TaxTMI 
TaxTMI 
1996 (2) TMI 611
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....are that the first respondent as a general power of attorney had entered into an agreement of sale, Ex.B1, to sell 35 acres of land for a total consideration of Rs.10 lakhs. In furtherance thereof, on paying Rs.4 lakhs as part consideration, 10 acres of land was put in possession of the appellant. On the appellant requiring additional land and as he did not have cash with him, had executed promissory note, Ex.A1, for a sum of Rs.1.50 lakhs and in furtherance thereof possession of three acres and forty four cents of land and building was given to the appellant. It is not necessary for us to proceed further in this matter relating to Ex.B1 for the reason that Ex.B1 has fallen through and the contract has not been completed. Chapter VIII of the Negotiable Instruments Act, 1881 (for short the 'Act') provides special rules of evidence. Section 118 draws presumption as to the negotiable instruments. "Until the contrary is proved", under clause (a) presumption shall be made of consideration that every negotiable instrument was made instrument when it has been accepted, endorsed, negotiated or transferred, was accepted, negotiated or transferred for consideration. 2. This Court in Kunda....
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....a) was rebutted and the appellant had not proved that consideration had been passed under that promissory note endorsed for consideration, This Court after elaborate consideration of all the case law for withholding material evidence by the appellant had held that the presumption raised under Section 118, in certain circumstances, stands rebutted. The burden of proof may be shifted by presumption of law or fact or presumption of law may be rebutted not only by direct or circumstantial evidence but also by presumption of law and fact. The question of irrebuttable presumption of law was not gone into. Accordingly rejection of the claim on the basis of the presumption under Section 118 was rebutted. 4. In U. Ponnappa Moothan sons, Palghat v. Catholic Syrian Bank Ltd. & Ors. [(199l) 1 SCC 113], a Bench of two Judges of this Court was to consider the presumption under Section 118(g) and Section 9 of the Act when the proviso to Section 118 was put in issue. This Court held that when the presumption, as provided under section 118(g), gets rebutted under the circumstances mentioned therein, the burden of proving that he is a holder in due course lies upon him. In a given case, the court....
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....was executed by the defendant. On its proof the rule of presumption under Section 118 [a] helps him to shift the burden on the defendant. The burden of proof as a question of law rests, therefore, on the plaintiff but as soon as the execution is proved, Section 118 imposes a duty on the Court to raise a presumption in his favour that the said instrument was made for consideration. That presumption shifts the burden of proof, namely, establishing a case that the promissory note is not supported by consideration to the defendant. The defendant may adduce direct or circumstantial evidences to prove that the promissory note was not supported by consideration. If he adduces acceptable evidence, the burden again shifts to the plaintiff. If the circumstances relied on by the defendant are so compelling, the burden is on the plaintiff to prove the contra. The statutory presumption, though is one of law, is also a question of fact to be proved in each case. The presumption raised under section 118 is not in respect of the consideration mentioned in negotiation instruments, the presumption is in favour of there being a consideration for the negotiable instrument. Any consideration which is a....
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....endant who had lent a sum of Rs.50,000/- to the first defendant and he executed a promissory note in his favour. A suit filed by him for recovery of that amount was already decreed. The husband of the second defendant was lending money without licence. He got signatures on blank papers from the appelnant-first defendant for the purpose of income-tax and other transactions. Therefore, he did not execute Ex.A9, promissory note nor receive any consideration thereunder. He also denied that Ex.A9 was renewal of Ex.A5 and A6, promissory notes nor they were supported by consideration. After considering the case law and the evidence it was held by the High Court that the appellant had proved that Ex.A5 and A6, promissory notes were not supported by consideration. lt was held that the expression "until the contrary is proved" under section 118 of the Act does not mean that the defendant must necessarily show that the document is not supported by any form of consideration but the defendant his the option to ask the court to consider the non-existence so probable that a prudent man ought, in the circumstances of the case, to act upon the supposition that the consideration did not exist. Thoug....
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....established and the suit requires to be decreed or dismissed. 7. In this case, the plea of the appellant is that he had executed Ex.A-1, promissory note to show to the principal of the first respondent, the power of attorney/agent under which the respondent had entered into the agreement. that Ex.B1 would be proceeded with and on the faith thereof, they intended to proceed to perform their part of the contract under Ex.B1. Later, the respondent got Ex.B1 cancelled and consequently, Ex.B1 contract became unenforceable and that, therefore, Ex.A1 is not supported by consideration and so the respondents cannot recover the amount. After adduction of evidence, the trial Court considered the evidence and recorded a finding in para 36 thus: "Thus there is exuberance of documentary evidence and circumstances to prove that the defendant executed Exhibit A1 promissory note when they were put in possession of the remaining extent of 3 acres and 44 cents in R.S.8/1A2." 8. The High Court in the appeal has further reinforced the finding holding thus: "There is oral and documentary evidence which would show that the consideration so pleaded, namely, for putting the defendan....