree would not entitle him to claim discharge. Thus, the Supreme Court, considering several decisions of the High Courts, has laid down that the question is always one of construing the surety bond in order to decide whether the compromise decree discharges the surety or not. In the decision of this Court also the legal position indicated is the same. 5. But the learned Advocate General argues that when a party undertakes to be bound by a decree or order as may be passed by the court, he undertakes to be bound by a consent decree as well as by one after contest, because a compromise decree is as much a decree as a decree obtained after contest. That is so. But the question is not whether the compromise decree stands on a different footing from a decree passed after contest: the question is whether the parties intended to exclude the compromise decree from the scope of the surety bond when it was executed. If from the provisions of the bond it does not appear that such, exclusion was contemplated, then the surety bond may cover every decree including a compromise decree. 6. It will be interesting now to turn to the English Law on the question. Halsbury's Laws of England, 3rd Edn. Vol. XVIII, p. 444, paragraph 818 states : "It has been said that a surety is favoured debtor. He is entitled to insist upon a rigid adherence to the terms of his (the surety's) obligation by the creditor, and cannot be made liable for more than he has undertaken ; for, though his contract is not, unlike that of an insurer, uberrimae fidei, it must be construed strictly." At page 446 again appears : "Neither will a surety for payment of what may be recovered by the plaintiff in an action be held liable if in a case where the surety bond stipulates that the action, shall be defended, judgment is allowed to go by default." Thus the surety bond has to be strictly construed ; and if it is the intention that the surety is liable for the decree only if the action is defended, he will not be liable if judgment is allowed to go by default. 7. The surety bond, Ext. D2, may be considered now. 7. The surety bond, Ext. D2, may be considered now. The relevant provision of the document recites that if the defendant's contention in the case is decided against him, the surety shall deposit the amount the plaintiff is entitled to under the decree. In a subsequent portion of the bond also the surety agrees to pay the amount in accordance with the decree. This can mean only a decree passed after deciding the contention of the defendant, and not a decree passed after the contest is withdrawn. 8. From the evidence what appears is that the surety tried to settle the matter between the plaintiff and the defendant before the filing of the suit; which will indicate that he knew about the merits or the demerits of the claim. It has also come out that for the counter claim another suit was filed. It was after the filing of the written statement that the attachment was effected and it was then that the surety executed the bond. Those circumstances will only indicate that the surety would not have contemplated when he executed the bond that the dispute between the creditor and the debtor might be settled in this manner without any contest. The indication is thus clear both from the relevant provision in the bond and from the circumstances that the surety offered to pay the decree amount only in case a decree is granted against the defendant after contest; and that a decree on consent was excluded from the bond. 9. Now we will come to the memorandum of objection of the respondent. The learned District Judge is of opinion that though there is a good deal of suspicion surrounding the withdrawal of defence, the evidence is not sufficient to establish that the plaintiff had also a part in it. We are not sure that the learned Judge is right in this view. It is well known that it is not necessary in order to establish fraud that direct, affirmative, or positive proof of fraud be given. Circumstantial evidence is not only sufficient, but in many cases it is the only proof that can be adduced. Fraud may be inferred from facts established. Of course, care must be taken not to draw the conclusion hastily; but a rational belief should not be discarded because it is not conclusively made out. Circumstantial evidence is not only sufficient, but in many cases it is the only proof that can be adduced. Fraud may be inferred from facts established. Of course, care must be taken not to draw the conclusion hastily; but a rational belief should not be discarded because it is not conclusively made out. If the facts established afford a sufficient and reasonable ground for drawing the inference of fraud, the conclusion of fraud must be adopted. It is enough if from the conduct of a party the court is satisfied that it can draw a reasonable inference of fraud, or it is enough if facts are established, from which it would be impossible to draw any conclusion but that there must have been fraud. (Vide Kerr on Fraud and Mistake, 7th Edn., pp. 672 and 673). 10. In this case I. A. No. 1599 of 1956 was filed on a day on which the case was not posted. It was filed by the defendant in person without the petition being counter signed or presented by his lawyer; and a person named Abdul Kadar identified the defendant. This Abdul Kadar, the defendant admits, was not known to him, and the plaintiff admits, was known to him for about ten years. Immediately on the surety knowing about this petition, he filed another petition for getting himself impleaded as a defendant in the suit or at least for leave to enter appearance on behalf of the defendant and contest the suit. That was opposed both before the lower court and in revision before the High Court. Though the allegation of the surety was that there was an agreement between the defendant and the plaintiff to share the decree amount, it could not be established in that form, because, in the nature of things, such an agreement could not be affirmatively or positively proved. All the same, the circumstances are not so insufficient, as the learned District Judge thinks establish collusion between the plaintiff and the defendant. The defendant's contention in the written statement was that he was not liable to pay any amount to, but was himself entitled to get amounts from, the plaintiff. This could not have been mere empty avernment devoid of any seriousness, because a suit appears to have been filed on this claim. That suit was also withdrawn when the defence in this suit was withdrawn. This could not have been mere empty avernment devoid of any seriousness, because a suit appears to have been filed on this claim. That suit was also withdrawn when the defence in this suit was withdrawn. The defence was withdrawn without the knowledge of the defendant's lawyer on a day on which the case was not posted. The case of the defendant regarding this is that he merely signed the petition prepared by the lawyer, D. W. 4, at the instance of the surety himself. This is denied by D. W. 4; and it is also proved by D. W. 3, a respectable doctor, that the surety was at Coonoor at that time undergoing treatment. It cannot be that all this was a one sided action on the part of the defendant alone without any knowledge or concurrence on the part of the plaintiff. In our opinion, looking at the facts established in a rational manner, it is impossible to infer anything but that the plaintiff must have also had a hand in the withdrawal of the defence. Therefore, we set aside the finding of the learned District Judge that fraud and collusion are not established ; and hold that there must have been collusion between the plaintiff and the defendant. 11. In the result we confirm the decision of the lower court and dismiss the appeal with costs. In the memorandum of objection we pass no order regarding costs because it is only an objection to a finding.