Bharat Barrel v Amin Chand Payrelal (1999) | Promissory Note Consideration & Section 118

Banking Law Case 16 of 29 by Law Easy, for LL.B., CLAT PG, UGC NET Law and Judiciary exams. Case: Bharat Barrel & Drum Manufacturing Company v Amin Chand Payrelal (1999), Supreme Court of India, decided 18 February 1999 (Justice R. P. Sethi). FACTS: The defendant admittedly signed a promissory note for Rs 6,20,000 payable on demand to the plaintiff company. When sued, he said the note was not given for any loan. It was only collateral security for a contract to import steel sheets, which was later cancelled, so nothing was due. The trial judge rejected the defendant's story but also disbelieved the plaintiff's account of the loan and dismissed the suit. A Full Bench of the Calcutta High Court agreed by majority. LEGAL ISSUE: Once a signed promissory note is admitted, who must prove consideration, and how can the presumption be rebutted? JUDGMENT: The Supreme Court reversed. Once execution of a promissory note is admitted, the court must presume it was made for consideration. The defendant can rebut this presumption without proving a negative by direct evidence: he must raise a probable defence on a preponderance of probabilities, and may rely on the circumstances and even the plaintiff's own evidence. A bare denial is not enough. Only if the defendant succeeds does the burden shift back to the plaintiff to prove consideration. Here the defendant's own story failed, so the plaintiff was entitled to the presumption. PRINCIPLE TO REMEMBER: A signed note brings a rebuttable presumption of consideration. The defendant needs to show a probable defence, not proof beyond reasonable doubt. The same reasoning applies to the statutory presumption in cheque bounce cases. PROVISIONS: Section 118(a) of the Negotiable Instruments Act, 1881 (presumption of consideration); compare Section 139. EXAM NOTE: The presumption is not conclusive proof. Once properly rebutted, the burden may shift back to the claimant to prove the transaction. PLAYLIST (all 29 cases in order): https://www.youtube.com/playlist?list=PLbhYsrMKgACA COMPLETE LECTURE (all 29 cases with timestamps): https://youtu.be/ayAN7RLlfPM PREVIOUS CASE (15, Crouch v Credit Foncier of England): https://youtu.be/MZ-Z2xFc7As More law notes: https://www.thelaweasy.com If this helps your exam preparation, please subscribe to Law Easy. This video is for education and is not legal advice. #BankingLaw #NegotiableInstrumentsAct #Section118 #CLATPG #Judiciary #LLB #LawEasy