JUDGMENT T.S. Krishnamoorthy Iyer, J. 1. These two appeals are directed against the decree of the Subordinate Judge, Quilon, allowing the plaintiff's suit. A. S.115 of 1962 is filed by the second defendant and the legal representatives of the first defendant. A.S. 110 of 1962 is filed by the 4th defendant. The plaintiff is the first respondent in A.S. 110 of 1962. Though the plaintiff was not originally impleaded as a respondent in A.S. 115 of 1962, he was impleaded as the additional 7th respondent therein by our order dated 13-12-1965 passed on C.M.P. 1227 of 1965 filed by the appellants in A.S. 115 of 1962 for the purpose. 2. The second defendant is the son of the first defendant. In order to appreciate the several questions raised for decision in the two appeals by the contending parties it is necessary to state the averments in the pleadings in some detail. The material averments in the plaint are in these terms. 3. The plaintiff has been carrying on for many years the business of manufacturing and supplying packing cases in wood and tin in Quilon. He owns two Saw Mills one at Asramam and the other at Kadappakada in Quilon and has been maintaining separate accounts for the two factories and a common account at his Head Office, which is also in Quilon. The first defendant who was carrying on business on a large scale in Bangalore, approached the plaintiff along with his son the second defendant in the second half of 1948 at Quilon for the supply of packing cases according to specifications. They took up residence in Quilon and the 3rd defendant who was his confidant was employed by the first defendant as his clerk and agent. The second defendant and the 3rd defendant had no independent business of their own. The first defendant for reasons not known to the plaintiff then wanted to carry on his business with the plaintiff in the names of others and the plaintiff learnt subsequently that the first defendant adopted this method for evading income tax assessment and payment of arrears of Income Tax. The several persons in whose names the first defendant carried on business with the plaintiff were (1) Abdul Salam, (2) Bharath Timber Trades, Bangalore, (3) A.C.T. Booth & Co., Bangalore, (4) The National Timber Works, Bangalore, (5) Abdul Azeezkhan (2nd defendant), and (6) Karunakaran Nair (3rd defendant). The several persons in whose names the first defendant carried on business with the plaintiff were (1) Abdul Salam, (2) Bharath Timber Trades, Bangalore, (3) A.C.T. Booth & Co., Bangalore, (4) The National Timber Works, Bangalore, (5) Abdul Azeezkhan (2nd defendant), and (6) Karunakaran Nair (3rd defendant). Bharath Timber Trades was represented by the 3rd defendant in all the transactions. The plaintiff was supplying first class quality packing cases to the first defendant in the above names during the period 1948 to 1954 because the first defendant undertook full and sole responsibility for the several transactions in their names and for the whole course of the trade. The plaintiff was maintaining accounts during the period in the Head Office and in the Saw Mills in the several names, for the several transactions. As per the accounts, there was a credit balance of Rs. 1,27,000/- in the name of the second defendant on 31-12-1951. As against this, the plaintiff had Rs. 10,281-7-11 to his credit in the account which stood in the name of Bharath Timber Trades, being the difference between the value of packing cases supplied by the plaintiff from Kadappakada Saw Mills for Rs. 1,26,157-11-0 and the sum of Rs. 1,15,876-3-1 received by the plaintiff from the first defendant in the name of Bharath Timber Trades, through Asramam Mills Account. The plaintiff had a further credit balance of Rs. 68,956-0-5 in his favour being the balance due in the account of Abdul Salam for the supply of packing cases from the Asramam Saw Mills. The first defendant had no dealings with the plaintiff in the name of Abdul Salam after 1951. The debit balance of Rs. 68,956-0-5 due to the plaintiff in that account was transferred to the plaintiff's Head Office ledger in the name of the second defendant as per the directions of the first defendant. 4. In the Asramam account standing in the name of Bharath Timber Trades credit was given for Rs. 2864-0-6 by way of difference in the value of packing cases and the balance to the credit of the plaintiff was Rs. 7318-2-10. The latter amount was also debited in the account standing in the name of the second defendant in the Head Office of the plaintiff with the consent of defendants 2 and 3 and on account of the direction of the first defendant. 5. 7318-2-10. The latter amount was also debited in the account standing in the name of the second defendant in the Head Office of the plaintiff with the consent of defendants 2 and 3 and on account of the direction of the first defendant. 5. The balance to the credit of the first defendant as per the accounts standing in the name of the second defendant, by the end of December 1952, was Rs. 50725-11-11. The sum of Rs. 5211-0-9 standing to the credit of Bharath Timber Trades was transferred and credited in the account of the second defendant thus bringing up the total credit in favour of the first defendant to Rs. 55,936-12-8. The account of the first defendant, standing in the name of the second defendant was debited after the end of December 1952 with the following amounts. Rs. 500/- payment to the first defendant by cheque dated 7-3-1953. Rs. 1000/- payment to the first defendant in cash on 17-8-1953. Rs. 16873-7-1 due to the plaintiff in the account of National Timber Works, Bangalore. Rs. 44-0-0 debited in the account of the second defendant for supplies of firewood to the first defendant in Quilon. Rs. 50-0-0 Cash paid to the second defendant through the third defendant on 15-12-1954. The total of the payments made above came to Rs. 18,467-7-1. The balance due in the account of the second defendant to the first defendant on the 15th December, 1954 was Rs. 37,469-5-7. 6. In December 1954 the first defendant entered into an agreement with the plaintiff at Quilon by which the first defendant agreed to secure in the course of the year 1955, orders for the supply of 60,000 packing cases to Indian Leaf Tobacco Development Company Ltd., Guntur and endorse the same to the plaintiff at the company's rates and for that purpose the first defendant should be paid commission at the rate of one rupee per packing case, that estimated commission on this deal may be added to the existing credit balance in favour of the first defendant and for the total amount so arrived, the plaintiff should issue 14 post dated cheques made up of 12 post dated cheques for Rs.5000/- each payable on the 15th day of every month beginning from 15-1-1955 and two post dated cheques, each for Rs. 18000 payable on 10-6-1955 and 10-12-1955. 18000 payable on 10-6-1955 and 10-12-1955. The plaintiff and defendants 1 and 2 agreed that the post dated cheques over the actually existing liability of Rs.37,469-5-7 would be presented for encashment only if and to the extent to which they happen to become supported by consideration by the securing and endorsement to the plaintiff of orders for the supply of packing cases to the Guntur Company. In pursuance to this agreement the plaintiff drew 12 cheques for Rs.5000/- each on the 5th defendant the Indian Bank Ltd., payable every month beginning from 15-1-1955 and drew two cheques in favour of the second defendant on the Indo-Mercantile Bank Ltd., Quilon, payable on 10-6-1955 and 10-12-1955. Defendants 1 and 2 requested the plaintiff to give a letter to them containing certain false statements regarding the circumstances under which the cheques were issued. The letter was given by the plaintiff to defendants 1 and 2 because of pressure and undue influence and because the plaintiff was threatened with a suit on the two promissory notes of the value of Rs. 80,000/- and Rs. 50,000/- which were not supported by consideration and which were executed by the plaintiff in favour of two nominees of the first defendant by way of collateral security for the maximum limit to which the credit balance in favour of the first defendant might go in the accounts maintained in the name of the second defendant. Defendants 1 and 2 had further agreed that all the accounts with the plaintiff including the dealings on the proposed transaction which was covered by the 12 cheques would be settled at Quilon. The first defendant failed to secure orders from the Indian Leaf Tobacco Development Company Ltd., Guntur and endorse the same to the plaintiff partly because of his unwillingness and partly because of his inability on account of the demand made on him by the income tax authorities to the extent of Rs.7,97,028-9-0 as tax and penalty due from him. The defendants without complying with the terms of the agreement fraudulently and without consideration endorsed the cheques in favour of the 4th defendant. The endorsements are illegal and void, unsupported by consideration and lacking in bona fides. The 4th defendant was at the time of the endorsement aware of the circumstances under which the 14 cheques were drawn by the plaintiff in favour of the second defendant. The endorsements are illegal and void, unsupported by consideration and lacking in bona fides. The 4th defendant was at the time of the endorsement aware of the circumstances under which the 14 cheques were drawn by the plaintiff in favour of the second defendant. The 4th defendant is not even a holder in respect of these 14 cheques he being only a benamidar of the first defendant. On the basis of the endorsements the 4th defendant cashed the cheques for Rs.5000/- dated 15-1-1955 and presentedthe cheques dated. 15-2-1955 and 15-3-1955 for encashment. The latter two cheques were dishonoured and the 4th defendant filed O.S. 28 of 1955 in the Court of the District Judge, Bangalore on 29-3-1955 for the recovery of Rs.10,050/- being the principal and interest due under the two dishonoured cheques. The suit was instituted against the plaintiff and the second defendant. An attachment before judgment was taken out in O.S. 28 of 1955 on an amount of Rs. 11,331/- due to the plaintiff from the Imperial Tobacco Company of India Ltd., Bangalore. The plaintiff deposited the amount in court and got the interim order or attachment passed exprate vacated. The suit was therefore filed by the plaintiff for a declaration that the first defendant is the real party in the dealings which stand in the names of defendants 2, 3 and 4 and Abdul Salam stated above and for a declaration that the second defendant has no property in the 14 cheques mentioned above he being only a nominee of the first defendant and even that only to the extent to which they are supported by consideration and for a declaration that the endorsements made on the 14 cheques in favour of the 4th defendant are without consideration and the 4th defendant is not a holder in due course or even a holder under the Negotiable Instruments Act. The plaintiff also prayed for a preliminary decree for the settlement of accounts between him and the first defendant for the amounts in the accounts in the names of the nominees of the first defendant. 7. The suit was contested by defendants 1, 2 and 4 who filed separate written statements. The first defendant's content ions can be stated thus. The plaintiff also prayed for a preliminary decree for the settlement of accounts between him and the first defendant for the amounts in the accounts in the names of the nominees of the first defendant. 7. The suit was contested by defendants 1, 2 and 4 who filed separate written statements. The first defendant's content ions can be stated thus. The first defendant was formerly a partner of a firm by name C. M. Jafferkhan and Company carrying on business in timber and became acquainted with the plaintiff in the course of transactions which the plaintiff had with the firm M/s. C. M. Jafferkhan and Co. The first defendant denied having transactions with the plaintiff in the names of various persons and firms suggested by the plaintiff. The 3rd defendant was an employee of C.M. Jafferkhan and Brothers of which the first defendant was a partner. C. M. Jafferkhan and brothers was dissolved in 1947. The first defendant denied any business dealings with the plaintiff from 1948 to 1954 either directly or in the several names mentioned in the plaint. The plaintiff during the early part of 1949 borrowed large sums of money from the second defendant. Defendants 2 and 3 had never acted as the agents of the first defendant. The first defendant did not undertake either at Quilon or elsewhere to secure and endorse to the plaintiff at company's rates orders for supply of packing cases to the Company at Guntur undertaking to receive a commission of Re.1/- per packing case. The agreement in December 1954 alleged by the plaintiff and the circumstances mentioned by him under which the 14 cheques were issued by the plaintiff to the second defendant were also denied. In view of the large amount owing from the plaintiff to the second defendant and in view of the highly embarrassed financial predicament in which the plaintiff was placed he approached the first defendant and requested him to interfere and settle the transactions of the plaintiff with the second defendant. The first defendant out of sympathy for the plaintiff interfered and on account of his own strained relationship with the second defendant sought further interference through other persons common to both the plaintiff and the second defendant. The first defendant out of sympathy for the plaintiff interfered and on account of his own strained relationship with the second defendant sought further interference through other persons common to both the plaintiff and the second defendant. As a result of this mediation it was agreed that the plaintiff should pay to the second defendant Rs.10,000/- in cash and Rs.96,000/- by means of cheques on the several dates mentioned in the plaint and that the second defendant should give up the balance in excess of Rs.1,06,000/-. The passing of the letter from the plaintiff to the second defendant and the execution of the two promissory notes for Rs.80,000/- and Rs.50,000/- were denied by the first defendant. The endorsements of the cheques by the second defendant to the 4th defendant are supported by consideration and the 4th defendant is a holder in due course. 8. The contentions of the second defendant are as follows. The second defendant became acquainted with the plaintiff in the early part of 1949. A. C. T. Booth & Co., and Bharath Timber Trades are firms carrying on business independently, and the first defendant had no manner of interest in them. The third defendant and Abdul Salam are persons of independent means and business of their own. In the early part of 1949 the plaintiff represented to the second defendant that he was a manufacturer of packing cases in wood and tea and for expanding his business he was in need of funds. The second defendant therefore agreed to finance the plaintiff in his business and in or about the months of April and May 1949 advanced to the plaintiff loans amounting to Rs.1,40,000/- for which the plaintiff executed in favour of the second defendant on demand promissory notes agreeing to repay the amounts with interest at 6% per annum. The second defendant denied the statement of the plaintiff that towards the end of 1951 a sum of Rs.1,27,000/- was alone due to him. The payments made by the plaintiff to the second defendant towards part payment of Rs.1,40,000/- were by means of cheques drawn in favour of the second defendant and by payment of cash into the hands of the second defendant and there were no other payments or adjustments towards the promissory notes. The payments made by the plaintiff to the second defendant towards part payment of Rs.1,40,000/- were by means of cheques drawn in favour of the second defendant and by payment of cash into the hands of the second defendant and there were no other payments or adjustments towards the promissory notes. The second defendant denied his liability for the several debit entires in his account alleged by the plaintiff in Para.18 of the plaint. The adjustments pleaded by the plaintiff were not agreed to by the second defendant. When the second defendant pressed the plaintiff for payment of the amounts due to him under the promissory notes the latter wanted time for discharging his liabilities and represented that he was in financial difficulties, that his trade suffered a slump. The plaintiff approached the first defendant and a few common friends and sought their intervention to bring about a settlement praying for certain concessions. As a result of the mediation by common friends the interest payable by the plaintiff on the loan was waived by the second defendant in view of the embarrassing financial position of the plaintiff. The sum of Rs.31,500/- which was paid by the plaintiff to the second defendant till then was adjusted towards the principal. A sum of Rs. 2500/- was allowed by way of remission on account of some sundry items and the plaintiff was required to pay a sum of Rs.10,000/- in cash forthwith and to pass cheques to the extent of Rs.96,000/- and in pursuance to this arrangement the 14 cheques referred to in the plaint by the plaintiff were drawn, signed and delivered by the plaintiff to the second defendant and the promissory notes with "shares" were handed back by the second defendant to the plaintiff. The sum of Rs.10,000/- which should have been paid immediately was not paid. Of the cheques issued the first cheque alone was honoured and the remaining cheques were dishonoured. The case of commission pleaded by the plaintiff is denied by the second defendant. The second defendant is not in any way bound to the plaintiff for the balances alleged to be due to him from Abdul Salam, M/s. Bharath Timber Trades and National Timber Works. The second defendant who was in need of money negotiated the 14 cheques and endorsed them in favour of the 4th defendant and obtained from him a sum of Rs. 86,938-8-0. The second defendant who was in need of money negotiated the 14 cheques and endorsed them in favour of the 4th defendant and obtained from him a sum of Rs. 86,938-8-0. The 4th defendant is therefore a holder in due course of the 14 cheques. 9. In the written statements filed by the 4th defendant he contended as follows. The 4th defendant is a bona fide holder of the 14 negotiable instruments for consideration without notice of any of the matters pleaded by the plaintiff. He in good faith paid a sum of Rs.86938-8-0 as consideration to the second defendant and thus he is a holder in due course. The endorsements in his favour are all valid, bona fide and supported by consideration. He was not aware at the time he paid the sum of Rs.86938-8-0 to the second defendant that the 14 cheques were drawn by the plaintiff in favour of the second defendant without consideration and on the basis of the agreement pleaded by him. Immediately after the endorsements in his favour the 4th defendant notified the same to the plaintiff, who did not repudiate his liability. The two cheques were dishonoured not because of any direction from the plaintiff to his bankers but because of want of funds. By an additional written statement the 4th defendant raised the contention that the decision in o. S.28 of 1955 would operate as res judicata on the questions whether the 14 cheques are supported by consideration and whether the 4th defendant is a holder in due course in respect of those cheques. The plaintiff filed a replication traversing the allegations contained in the written statements of defendants 1, 2 & 4. No written statements were filed by defendants 3, 5 & 6. 10. Though defendants 1 and 2 filed written statements they were represented in the court below by the same advocate. 11. The learned Subordinate Judge decreed the suit in terms of the plaint and passed a preliminary decree for settlement of accounts between the first defendant and the plaintiff. No written statements were filed by defendants 3, 5 & 6. 10. Though defendants 1 and 2 filed written statements they were represented in the court below by the same advocate. 11. The learned Subordinate Judge decreed the suit in terms of the plaint and passed a preliminary decree for settlement of accounts between the first defendant and the plaintiff. The learned Subordinate Judge found that the plaintiff did not take any loan from the second defendant, the first defendant had business dealings with the plaintiff in the several names mentioned in the plaint that the accounts kept by the plaintiff are genuine, that the first defendant had allowed the business transactions with the plaintiff to be carried on in the names of his nominees and that the first defendant was in fact the debtor or creditor of the plaintiff according to the shifting of the balances in the course of the dealings, that the adjustments pleaded by the plaintiff are true and the balance due in the account kept in the name of the second defendant really belongs to the first defendant. The learned Judge further found that the agreement pleaded by the plaintiff in Para.19 and 27 of the plaint is true, the 14 cheques were drawn by the plaintiff in the name of the second defendant under the circumstances pleaded by him and the second defendant was aware of the circumstances in which the cheques were drawn that the endorsements in favour of the 4th defendant are not supported by consideration that the 4th defendant is not a bona fide holder in due course or even a holder of these cheques and that he was perfectly aware of the circumstances under which the cheques were drawn by the plaintiff in favour of the second defendant and the endorsements in favour of the 4th defendant in respect of these 14 cheques are only benami for the first defendant and that the judgment in o. S.28 of 1955 on the file of the Civil Judge of Bangalore will not operate as res judicata. 12. In the appeals before us also the second defendant and the other legal representatives of the first defendant were represented by the same Advocate. The main questions that arise for consideration in the appeals are. 12. In the appeals before us also the second defendant and the other legal representatives of the first defendant were represented by the same Advocate. The main questions that arise for consideration in the appeals are. (1) Whether the 14 cheques were drawn by the plaintiff on defendants 5 and 6 in favour of the second defendant under the circumstances pleaded by the plaintiff and whether they are supported by consideration. (2) Whether the transactions which the plaintiff had during the relevant period with Abdual Salam, Bharath Timber Trades, Bangalore, and National Timber Works, Bangalore, were on behalf of the first defendant as his nominees and whether the first defendant is in any way liable for the amounts due to the plaintiff under the accounts kept in the names of the above mentioned persons. (3) Whether the 4th defendant is a holder in due course in respect of the fourteen cheques. (4) Whether the suit in relation to the prayer therein for a declaration that the payee under the 14 cheques is a benamidar for the Ist defendant "is maintainable. (5) Whether the decision in O. S.28 of 1955 on the file of the District Judge, Bangalore, will operate as res judicata to the present suit or to the trial of any of the issues in the suit. 13. Before discussing the points seriatim, it is necessary to mention that the plaintiff has produced in evidence the several accounts maintained by him in the Head Office, Asramam Saw Mills and Kadappakada Saw Mills in the names of the second defendant, Abdul Salam, Bharath Timber Trades Bangalore and National Timber Works, Bangalore. These accounts comprise the day Books and the ledgers maintained in the Head Office and in the two Saw Mills during the years 1948 to 1954 and they were proved by PW I (Plaintiff) and PW 8. The trial Judge found that the accounts of the plaintiff are genuine and kept in the usual course of business. This finding was not challenged before us by the learned advocates appearing for the appellants in both the appeals. The entire argument preceded accepting the correctness of the entries in these accounts. This fact is mentioned at this stage because it will be necessary to refer to the several entries in the accounts of the plaintiff in considering the several questions raised. 14. The entire argument preceded accepting the correctness of the entries in these accounts. This fact is mentioned at this stage because it will be necessary to refer to the several entries in the accounts of the plaintiff in considering the several questions raised. 14. It is also necessary to mention at this stage about the burden of proof in this case. There is a presumption in favour of the second defendant under S.118(a) of the Negotiable Instruments Act that the 14 cheques are supported by consideration and in favour of the 4th defendant under S.118(g) of the Negotiable Instruments Act that he is a holder in due course and the burden is on the plaintiff to prove the contrary. What is enjoined by S.118 of the Negotiable Instruments Act is only a rule of evidence and it has no conclusive effect. The Supreme Court in Kundan Lal Rallaram v. Custodian Evacuee Property, Bombay ( AIR 1961 SC 1316 ) examined the scope of the presumption under S.118 of the Negotiable Instruments Act and also the different methods available to a person against whom such a presumption isdrawn to rebut the same. Subba Rao J on behalf of the court stated the law in these terms: "This section lays down a special rule of evidence applicable to negotiable instruments. The presumption is one of law and thereunder a court shall presume, inter alia, that the negotiable instrument or the endorsement was made or endorsed for consideration. In effect it throws the burden of proof of failure of consideration on the maker of the note or the endorser, as the case may be. The question is, how the burden can be discharged? The rules of evidence pertaining to burden of proof are embodied in Chapter VII of the Evidence Act. The phrase "burden of proof" has two meanings - one the burden of proof as a matter of law and pleading and the other the burden of establishing a case; the former is fixed as a question of law on the basis of the pleadings and is unchanged during the entire trial, whereas the latter is not constant but shifts as soon as a party adduces sufficient evidence to raise a presumption in his favour. The evidence required to shift the burden need not necessarily be direct evidence, i.e., oral or documentary evidence or admissions made by opposite party; it may comprise circumstantial evidence or presumptions of law or fact. To illustrate how this doctrine works in practice, we may take a suit on a promissory note. Under S.101 of the Evidence Act "whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist". Therefore, the burden initially rests on the plaintiff who has to prove that the promissory note was executed by the defendant. As soon as the execution of the promissory note is proved, the rule of presumption laid down in S.118 of the Negotiable Instruments Act helps him to shift the burden to the other side. The burden of proof as a question of law rests, therefore, on the plaintiff; but as soon as the execution is proved, S.118 of the Negotiable Instruments Act, imposes a duty on the Court to raise a presumption in his favour that the said instrument was made for consideration. This presumption shifts the burden of proof in the second sense, that is, the burden of establishing a case shifts to the defendant. The defendant may adduce direct evidence to prove that the promissory note was not supported by consideration, and, if he adduced acceptable evidence, the burden again shifts to the plaintiff, and so on. The defendant may also rely upon circumstantial evidence and, if the circumstances so relied upon are compelling, the burden may likewise shift again to the plaintiff. He may also rely upon presumptions of fact, for instance those mentioned in S.114 and other sections of the Evidence Act. Under S.114 of the Evidence Act, ''The Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case". Illustration (g) to that section shows that the Court may presume that evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. Illustration (g) to that section shows that the Court may presume that evidence which could be and is not produced would, if produced be unfavourable to the person who withholds it. A plaintiff who says that he had sold certain goods to the defendant and that a promissory note was executed as consideration for the goods and that he is in possession of the relevant account books to show that he was in possession of the goods sold and that the sale was effected for a particular consideration, should produce the said account books, for he is in possession of the same and the defendant certainly cannot be expected to produce his documents. In those circumstances, if such a relevant evidence is withheld by the plaintiff, S.114 enables the Court to draw a presumption to the effect that, if produced, the said accounts would be unfavourable to the plaintiff. This presumption, if raised by a court, can under certain circumstances rebut the presumption of law raised under S.118 of the Negotiable Instruments Act. Briefly stated, the burden of proof may be shifted by presumption of law or fact, and presumptions of law or presumptions of fact may be rebutted not only by direct or circumstantial evidence but also by presumptions of law or fact. We are not concerned here with irrebuttable presumptions of law". 15. Their Lordships approved of the observations of Varadachariar J. in Narayana Rao v. Venkatapayya (AIR 1937 Madras 182 at page 187) to the following effect: "It has to be borne in mind that when evidence has been adduced on both sides, the question of onus is a material or deciding factor only in exceptional circumstances (cf. 56 MLJ 287) and that even the onus under S.118, Negotiable Instruments Act, need not always be discharged by direct evidence adduced by the defendant: 79 IC 464, 124 IC 717 and AIR 1933 Lah. 1029. Not merely can the Court base its conclusion on the effect of the evidence taken as a whole but it may also draw adverse inferences against a party who being in a position to adduce better evidence deliberately abstains from doing so: 40 Mad. 402, 42 Mad. 629 and 30 M.L.W. 966 at p. 971." 16. It is in the light of the principles stated above that the questions formulated have to be considered. 17. Points 1 & 2. 402, 42 Mad. 629 and 30 M.L.W. 966 at p. 971." 16. It is in the light of the principles stated above that the questions formulated have to be considered. 17. Points 1 & 2. These are the most important points to be decided in the appeal. The case set up by the second defendant in his written statement is that in or about the months of April and May 1949 he advanced to the plaintiff loans amounting to Rs. 1,40,000/- for which promissory notes were executed by the plaintiff in favour of the second defendant undertaking to repay the same with interest at 6% per annum. The second defendant admits having received Rs.31,500/- towards the debt by means of cheques and cash. According to the second defendant at the intercession of common friends, the liability of the plaintiff was settled in December 1954 in the following manner. In view of the plaintiff's distressed financial position the second defendant waived all interest due to him from the plaintiff. The sum of Rs.21,500/- paid by the plaintiff to the second defendant towards the loan was adjusted towards the principal and out of the balance due a further remission to the extent of Rs.2,500/- was allowed on account of some sundry items. The balance due was Rs.1,06,000/-. The plaintiff agreed to pay forthwith Rs.10,000/- in cash and issued 14 post dated cheques for a sum of Rs.96,000/-. Out of the fourteen post dated cheques twelve post dated cheques were for Rs.5,000/- each payable on the 15th day of every month beginning from 15-1-1955 and drawn on the 5th defendant and the remaining two for Rs. 18,000/- each were dated 10-6-1955 and 10-12-1955 and drawn on the 6th defendant. These fourteen cheques were delivered to the second defendant by the plaintiff and the promissory notes were returned to the plaintiff duly discharged. 18. The above case pleaded by the second defendant was denied by the plaintiff. The contention of the plaintiff was that the Ist defendant was having business dealings with the plaintiff from 1948 to 1954 in the names of the second defendant, Abdul Salam, Barath Timber Trades, Bangalore and National Timber Works, Bangalore and for these transactions the plaintiff was maintaining accounts in the several names. The contention of the plaintiff was that the Ist defendant was having business dealings with the plaintiff from 1948 to 1954 in the names of the second defendant, Abdul Salam, Barath Timber Trades, Bangalore and National Timber Works, Bangalore and for these transactions the plaintiff was maintaining accounts in the several names. The plaintiff allowed the Ist defendant to have transactions with him in those names because of the responsibility of the 1st defendant for all the transactions. An account Was opened by the plaintiff in the Head Office in the name of the second defendant on 12-4-1949. Amounts were advanced by the Ist defendant to the plaintiff through the accounts maintained in the name of the second defendant during the years 1949 and 1950 and there were some repayments also. The balance due from the plaintiff in the account in the name of the second defendant on 31-12-1951 was Rs.1,27,000/-. There were credit balances of Rs.68,956-0-5 and Rs.7,318-3-8 in favour of the plaintiff in the account in the name of Abdul Salam and in the Asramam Saw Mills account in the name of Barath Timber Trades. These two amounts were credited in favour of the plaintiff in the account of 1952 standing in the name of the second defendant and the balance due from the plaintiff on 31-12-1952 as per the account standing in the name of the second defendant was Rs.50,735-11-11. A sum of Rs.1,500/- was credited to the account of the plaintiff in the account of the second defendant for the year 1953 and the balance due from the plaintiff on 31-12-1953 was Rs.49,235-11-11. A sum of Rs.16,873-7-1 standing to the credit of the plaintiff in the account in the name of National Timber Trades Bangalore was credited in favour of the plaintiff and a sum of Rs.5,211-0-9 standing to the credit of Barath Timber Trade, Bangalore, was debited against the plaintiff in the account in the name of the second defendant for the year 1954. The balance due from the plaintiff on 15-12-1954 as per the account in the name of the second defendant was only Rs.37,469-5-7. 19. The accounts in the name of the second defendant were maintained by the plaintiff in the Head Office. The ledgers standing in the name of the second defendant for the years 1949 to 1954 are Exs. P-33, P-36, P-38, P-40, P-42 and P-47. 19. The accounts in the name of the second defendant were maintained by the plaintiff in the Head Office. The ledgers standing in the name of the second defendant for the years 1949 to 1954 are Exs. P-33, P-36, P-38, P-40, P-42 and P-47. The corresponding day books are Exs. P-11, P-37, P-39, P-41, P-43, and P-48. 20. The question to be decided is whether the transactions disclosed by these accounts are really transactions between the first defendant and the plaintiff, the second defendant in whose names the accounts stand, being only a nominee of the Ist defendant. The burden of proving that the second defendant in whose name the account was opened by the plaintiff is only as a nominee of the Ist defendant and that the transactions disclosed by the accounts standing in the name of second defendant are transactions with the Ist defendant is on the plaintiff. The burden of proof is on the person who claims against the apparent tenor of the document. It was contended on behalf of the appellants that the plea of the plaintiff is in effect one of benami and therefore the burden is heavily on him to establish that the second defendant was a nominee of the first defendant and it is for the plaintiff to prove the source of the amounts which were credited in the accounts of the second defendant and in the absence of proof to show that the amounts belonged to the first defendant the plaintiff cannot succeed. 21. We do not think that the contention of the learned advocate for the appellant is well founded. The reason for the first defendant's trading in different names was stated by the plaintiff in Para.6 of the plaint that: "The first defendant for reasons not known to the plaintiff at that time wanted to carry on his business dealings with the plaintiff in the names of several other persons and firms. The plaintiff now learns that the first defendant adopted this course to evade assessment to and imposition of income tax by the Government of India." The submission of the learned counsel for the appellants proceeded on the assumption that plea of the plaintiff is one of benami. That is not so. The plaintiff now learns that the first defendant adopted this course to evade assessment to and imposition of income tax by the Government of India." The submission of the learned counsel for the appellants proceeded on the assumption that plea of the plaintiff is one of benami. That is not so. The case of the plaintiff that the several persons including the second defendant in whose names the accounts were maintained were only the nominees of the 1st defendant. The mode of approach in such cases to find out the real nature of the transactions was stated by Their Lordships of the Supreme Court in Sree Meenakshi Mills Ltd. v. I.T. Commissioner ( AIR 1957 SC 49 ). The appeal before the Supreme Court was directed against the order of the High Court dismissing an application filed by an assessee under S.66 (2) of the Indian Income Tax Act, 1922 for compelling the Tribunal to refer certain question to the court. The assessee involved in the proceedings was a public limited company registered under the Companies Act and was carrying on business in the manufacture and sale of yarn. The department contended that the assessee had earned more profits than were disclosed in its accounts for the accounting years in question and that it had contrived to suppress them by resort to devices of showing transactions in the name of intermediaries which were all paper transactions and the profits made by the intermediaries represented in fact the profits earned by the assessee and should be added to the figures shown in the accounts of the assessee as profits. So the question to be considered by the Supreme Court was whether the sales entered in the books of the assessee in the names of the intermediaries were genuine. The contention advanced before Their Lordships was that the finding of the Income Tax Tribunal that the intermediaries were benamidars for the assessee was arrived at without considering several matters relevant for such decision including the source of consideration for the sales in the names of the intermediaries in the books of the assessee. The contention advanced before Their Lordships was that the finding of the Income Tax Tribunal that the intermediaries were benamidars for the assessee was arrived at without considering several matters relevant for such decision including the source of consideration for the sales in the names of the intermediaries in the books of the assessee. In discussing the tenability of such an argument Venkatarama Ayyar, J. speaking for the court said thus: "Now, the assumption underlying this argument is that the Tribunal had found in its order that the intermediaries were benamidars for the appellant, but there is no basis for this in the order. In this connection it is necessary to note that the word 'benami' is used to denote two classes of transactions which differ from each other in their legal character and incidents. In one sense, it signifies a transaction which is real, as for example, when a A sells properties to B but the sale deed mentions X as the purchaser. Here the sale itself is genuine, but the real purchaser is B, X being his benamidar. This is the class of transactions which is usually termed as benami. But the word 'benami' is also occasionally used, perhaps not quite accurately, to refer to a sham transaction, as for example, when A purports to sell his property to B without intending that his title should cease or pass to B. The fundamental difference between these two classes of transactions is that whereas in the former there is an operative transfer resulting in the vesting of title in the transferee, in the latter there is none, such, the transferor continuing to retain the title notwithstanding the execution of the transfer deed. It is only in the former class of cases that it would be necessary, when a dispute arises as to whether the person named in the deed is the real transferee or B, to enquire into the question as to who paid the consideration for the transfer, X or B. But in the latter class of cases, when the question is whether the transfer is genuine or sham, the point for decision would be, not who paid the consideration but whether any consideration was paid. Therefore, there will be force in the contention of the appellant that a finding as to who furnished the capital for the intermediaries was requisite before they could be held to be benamidars, if the Tribunal had held them to be benamidars in the former sense but not in the latter. We, must, therefore, examine what it is that the Tribunal has actually found. Now, the Tribunal has not held that any of the transactions with which the assessment proceedings are concerned, are benami. Indeed the word 'benami' does not find a place anywhere in its order. It is only in the question which the appellant framed for reference to the Court in its application under S.66(1) that it has chosen for the first time to introduce the word 'benamidar'. That apart, looking at the substance of the finding, the point that arose for determination before the taxing authorities was what profit the appellant had made on certain sales standing in its books in the names of the intermediaries. If the sales were true, the amounts shown in the books as price received therefor would be the basis for working out the profits , and that was the stand of the appellant; but the authorities held that those sales were sham and the entries relating to the payment of price therefor fictitious. Then they found that the concerned goods were sold by the appellant directly to its own constituents, that the price paid by them was actually received by it, and that that should be the basis for calculating its profits. Thus, the point which was actually in issue in the proceedings was a question of benami in the second sense and not in the first, and to decide that, the Tribunal had only to find whether any price was paid by the intermediaries for the sales and not who paid the price for them. It is scarcely necessary to add that no question arises as to whether the intermediaries are benamidars for the ultimate purchasers, because the claim of the former is that they had sold the goods to the latter under fresh contracts at different prices. It is scarcely necessary to add that no question arises as to whether the intermediaries are benamidars for the ultimate purchasers, because the claim of the former is that they had sold the goods to the latter under fresh contracts at different prices. Nor could there be a question of benami in the first sense, as that could arise only between a party to a deed and another who is co nomine not a party to it but claims to be beneficially entitled to the properties conveyed by the deed. Therefore, on the findings of the Tribunal, the question whether the intermediaries were benamidars for the appellant could not arise, and the further question as to who found the capital for the intermediaries is altogether irrelevant. Likewise, in the finding that the yarn was really sold by the appellant not to the intermediaries but to its own constituents and that they paid the price therefor to the appellant, the question who had the benefit of the transaction could not arise either." 22. In the case before us the contention of the plaintiff was that the transactions in the accounts of the plaintiff in the names of Abdul Salam, Bharath Timber Trades, Bangalore, National Timber Works, Bangalore and the second defendant who are really in the position of intermediaries for the first defendant, were really transactions between the plaintiff and the first defendant. The question has therefore to be considered in the light of the principles stated in the Supreme Court decision referred to. Even assuming that the plea raised by the plaintiff is one of benami, it does not follow that the plaintiff has to be nonsuited if he is not able to prove by direct evidence that the amounts credited in the name of the second defendant came from the first defendant. The source of money is no doubt a very important test in deciding a question of benami. But it does not follow that unless the source is established there can never be any finding of benami however good and numerous other facts and circumstances there may be pointing to such a finding. A benami transaction may be innocent or fraudulent. In the case of benami transactions which are carried into effect with an object, it is not possible to expect direct evidence of benami. A benami transaction may be innocent or fraudulent. In the case of benami transactions which are carried into effect with an object, it is not possible to expect direct evidence of benami. The whole object of such a transaction is to suppress the evidence of real facts which can be proved by circumstantial evidence. Macleod, C. J. observed in Appa Dhond Savant v. Babaji Krishnaji Chagla (ILR 46 Bombay 85). "Benami transactions, it may safely be assumed, are generally effected in order to conceal some fraud, or in order to support some object of a discreditable nature." Fraud is secret in its nature and therefore evidence bearing on the benami character of the transaction would in its nature be most circumstantial. Mitter, J. in Mothoora Panday v. Ram Ruchya Jeweree (11 Weekly Reporter 482) observed: "It is a truth confirmed by all experience that in the great majority of cases fraud is not capable of being established by positive and express proofs. It is by its very nature secret in its movements: and if those whose duty it is to investigate questions of fraud are to insist upon direct proof in every case, the ends of justice would be constantly, if not invariably defeated. We do not mean to say that fraud can be established by any less proof, or by any different kind of proof, from what is required to establish any other disputed question of fact or that circumstances of mere suspicion which lead to no certain result should be taken as sufficient proof of fraud, or that fraud should be presumed against, anybody in any case; but what we mean to say is, that in the generality of cases circumstantial evidence is our only resource in dealing with questions of fraud and if this evidence is sufficient to overcome the natural presumption of honesty and fair dealing and to satisfy a reasonable mind of the existence of fraud by raising a counter presumption, there is no reason whatever why we should not act upon it." 23. The inability on the part of the plaintiff to adduce evidence to prove by direct evidence that the receipts by the plaintiff through the several accounts including those in the name of the second defendant were amounts belonging to the first defendant cannot by itself in the circumstances of this case sufficient to nonsuit the plaintiff. The inability on the part of the plaintiff to adduce evidence to prove by direct evidence that the receipts by the plaintiff through the several accounts including those in the name of the second defendant were amounts belonging to the first defendant cannot by itself in the circumstances of this case sufficient to nonsuit the plaintiff. The system of carrying on business in names other than those of the real persons has been a common practice in India and there is nothing illegal in it. (After discussing the evidence His Lordship proceeded) 24. We have come to the conclusion that in their transactions with the plaintiff Abdul Salam, Bharath Timber Trades, Bangalore& National Timber Works, Bangalore were the nominees of the 1st defendant. The Ist defendant was liable for the credits balances in favour of the plaintiff in the respective accounts. A sum of Rs.68,956-0-5 was due to the plaintiff under Ex. P29. the Asramam Saw Mills Ledger for the year 1952 standing in the name of Abdul Salam. That this was the balance due to the plaintiff in the account of Abdul Salam from the 30th June 1950, is seen from Ex. P-15, P-17 and P-29. This amount remained unpaid from 30-6-1950 to 31-12-1952 until it was adjusted by debiting the same in Ex. P40 the ledger of the Head Office in the name of the 2nd defendant for the year 1952. Ex. P. 26, the ledger of the Asramam Saw Mills in the name of Bharath Timber Trades for the year 1952 shows that a sum of Rs.7318-2-0 standing to the credit of the plaintiff was transferred to the debit of the second defendant in Ex. P. 40, the ledger of the Head Office for the year 1952 in the name of the 2nd defendant. There was nil balance at the close of the year 1952 in Ex. P. 26. 25. It will therefore be seen that Rs.76,274-4-1 due to the plaintiff on 31-12-1952 under Exs. P26 and P29 were adjusted by debiting the same in Ex. P40. Ex. P41(a) is the corresponding entry in the cash book of the Head Office. The case set up by the plaintiff is that the transfer of these amounts to Ex. P. 40 was effected by the plaintiff as per the direction of the 1st defendant concurred by the second defendant. This is denied by defendants 1 and 2. P40. Ex. P41(a) is the corresponding entry in the cash book of the Head Office. The case set up by the plaintiff is that the transfer of these amounts to Ex. P. 40 was effected by the plaintiff as per the direction of the 1st defendant concurred by the second defendant. This is denied by defendants 1 and 2. The only evidence in support of the case is that of PW 1. PW 1 was not cross examined on this aspect, As observed the second defendant has not been examined. The amount owing to the plaintiff from the account of Abdul Salam was outstanding from 30-6-1950. We have already found that it is really an amount owing to the plaintiff from the Ist defendant. There is absolutely no suggestion that there was any attempt on the part of the plaintiff to realise the amount from Abdul Salam or from the 1st defendant and because he failed in his attempt he debited the same in Ex, P. 40. It is rather difficult to assume that the plaintiff would have been indifferent in the collection of this huge sum. The claim would have become barred by 30-6-1953. In view of these circumstances PW 1 could be believed when he stated that the adjustment was with the knowledge and consent of defendants 1 and 2. This supports the theory that the second defendant was only a nominee of the Ist defendant in the transactions with the plaintiff. 26. The view taken above is supported by what the second defendant stated in his latter Ex. P. 70 dated 26-11-1954 written to the plaintiff from Bangalore. Apart from disproving the case of enmity spoken to by the first defendant between him and the second defendant, the contents of Ex. P. 70 would positively establish the case of the plaintiff that the first defendant was having transactions with him in the names of others and was regularly purchasing packing cases from him for supply to tobacco companies. 27. In Ex. P. 70, settlement of accounts was contemplated and it shows that the parties already had a talk over settling their accounts. According to the second defendant, he had paid Rs.1,40,000/- for which the plaintiff executed two promissory notes agreeing to repay the same with 6% interest per annum and amounts repaid were by cash and cheques and were endorsed on the promissory notes. According to the second defendant, he had paid Rs.1,40,000/- for which the plaintiff executed two promissory notes agreeing to repay the same with 6% interest per annum and amounts repaid were by cash and cheques and were endorsed on the promissory notes. If so one fails to understand any necessity for settlement of accounts. Ex. P. 70 stated that the first defendant was proposing to discuss with the plaintiff shortly a new proposal which would lead to new business in the year 1955 under special conditions. The letter warned the plaintiff that both defendants 1 and 2 (the expression used in Ex. P. 70 is 'we') would not be placing any more orders with the plaintiff as in the past through their nominees, in Ex. P. 70 it was stated thus: "I hope our dealings with you in the past has satisfied you that we are worthy of trust." The reference is obviously to transactions by defendants 1 and 2 with the plaintiff. According to the first defendant, he had no transactions at all with the plaintiff and the transaction which the second defendant had with the plaintiff was only advancing of loans. dw. 2 stated 'we had no customer in Quilon except through M.A. Salam about packing cases'. The books of account kept by the plaintiff do not disclose any transaction in the name of the Ist defendant. The settlement contemplated in Ex. P. 70 can only refer to settlement of accounts and not debts covered by promissory notes. The only inference possible from Ex. P. 70 is that the 1st defendant was purchasing packing cases from the plaintiff through accounts maintained in the names of others. Apart from past business transactions between the plaintiff and the 1st defendant, Ex. P. 70 informed the plaintiff that the first defendant, would be meeting him in the course of one or two weeks with a new proposal for another business for the year 1955. The nature of the new business was also stated in Ex. P. 70 in these terms: "Father expects to secure from the Indian Leaf Tobacco Company at Guntur orders for the supply of about 60000 packing cases in 1953. We may not be placing the orders with you as in the past through our nominees. Your letter to the Income Tax people had made it impossible. Father may not also care himself to deal with you. We may not be placing the orders with you as in the past through our nominees. Your letter to the Income Tax people had made it impossible. Father may not also care himself to deal with you. But he hopes to devise some means of sharing the profits with any Saw Mills that may care to accept his proposition. If you can find your way to accept his proposal that will open a way for paying off the Book debts you owe us and continuing our business relationship in 1955 with advantage to both parties. I need not say that the proposal would mean some mutual trust. I hope our dealings with you in the past has satisfied you that we are worthy of trust. If you are interested in getting the new business and paying off old debts in easy instalments you may accept father's proposals when he meets you in the course of one or two weeks. Of course we must be sure of our profits and father would insist on some fool proof assurance." Can it be said that the above passage supports the version of dw. 2 when he said that he came to Quilon at the request of the plaintiff for inducing the second defendant to show concessions to the plaintiff in settling the transactions between the plaintiff and the second defendant. The answer can only be 'No'. In spite of the disappointment felt by defendants 1 and 2, over the petition alleged to have been sent by the plaintiff to the Income Tax Department, Ex. P. 70 evinced an anxiety on the part of defendants 1 and 2 to continue their business transactions with the plaintiff even for the year 1955 but the only condition stated was that they should be sure of their profits and that the first defendant should set some "fool proof assurance". Ex. P. 70 therefore establishes that the first defendant had dealings with the plaintiff in the past through his nominees and there were prospects for a new business deal between the parties for the year 1955. PW 2 stated that he came to Quilon in December, 1954, at the express request of the plaintiff. dw. Ex. P. 70 therefore establishes that the first defendant had dealings with the plaintiff in the past through his nominees and there were prospects for a new business deal between the parties for the year 1955. PW 2 stated that he came to Quilon in December, 1954, at the express request of the plaintiff. dw. 2 deposed that plaintiff had sent him letters, telegrams requesting him to go over to Quilon to settle the plaintiffs' transactions with the second defendant and plaintiff even sent a messenger to Bangalore for that purpose. This could have been proved by the production of letters or telegrams alleged to have been sent by the plaintiff. That was not done. 28. It is admitted by defendants 1 and 2 that immediately after Ex. P. 70 in the middle of December 1954 defendants 1 and 2 came to Quilon. The first defendant in Para.18 of his written statement stated thus. "Plaintiff became heavily indebted to second defendant and having been left with no immediate means of discharging his debts, on account of his highly embarrassed financial predicament approached and requested this defendant to interfere and mediate in the plaintiff's transaction with the second defendant. Plaintiff represented that he was in difficulties that the second defendant was exerting pressure for repayment and that unless a mode of easy payments was arranged, his financial stability would stand jeopardized. This defendant out of sympathy with the plight of the plaint undertook to interfere and on account of his own estranged relationship with the second defendant, sought further interference of persons who could successfully persuade both the parties to the settlement." The second defendant stated in Para.10 of his written statement that "the plaintiff's indebtedness to him was settled at the intercession of common friends." dw. 2 in one portion of his evidence stated thus: "Yourself and Azeezkhan together came to Quilon to settle the matter. Is it not (Q). I had not come with Azeez. I came on the request of Sundaresan (plaintiff). His brother inlaw Mr. Sukumaran came over to Bangalore to take me. Azeezkhan had come to Quilon earlier; so Sukumaran told me. During that visit I stayed with the plaintiff for few days. Afterwards I left Quilon." In another portion dw. 2 deposed as follows: "Did you inspect the plaintiff's account books before the so called settlement of the 2nd defendant's dealing with the plaintiff ? Azeezkhan had come to Quilon earlier; so Sukumaran told me. During that visit I stayed with the plaintiff for few days. Afterwards I left Quilon." In another portion dw. 2 deposed as follows: "Did you inspect the plaintiff's account books before the so called settlement of the 2nd defendant's dealing with the plaintiff ? (Q). Plaintiff brought a statement on a paper to the Inco factory. I did not see or inspect any account books. (Ans). What is the amount of loss that 2nd defendant was complaining of ? (Q). I have said already I have nothing more to add. (Ans). Did he tell you what amount he was losing ? (Q). That also I have stated already (Ans). That statement is correct. You say that Azeezkhan was persuaded to give up the commission of 50,000 rupees he had bargained for and also to forego 25,000/- rupees from the principal amount. Is it (Q). I have already stated that. According to plaintiff's statement 2nd defendant had to get from Sundarasan 17 1/2 lakhs of rupees. I have explained that already (Ans). I say you have never stated in chief examination that plaintiff stated that seventeen and a half lakhs rupees was due to Azeezkhan. What have you to say? (Q). Azeezkhan said through Kabir that 17 lakhs is due to him from plaintiff (Ans). I did not ask him if he had any document for it. I did not ask whether he had account for the amount. Did you enquire as to the amount actually paid by Azeezkhan ? (Q). Don't ask me I cannot again answer (Ans). Did you ask Sundaresan what amount was actually paid (Q). Yes. I enquired Mr. Sundaresan. He said he had agreed to pay accordingly and said he had received one lakh forty thousand without my knowledge (Ans). Witness adds. That plaintiff also said that he was in a bad position forced by circumstances. Did you enquire the banks at which Sundarasan had accounts there? (Q). No. (Ans). Did you enquire the value of his assets as per key loan in the bank there? (Q). No. (Ans)." 29. It has not been proved that in December 1945 the plaintiff was in embarrassed circumstances or that his financial position was not satisfactory. The evidence of dw. 2 is not sufficient to establish this. (Q). No. (Ans). Did you enquire the value of his assets as per key loan in the bank there? (Q). No. (Ans)." 29. It has not been proved that in December 1945 the plaintiff was in embarrassed circumstances or that his financial position was not satisfactory. The evidence of dw. 2 is not sufficient to establish this. The circumstances disclosed in the case and the evidence of PW 1 prove that the plaintiff was in a position to meet his liabilities if any. PW 1 was the owner of two Saw Mills and a tin factory. He deposed that he had stock in trade and credit facilities in banks. The account of the plaintiff filed in the case relate to the period, 1948 to 1954. He seems to have had large turn over of business during these years. He had deposited more than Rs. 10,000/- and odd within a few days after the filing of O.S. 28 of 1955 to get the interim attachment vacated. It is not shown that there was any creditor to whom amounts were payable by the plaintiff during the period or who was taking coercive proceedings. On the basis of the evidence given by dw. 2 alone it is not possible to come to the conclusion that the plaintiff on account of his financial circumstances was pleading for some concession with the second defendant. The second defendant did not contend in his written statement that the first defendant intervened to settle the transactions. According to the second defendant the settlement was as a result of intervention by common friends. The first defendant would say that because of his enmity with the second defendant for the past 15 years the settlement was arrived at due to the intervention of other friends. The common friends who according to defendants 1 and 2 intervened in the settlement of the transactions with the plaintiff were not examined. If we look at the tone of Ex. P. 70 it is clear that there were no apprehensions at all either in the mind of the first defendant or in the mind of the second defendant regarding the realisation of the amounts due from the plaintiff. On the other hand one is tempted to draw an inference from Ex. If we look at the tone of Ex. P. 70 it is clear that there were no apprehensions at all either in the mind of the first defendant or in the mind of the second defendant regarding the realisation of the amounts due from the plaintiff. On the other hand one is tempted to draw an inference from Ex. P. 70 that defendants 1 and 2 were anxious to have business transactions with the plaintiff, but on an assurance from the plaintiff regarding the payment of profits to them. In these circumstances, we are not inclined to accept the case pleaded by defendants 1 and 2 that the agreement was brought about in the circumstances mentioned by them. the middle of December 1954 there was a meeting of defendants 1 and 2 and the plaintiff in Quilon regarding the transactions between them. The evidence given by dw. 2 that he was not present at the time cannot be accepted. The 14 postdated cheques are admitted to be in the handwriting of PW 6. At the time he was examined PW 6 was the Principal of S. N. College, Quilon, He proves his handwriting in the cheques Exs. D1 to D11. In his evidence he stated that at the time he wrote the cheques plaintiff and the first defendant were present. He did not speak to the presence of the second defendant. No definite question was put to him regarding the presence of the second defendant. The plaintiff swears to it and the presence of the second defendant is admitted by the first defendant though he disputes the fact that he was present. PW 6 also swears that he had known the first defendant for a long time because the latter used to frequent the office of the plaintiff in connection with his business. Before he joined the staff of the college, PW 6 had worked under the plaintiff. That was before 1948. PW 6 deposed that even after 1948, he used to go to the Head Office of the plaintiff often. The trial Judge believed the evidence of PW 6. We think that we can also believe him. It can therefore be safely inferred that at the time of the settlement of the transactions between the parties plaintiff, defendants 1 and 2 and PW 6 were present. The trial Judge believed the evidence of PW 6. We think that we can also believe him. It can therefore be safely inferred that at the time of the settlement of the transactions between the parties plaintiff, defendants 1 and 2 and PW 6 were present. Then the only question to be considered is the basis on which the 14 postdated cheques were issued by the plaintiff in the name of the second defendant. The case set up by the defendants was that it was decided that the second defendant should be paid Rs.1,06,000/- in full satisfaction of the amount due to him and that the plaintiff should pay Rs.10,000/- in cash and the balance of Rs.96,000/- by means of cheques on the several dates already mentioned. It has already been stated by us that evidence is absolutely lacking to prove how the sum of Rs. 31,500/- mentioned by the second defendant was arrived at. We have already held that the adjustment of Rs. 68,956-0-5 due from Abdul Salam and Rs. 7318-2-10 due from the Bharath Timber Trades in the account of the second defendant in the Head Office on 31-12-1952 has to be upheld. If so it is not possible to hold that there was a settlement between the parties by which it was agreed that the plaintiff should pay a sum of Rs. 16,000/- to the second defendant. In December 1954 it is seen that the balance brought forward to the credit of the second defendant was only Rs. 49,225-11-11. If so it is not possible to believe that the plaintiff would have issued cheques for Rs. 966,000/- to the second defendant in settlement of his past transactions. The case of the plaintiff, was that in December 1954 when the parties met it was agreed to adjust Rs. 16, 873-7-1 due to the plaintiff from the account of the National Timber Works, Bangalore, and also to adjust Rs. 5211-0-9 standing to the credit of Bharath Timber Trades, Bangalore. After such adjustment and after adjusting two other small items the balance due from the plaintiff was Rs. 37,469-5-7. We have already held that Bharath Timber Trades and National Timber Works were the nominees of the first defendant and the amounts outstanding under those accounts are really amounts owing from the first defendant and due to the first defendant. After such adjustment and after adjusting two other small items the balance due from the plaintiff was Rs. 37,469-5-7. We have already held that Bharath Timber Trades and National Timber Works were the nominees of the first defendant and the amounts outstanding under those accounts are really amounts owing from the first defendant and due to the first defendant. According to the plaintiff, therefore the balance due from him was only Rs. 37,469-5-7. But it was contended by him that the balance covered by 14 postdated cheques represented the commission at the rate of Re. 1/- per packing case for 60000 packing cases and the estimated commission was also included and the 14 cheques were issued for the entire amount on the understanding that they would be presented for encashment only if and to the extent to which they happened to become supported by consideration by securing an endorsement to the plaintiff of orders for the supply of packing cases to the Guntur Company. Now the question is whether this plea of the plaintiff can be accepted. The question whether the transactions disclosed by the accounts standing in the name of the second defendant, Abdul Salam, Bharath Timber Trades and National Timber Works are transactions between the plaintiff and the first defendant will have a great bearing on this aspect of the case. We have already held that in the several transactions these various parties are only the nominees of the first defendant and that the adjustment of Rs. 76,274-3-3 on 31-12-1952 in the account of the second defendant is correct. If so, the balance under that account in December 1954 was not even one half of Rs. 1,06,000/-. This probabilises the plea of the plaintiff regarding the issue of cheques by including amounts as estimated commission. The evidence of PW 6 also goes to support the case pleaded by the plaintiff. The presence of PW 6 at the time of the settlement cannot be disputed because the postdated cheques were written in the handwriting of PW 6. PW 6 swears that the balance due from the plaintiff as per the accounts was only Rs. 35,000/- and odd and there was an agreement to pay Rs. The presence of PW 6 at the time of the settlement cannot be disputed because the postdated cheques were written in the handwriting of PW 6. PW 6 swears that the balance due from the plaintiff as per the accounts was only Rs. 35,000/- and odd and there was an agreement to pay Rs. 60,000/- to the first defendant by the plaintiff by way of commission and the cheques were issued because of the assurance given by the first defendant that he would endorse the orders received by him from the Guntur Tobacco Company for the supply of packing cases in favour of the plaintiff from time to time during the year 1955. The learned Judge in spite of the criticism levelled against PW 6 that he was an ex employee of the plaintiff and interested in him believed PW 6. PW 6 appears to be a very respectable witness. We are also inclined to accept the evidence of PW 6 in spite of the above fact. His evidence receives corroboration from Ex. P70 also. Ex. P70 as already stated is dated 26-11-1954. The parties met within three weeks after the date of Ex. P.70. Defendants 1 and 2 and the plaintiff were on the best of terms at that time. In Ex. P.70 there is a reference that the father was expect ing to secure from the Indian Leaf Tobacco Company at Guntur orders for supply of about 60000 packing cases in 1955. Defendants 1 and 2 were desirous of continuing their business relationship with the plaintiff for the year 1955. But Ex. P.70 imposed the condition that defendants 1 and 2 should be assured of their profits. It is seen from Ex. P.70 that even in respect of this transaction the first defendant wanted to remain in the background. He was not prepared to deal with the first defendant as in the past in the names of his nominees. If he were to place the order for 60000 packing cases with the plaintiff he should give defendants 1 and 2 their share of profits. According to the plaintiff this is Re. 1/- per packing case. Again according to Ex.P.70 if the first defendant were to give the orders to the plaintiff some "fool proof assurance" should be given by the plaintiff to the first defendant. Ex. According to the plaintiff this is Re. 1/- per packing case. Again according to Ex.P.70 if the first defendant were to give the orders to the plaintiff some "fool proof assurance" should be given by the plaintiff to the first defendant. Ex. P.70 itself shows that the assurance to the 1st defendant has to be in the name of somebody else, as it is seen from Ex. P.70 that the 1st defendant wanted to remain in the background even in respect of this transaction. The reason for saying so in Ex. P.70 is furnished by Ex. P.71 dated 22-12-1954 the demand notice to the 1st defendant by the Income tax department claiming nearly 8 lakhs of rupees. There is no other explanation for Ex. P.70 either by the second defendant or the first defendant. It cannot be doubted that in the meeting between the parties that took place in the middle of December 1954 they must have discussed about these aspects. In view of Ex P. 70 we are of the opinion that PW 6 can be safely relied upon when he deposed that in the 14 postdated cheques issued by the plaintiff the estimated commission of Rs. 60000/- was also included. PW 1 also swears to this fact. On a perusal of the evidence of Dw.2, we are satisfied that he has no regard for truth and his evidence cannot be believed. It is also seen from the nature of the cheques issued that the case of the plaintiff is probable. The reason for the issue of twelve cheques for Rs. 5000/- each covering the sum of Rs. 60000/- and two cheques for Rs. 18000/- each approximating to the balance outstanding in Ex. P.47 only supports the plaintiff's case. We therefore hold that the agreement pleaded by the plaintiff in Para.19 of the plaint is true and has been proved. It is established beyond any doubt that the intermediaries were not financially capable of carrying on business of such magnitude as is disclosed by the books of account. They had absolutely no source of money to carry on such transactions. Abdul Salam and the third defendant during the relevant period were only employees getting small salaries. They had no independent office in Quilon. The second defendant had no wherewithal to advance large sums to the plaintiff in the years 1949 and 1950. They had absolutely no source of money to carry on such transactions. Abdul Salam and the third defendant during the relevant period were only employees getting small salaries. They had no independent office in Quilon. The second defendant had no wherewithal to advance large sums to the plaintiff in the years 1949 and 1950. On the other hand he had to depend even for his livelihood on his mother. Though the accounts of the plaintiff were in the names of intermediaries who were alleged to be in Quilon, the goods supplied through all the three accounts were despatched to Bangalore from time to time by the plaintiff. There is absolutely no evidence that the second defendant, Abdul Salam or the 3rd defendant had taken any contract with any Tobacco Factory in Guntur or in Bangalore for the supply of packing cases. All of them were only dependants of the first defendant. On the other hand there is evidence to prove the intimate connection of the first defendant in all these accounts and the first defendant was dealing in the supply of packing cases to companies in Guntur and Bangalore. Dw.2 would say that he was supplying packing cases to The Indian Leaf Tobacco Development Company from the end of 1944 till the middle of June 1947 and that this company had depots at Chirala & Guntur Districts. dw. 2 would also swear that his firm was supplying packing cases to The Indian Leaf Tobacco Development Company till 1949 or 1950. His financial position during the relevant years was such that of all the persons involved in the transactions, he could alone have done such volume of business with the plaintiff. These broad circumstances and other matters already referred to by us conclusively establish that the persons in whose names the accounts of the plaintiff stand are only intermediaries for the first defendant. The non production of accounts of Jafferkhan & Co. and the failure of the second defendant to swear in support of his case are circumstances which cannot be overlooked. It is therefore not necessary for the plaintiff to establish that the several amounts received through the accounts in the name of the second defendant belonged to the first defendant. 55. The non production of accounts of Jafferkhan & Co. and the failure of the second defendant to swear in support of his case are circumstances which cannot be overlooked. It is therefore not necessary for the plaintiff to establish that the several amounts received through the accounts in the name of the second defendant belonged to the first defendant. 55. In a plea of res judicata what is to be considered is whether the issue which is directly and substantially in question in the subsequent suit has been directly and substantially in question in the former suit. It is the matter in issue directly and substantially either actually or constructively and not the subject matter that forms the test of res judicata. If the matter in issue in the two suits is substantially the same the decision in the former suit will operate as res judicata in the subsequent suit even though the former suit did not relate to the property which is the subject matter of the subsequent suit or did not comprise the whole of the property in dispute in the subsequent suit. As was stated by Their Lordships of the Supreme Court in Srimati Raj Lakshmi Dasi v. Banamali Sen AIR 1954 SC 33 the test of res judicata is the identity of title in the two litigations and not the identity of the actual property involved in the two cases. Where the rights in the two suits are different then the subsequent suit will not be barred even though the property involved in both the suits is identical. If the causes of action in the two suits are different matter in issue in the two suits will not be the same. If the cause of action in the subsequent suit was not in existence on the date when the former suit was filed, then the decision in the former suit cannot operate as res judicata. Ex. D 33 which are the issues framed in Ex. D34 suit deal only with the question whether in respect of the two cheques forming the basis of the said suit the 4th defendant herein was a holder in due course and whether the two cheques were obtained by the second defendant herein by fraud and misrepresentation. Ex. D 33 which are the issues framed in Ex. D34 suit deal only with the question whether in respect of the two cheques forming the basis of the said suit the 4th defendant herein was a holder in due course and whether the two cheques were obtained by the second defendant herein by fraud and misrepresentation. The right of the 4th defendant to recover the amounts due under the other cheques was not in issue and there was neither a prayer for a declaration that the 4th defendant herein was a holder in due course in respect of the other cheques nor a contention' that those cheques were supported by consideration. The law is now settled that the scope of the rule of res judicata denoted by the words directly and substantially in issue is not confined to the relief granted by the former suit or to the property which was the subject matter therein. But it is also settled that the words of S.11 of the Civil Procedure Code clearly imply that the decision on a matter not essential for the relief finally granted in the former case or which did not form one of the decisions itself cannot be said to have been directly or substantially in issue in the former case. The decision of a suit involves the determinations of all the questions which are necessary and essential for the decision, and those questions will therefore be deemed to have been necessarily decided if not expressly or by implication. Thus where certain reliefs were granted to the plaintiff in a suit it is not open to the defendant to raise any plea in a subsequent suit which would interfere with the relief given in the previous suit. He cannot therefore interfere with the scope of the prior decree so far as that matter is concerned. The principle of res judicata does not extend to anything more than this. The only issue in Ex. D34 suit was whether the 4th defendant was holder in due course in respect of those two cheques. To prove this probably incidental questions may arise regarding the remaining 12 cheques. The remaining cheques did not form the subject of the litigation in the earlier suit. In Ratneshwari Nandan Singh v. Bhaghavati Saran Singh AIR 1950 SC 142 at p.179. D34 suit was whether the 4th defendant was holder in due course in respect of those two cheques. To prove this probably incidental questions may arise regarding the remaining 12 cheques. The remaining cheques did not form the subject of the litigation in the earlier suit. In Ratneshwari Nandan Singh v. Bhaghavati Saran Singh AIR 1950 SC 142 at p.179. Mukherjea, J. made the following observations: "It was said by Vice Chancellor Knight Bruce in Barrs v. Jackson (1845) 57 R.R. 461: (14 L.J.Ch. 433) that: 'The rule against reagitating matters adjudicated is subject to this general restriction that however essential the establishment of particular facts may be to the soundness of the judicial decision, however it may proceed on them as established and however binding and conclusive the decision may be as to its immediate and direct object, those facts are not all necessarily established conclusively between the parties and that either may again litigate them for any other purpose as to which they may come in question; provided the immediate subject of the decision be not attempted to be withdrawn from its operation, so as to defeat its direct object. The immediate subject of these decisions was the particular properties in respect to which the suits were brought. They could not certainly be withdrawn from the operation of the decisions but no greater effect can be attached to them." In Mullas Civil Procedure Code (13th Edition) Volume I at page 56 it is staled thus: "A matter in respect of which no relief is claimed, but which is put in issue for the purpose of enabling the Court to adjudicate on a matter in respect of which relief is claimed may be 'directly and substantially' in issue or it may be in issue 'collaterally or incidentally'. It would be a matter 'directly and substantially' in issue 'if it was necessary to decide it in order to adjudicate on the principal issue and if it was in fact decided, and if the judgment was in fact based upon that decision': otherwise it would be a matter 'collaterally or incidentally' in issue. A matter cannot be directly and substantially in issue if the judgment would be correct whether that matter exists or not." In view of the above principles it has to be held that the decision in Ex. A matter cannot be directly and substantially in issue if the judgment would be correct whether that matter exists or not." In view of the above principles it has to be held that the decision in Ex. D34 cannot operate as res judicata to the suit before us excepting in respect of the two cheques which were the subject matter of Ex. D34. The issue relating to the circumstances under which the 12 remaining cheques were issued was not directly and sustantially in issue in the earlier suit and therefore the findings in the earlier suit cannot operate as a bar to the trial of the issues relating to the remaining 12 cheques. The plea of res judicata raised therefore has to fail. We therefore overrule the plea of res judicata raised by the learned advocates for the appellants excepting to this extent, namely that the prayer of the plaintiff regarding two cheques which were the subject matter of Ex. D34 suit is barred by res judicata. 56. The question remains as to the nature of the decree that has to be passed by this Court in view of the findings recorded above. Since we have held that the cheques are supported by consideration to the extent of Rs. 37,469-5-7 the second defendant who is the payee is entitled to get those amounts as even according to the plaintiff the cheques were issued with the consent of the first defendant to the second defendant to discharge the liability of Rs. 37,469-5-7 due from the plaintiff to the first defendant. Thus the second defendant as payee under the cheques is entitled to get the said amount. The 4th defendant though it has been found by us that he is not a holder in due course is a holder of the cheques as defined in the Negotiable Instruments Act. S.8 of the Negotiable Instruments Act defined "holder" thus: "The 'holder' of a promissory note, bill of exchange or cheque means any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto. Where the note , bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction." There is an endorsement by the second defendant in favour of the 4th defendant. Where the note , bill or cheque is lost or destroyed, its holder is the person so entitled at the time of such loss or destruction." There is an endorsement by the second defendant in favour of the 4th defendant. The 4th defendant is therefore a holder of the cheques entitled in his own name to the possession thereof entitled to recover a sum of Rs. 37469-5-7. The 4th defendant has already cashed one cheque for Rs. 5000/- and as a result of OS 28 of 1955 recovered Rs. 11,831/- under the subsequent two cheques. Had it not been for the institution of the present suit the 4th defendant would have been in a position to realise the balance of Rs. 21,000/- and odd which according to the plaintiff, is the admitted liability. The case set up by defendants 1 and 2 regarding the passing of consideration for the endorsements in favour of the 4th defendant must be binding on them and on that basis the 4th defendant is entitled to get from the plaintiff the balance due to the first defendant as a result of such settlement. We therefore confirm the decree and judgment of the court below regarding the reliefs 1 to 3 allowed therein and modify the decree for settlement of accounts in the following manner. After the settlement of accounts as directed by the court below there will be a decree in favour of the 4th defendant for the amounts found due to the first defendant from the plaintiff with interest thereon at the rate of 6% per annum from 1-1-1955 after deducting the amounts already collected by the 4th defendant by cashing the cheque dated 15-1-1955 and as a result of the institution of OS 28 of 1955 in the court of the District Court Bangalore, on the respective dates subject to directions regarding payment of court fee by the 4th defendant. In all other respects, the decree and judgment of the court below will stand confirmed. The plaintiff respondent will realise 1/4th of the costs in AS 110 of 1962 from the appellant therein and 3/4 of the costs in AS 115 of 1962 from the appellants therein.