Rebuttable presumption of consideration under the Negotiable Instruments Act fails when surrounding circumstances and inconsistent evidence undermine the promissory note.

Admission of execution of a promissory note raises a rebuttable presumption of consideration under Section 118 of the Negotiable Instruments Act, but the defendant may displace it on a preponderance of probabilities by showing surrounding circumstances that make the transaction improbable. Here, the absence of income records or contemporaneous proof of lending, together with material inconsistencies in the testimony on when and how the money was advanced, rebutted the presumption. Once rebutted, the burden shifted back to the plaintiff, who failed to prove passing of consideration satisfactorily, so the decree on the suit could not be sustained.

---

---

Issues: Whether the presumption of consideration under Section 118 of the Negotiable Instruments Act, 1881 stood rebutted on the evidence, and whether the suit on the promissory note was maintainable.

Analysis: The presumption under Section 118 arises once execution of the promissory note is admitted, but it is rebuttable. The defendant can displace it by showing a probable defence and may do so through direct evidence or by establishing circumstances that make the existence of consideration improbable or doubtful on a preponderance of probabilities. Here, the circumstances relied upon were that the plaintiff was young at the relevant time, did not produce income-tax returns or any material showing availability of funds, failed to produce contemporaneous proof of lending, and the evidence of PW1 and PW2 was materially inconsistent as to when and how the money was advanced. These features weakened the statutory presumption and shifted the burden back to the plaintiff, who did not adduce satisfactory evidence to prove passing of consideration.

Conclusion: The presumption under Section 118 stood rebutted, and the plaintiff failed to prove consideration for the promissory note. The suit decree could not be sustained.

Ratio Decidendi: In a suit on a promissory note, admission of execution raises a rebuttable presumption of consideration, but the defendant may rebut it by showing, on a preponderance of probabilities, that the transaction is improbable or unsupported by surrounding circumstances; once rebutted, the plaintiff must affirmatively prove consideration.

---