Rebutting statutory presumption of consideration through circumstantial evidence and adverse inference when material evidence is withheld.

Section 118 of the Negotiable Instruments Act creates a rebuttable presumption that a negotiable instrument or endorsement was made for consideration. That presumption can be displaced not only by direct evidence but also by circumstantial evidence and by adverse inference under Section 114 of the Evidence Act where a party withholds material documents or available testimony within its possession. On the facts, the appellant's failure to produce relevant accounts, a list of articles, and supporting oral evidence was treated as sufficient to rebut the presumption. The endorsement was therefore not proved to be supported by consideration.

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Issues: Whether the statutory presumption of consideration under Section 118 of the Negotiable Instruments Act stood rebutted on the facts and circumstances, including the appellant's failure to produce material evidence.

Analysis: Section 118 creates a presumption that a negotiable instrument or endorsement was made for consideration. That presumption is one of law, but it is rebuttable. The burden may be displaced not only by direct evidence, but also by circumstantial evidence and by presumptions of fact under Section 114 of the Evidence Act. Where a party withholds relevant documents or available testimony within its possession, the Court may draw an adverse inference that such evidence would be unfavourable. Applying that principle, the appellant's own evidence showed that he possessed relevant accounts, a list of articles, and available oral testimony, yet withheld them. Those surrounding circumstances were sufficient to rebut the statutory presumption.

Conclusion: The presumption under Section 118 of the Negotiable Instruments Act was rebutted, and the endorsement was not proved to be supported by consideration.

Ratio Decidendi: A presumption of consideration under the Negotiable Instruments Act may be rebutted by circumstantial evidence and by an adverse inference arising from the withholding of material evidence within a party's possession.

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