Evidence recorded in the absence of the defendant, which formed the basis of the previous ex parte decree, cannot be legal evidence once the said ex parte decree is set aside so that it may be used against him at any subsequent stage of the suit.

N. KUMARAYYA, C. J.

( 1 ) THIS appeal arises out of a suit brought against the appellant herein for recovery of amounts together with interest thereon alleged to have been advanced to him by way of accommodation on two occasions for which separate receipts were obtained. The suit was registered on 13-9-1963. On 5-10-1963 which was the date fixed for the appearance of the defendant, the 3rd Additional Judge, City Civil Court at Secunderabad set the proceedings against him ex parte as he did not enter appearance in spite of service of summons and fixed the date for plaintiffs evidence as 9-10-1963. The plaintiff was the lone witness and the suit was decreed on that very day. Later the defendant applied for setting aside the ex parte decree by filing I. A. 489 of 1963 which was allowed. He filed his written statement on 14-2-1964 wherein he denied that any amount was advanced to him either on 29-10-1960 or 30-11-1960 by way of loan or any interest was agreed to be paid thereon. He did not, however, deny the receipts, which showed that the amounts were received "on account". He stated that the plaintiff had suppressed the true facts and circumstances under which the said receipts came into being and had instituted a false suit. The true state of facts, according to him, the defendant, is as follows: The state Talkies at Aurangabad was owned by Shah Nawaz Khan, the brother-in- law of the defendant, along with others. The defendants wife also had interest therein. The defendant looked after the affairs of the Talkies along with his brother-in-law. The plaintiff was interested in taking on lease the said talkies. He therefore approached the defendant at Aurangabad in October, 1960. But the Talkies was already given on lease to one Babubhai Patel. The defendant explained to him that it was not possible to give the said talkies on lease to him as it was already leased out to others. The plaintiff told him that he would arrange with the lessee. Thereafter, one day he called the defendant to Hyderabad on 29-10-1960 it was agreed that the plaintiff would get the theatre vacated within 6 months whereupon the theatre would be leased out to him. The plaintiff offered to pay Rs. 3,000. 00 by way of advance to enable the owners of the talkies to meet the incidental expenses in getting the lease terminated. It was one of the terms of the agreement that in case his attempt in getting the theatre vacated by the tenant failed, the said amount should stand forfeited and the plaintiff would have no right to claim back the same. The amount of Rs. 3,000. 00 was paid on 29-10-1960 and it was utilised for the purpose for which it was paid. Later, on 30-11-1960 the plaintiff again approached the defendant and told him that he incurred an expenditure of Rs. 4. 000. 00 in attempting to get the lease terminated and also for purchase of equipment for the talkies in anticipation of getting the lease. He said that the whole amount would be adjusted later and requested the defendant to pass receipts for both the amounts. The defendant took the plaintiff at his word that they were needed for adjustment of accounts and executed the receipts. The efforts of the plaintiff to prevail upon the lessee to terminate the lease failed as a result of which the amount which was paid to the owners under the terms of the agreement became a forfeit. Some time thereafter, the plaintiff revived his efforts. He sent a letter of a common friend in August 1962 by registered post which was acknowledged by the defendant. A doubt was expressed therein that the defendant had a secret hand in the failure of the lease deed. In reply to the said registered letter, the defendant sent the telegram relied on by the plaintiff dated 14-9-1962, saying that he required two months time to come and explain. Accordingly the defendant went to Hyderabad in November along with some common friends and businessmen and explained to the plaintiff that he had nothing to do with the failure of the lease dee

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