Rebuttable presumption of consideration under negotiable instruments law can be displaced on preponderance of probabilities.

The presumption of consideration under section 118 of the Negotiable Instruments Act is a rebuttable presumption of law, and the defendant may displace it on a preponderance of probabilities. Rebuttal may be shown by direct evidence, circumstantial material, or other presumptions; the defendant need not disprove every possible form of consideration with absolute certainty. Once the defendant shows the absence of consideration to be probable on the totality of the evidence, the evidential burden shifts back to the plaintiff, and the statutory presumption ceases to operate. The presumption does not survive merely because both parties' versions are disbelieved.

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Issues: Whether the presumption of consideration under section 118 of the Negotiable Instruments Act, 1881 can be rebutted by the defendant on a preponderance of probabilities, and whether the presumption survives after both parties' versions are disbelieved.

Analysis: The statutory presumption under section 118 is a rebuttable presumption of law. Reading section 118 with sections 3, 4 and 101 to 104 of the Indian Evidence Act, 1872, the defendant is not required to disprove every conceivable form of consideration with absolute certainty. The rebuttal may be made by direct evidence, circumstantial evidence, or other presumptions, and is sufficient if the non-existence of consideration is shown to be probable on the totality of the circumstances. Once such rebuttal evidence satisfies the Court, the initial evidential burden shifts back to the plaintiff and the statutory presumption ceases to operate.

Conclusion: The presumption under section 118 can be rebutted on a preponderance of probabilities, and once rebutted it disappears and does not continue to support the plaintiff merely because both parties' versions are rejected.

Final Conclusion: The governing rule is that the holder of a promissory note must meet rebuttal evidence by proving consideration once the defendant has displaced the statutory presumption by showing absence of consideration to be probable on the whole evidence.

Ratio Decidendi: A statutory presumption of consideration under section 118 is displaced when the defendant, on the totality of the material, shows the absence of consideration to be probable; thereafter the evidential burden revives on the plaintiff and the presumption no longer operates.

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