Give any two special rules of evidence under Negotiable Instruments Act, 1881.

Section 118 — Presumptions as to Negotiable Instruments

The most expansive and frequently invoked of the special rules of evidence is Section 118. It opens with the words "Until the contrary is proved, the following presumptions shall be made" — and what follows is a cluster of seven distinct presumptions that the court is bound to make in every case involving a negotiable instrument, once the execution of that instrument is established.

The genius of Section 118 lies in its departure from the foundational rule of contract law. Under the ordinary law of contract, the party who asserts a right must prove the facts that give rise to it — including the existence of consideration. Not so with negotiable instruments. Section 118(a) mandates that every negotiable instrument shall be presumed to have been made, drawn, accepted, indorsed, negotiated, or transferred for consideration. The reason for this was stated with clarity by a Full Bench of the Rajasthan High Court in Heerachand v Jeevraj (AIR 1959 Raj 1) — the principle behind the presumption is not a mere technical provision; it is grounded in the very nature of negotiable instruments, which pass from hand to hand on indorsement, making proof of consideration in every individual transaction wholly impracticable.

The other presumptions in Section 118 are equally important in their respective contexts: that every instrument bearing a date was made on that date (clause b); that an accepted bill was accepted within a reasonable time and before maturity (clause c); that every transfer was made before maturity (clause d); that indorsements were made in the order they appear (clause e); that a lost instrument was duly stamped (clause f); and that the holder is a holder in due course (clause g), subject to the proviso placing the burden on the holder where the instrument was obtained by offence, fraud, or unlawful consideration.

The Nature of the Presumption

The critical distinction between Section 118 and Section 114 of the Indian Evidence Act must be clearly understood. Under Section 114 of the Evidence Act, Illustration (c) permits a court to presume — optionally — that a bill accepted or indorsed was accepted or indorsed for good consideration. That presumption is discretionary; the court may draw it or decline to. Section 118, by contrast, uses the word "shall" — the court has no option. As the Supreme Court settled in Kundan Lal Rallaram v Custodian, Evacuee Property, Bombay (AIR 1961 SC 1316), and later reaffirmed in MS Narayana Menon v State of Kerala (AIR 2006 SC 3366), Section 118 raises a presumption of law, not merely a presumption of fact — and the court must treat the presumed fact as proved unless and until it is displaced by the party against whom it operates.

The mechanics of the presumption under Section 118(a) operate as follows. The initial burden lies on the plaintiff to prove the execution of the instrument. Execution is not presumed — it must be established. Once execution is proved or admitted, Section 118 immediately steps in and casts the burden on the defendant to disprove consideration. As the Supreme Court formulated the position in Bharat Barrel and Drum Manufacturing Co. v Amin Chand Pyarelal (AIR 1999 SC 1008), the defendant may discharge this burden either by direct evidence or by bringing on record a preponderance of probabilities showing that the existence of consideration was improbable, doubtful, or illegal. If the defendant discharges that burden, the onus shifts back to the plaintiff. This process of shifting and counter-shifting continues through the trial — it is not a static burden but a dynamic one.

A bare denial by the defendant is, however, never enough. As the Supreme Court has consistently reiterated, "the bare denial of the passing of the consideration apparently does not appear to be any defence" — something credible and probable must be brought on record before the presumption is said to be rebutted.

Section 119 — Presumption on Proof of Protest

The second special rule of evidence is contained in Section 119, which deals with proof of dishonour. It provides that in a suit upon an instrument which has been dishonoured, the court shall, on proof of the protest, presume the fact of dishonour — unless and until such fact is disproved.

To appreciate the significance of this rule, one must understand what a protest is. A protest is a formal notarial certificate drawn up by a Notary Public when an instrument has been presented and dishonoured — either by non-acceptance or by non-payment. Under Sections 99 to 101 of the Act, a protest must specify the instrument, the time and place of presentment, and the fact and reason for dishonour.

Section 119 invests this document with presumptive force. Once the holder produces the protest before the court, the law immediately presumes that the instrument was duly presented and that it was, in fact, dishonoured. The holder need not call the Notary Public as a witness, need not prove presentment by oral evidence, and need not establish the circumstances of dishonour through independent testimony. The protest is prima facie evidence of the facts it contains. As the principle stands, a protest drawn up in conformity with Sections 99, 100, and 101 of the Act raises the presumption that whatever is stated in it has been regularly performed.

This rule saves considerable effort in litigation, particularly in the case of foreign bills where protest is a mandatory prerequisite. Without Section 119, a holder would be required to reconstruct the events of dishonour through witnesses and documents every time he sues — an onerous and often impossible task when the instrument has passed through several hands across different places. The section therefore facilitates the enforcement of rights on dishonoured instruments by raising a conclusive starting presumption in favour of the holder, while leaving open to the defendant the opportunity to disprove the fact of dishonour.

The Common Thread

What ties these two provisions together is the same underlying legislative philosophy — that parties who create and circulate negotiable instruments take upon themselves an obligation to the commercial world. The law, in response, raises presumptions that protect those who deal with such instruments in good faith, shifting the burden to those who wish to deny the ordinary incidents of the transaction. Both presumptions are rebuttable, but the burden of rebuttal falls squarely on those who would defeat the instrument rather than on those who seek to enforce it.