Chapter XIII - Special Rules of Evidence
Section 118
Section 118: Rebuttable presumptions about instruments
Section 118 creates rebuttable presumptions about consideration, dates, acceptance, transfer, indorsements, stamping and holder-in-due-course status.
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Need advice on Section 118?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Until the contrary is proved, the following presumptions shall be made:—
(a) of consideration:—that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date:—that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance:—that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer:—that every transfer of a negotiable instrument was made before its maturity;
(e) as to order of indorsements:—that the indorsements appearing upon a negotiable instrument were made in the order in which they appear thereon;
(f) as to stamp:—that a lost promissory note, bill of exchange or cheque was duly stamped;
(g) that holder is a holder in due course:—that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
Key rule and applicability
Until the contrary is proved, the listed presumptions apply to the relevant features of a negotiable instrument: consideration, its stated date, timely acceptance and transfer, the apparent order of indorsements, stamping of a lost instrument, and the holder's due-course status. The proviso shifts the burden of proving holder-in-due-course status to the holder where the instrument was obtained in the specified ways through offence, fraud or unlawful consideration.
Limits and related provisions
A presumption is not conclusive proof or an automatic judgment. Each presumption concerns its particular fact, and contrary evidence can matter. The fraud, offence and unlawful-consideration proviso must be assessed specifically; it should not be omitted from a claim to presumptive due-course status. Section 139's cheque-related presumption is a separate provision and should not be treated as identical to every item in Section 118.
Hypothetical business example
Hypothetical: A claimant relies on a dated bill and its indorsements. The claim identifies the relevant presumptions, while the opposing party produces evidence disputing the transfer history. If the statutory fraud circumstances are established, the holder must address the proviso's burden concerning due-course status instead of asserting that possession decides everything.
Practical decision flow
Identify the precise disputed fact and the corresponding paragraph of Section 118.
Collect the instrument, transaction records, acceptance and transfer evidence, and any material capable of rebutting the presumption.
Check the fraud, offence or unlawful-consideration proviso and distinguish any separate Section 139 issue before framing the evidence.
Practical checklist
Do
- Identify the precise disputed fact and the corresponding paragraph of Section 118.
- Collect the instrument, transaction records, acceptance and transfer evidence, and any material capable of rebutting the presumption.
- Check the fraud, offence or unlawful-consideration proviso and distinguish any separate Section 139 issue before framing the evidence.
Avoid
- A presumption is not conclusive proof or an automatic judgment. Each presumption concerns its particular fact, and contrary evidence can matter. The fraud, offence and unlawful-consideration proviso must be assessed specifically; it should not be omitted from a claim to presumptive due-course status. Section 139's cheque-related presumption is a separate provision and should not be treated as identical to every item in Section 118.
Glossary
- Rebuttable presumption
- A starting legal assumption that operates until the contrary is proved.
- Holder in due course
- A holder satisfying the Act's qualifying conditions, whose presumed status is subject to the stated proviso.
Frequently asked questions
Are Section 118 presumptions final?
No. The opening words make them subject to proof of the contrary.
Does a lost instrument have a stated presumption?
Yes. Clause (f) concerns due stamping of a lost promissory note, bill or cheque; it does not by itself prove every other element of a claim.
Who proves due-course status in the proviso's fraud situation?
The burden lies on the holder where the specified offence, fraud or unlawful-consideration circumstances apply.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026