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Provincial Insolvency Act (5 of 1920), ss. 33, 75(1) and 80- Negotiable Instruments Act (26 of 1881), s. 118- Official Receiver-If bound to rely upon statutory presumption-High Court-Jurisdiction under s. 75(1) of the Insolvency Act. = The second appellant, who had executed promissory notes in favour of the respondents was adjudicated an insolvent on a petition by them. The Official Receiver in exercise of the powers under ss. 33 and 80 of the Provincial Insolvency Act (5 of 1920) and under directions of the Insolvency Judge, inquired into the claims of the respondents and rejected them. On appeal, the Insolvency Judge directed the inclusion of their names in the schedule of creditors. The appeal to the District Court against the order of the Insolvency Judge was allowed. In second appeal to the High Court, it was held, that the inference drawn by the District Court from its findings was a matter of law and that therefore the High Court had jurisdiction under s. 75(1), to interfere with the order of the District Court. Relying upon the presumption in favour of creditors in s. 118 of the Negotiable Instruments Act (26 of 1881), the High Court set aside the judgment of the District Court. The Official Receiver and the insolvent appealed to the Supreme Court. HELD : The appeal should be allowed. Since all the findings of the District Court were findings of fact and the question whether a statutory presumption was rebutted by the rest of the evidence was also a question of fact, the High Court had no jurisdiction to set aside the judgment of the District Court. [259A-C]. Wali Mohammad V. Mohammad Bakhsh, (1930) L.R. 57 I.A. 86. approved. Section 118 of the Negotiable Instruments Act, enacts a special rule of evidence which operates only between parties to the instrument or persons claiming under them in a suit or proceeding relating to the negotiable instrument. The section does not affect s. 114 of the Evidence Act, and in cases not falling within s. 118 of the Negotiable Instruments Act the Court may or may not presume that a promissory note was founded on good consideration. Therefore, in a proceeding relating to proof of debts, the question being not one between the insolvent and the proving creditor alone, and since the rights of other creditors of the insolvent have of necessity to be considered, the Court has jurisdiction to investigate whether there is a real -debt. Even if for some reason the debtor himself is estopped from denying the debt, there could be no estopped against the Insolvency Court. There is thus no statutory presumption of consideration in favour of the creditors under promissory notes in proceedings under s. 33 of the Provincial Insolvency Act for settlement of the schedule of creditors, and the Receiver exercising powers under s. 80 of that Act is not bound to admit the debts in the schedule merely because the insolvent or the creditors have failed to displace such a presumption. [261F-262C; 264E-G]. Case law reviewed. 255

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PETITIONER:

OFFICIAL RECEIVER, KANPUR AND ANOTHER

 Vs.

RESPONDENT:
ABDUL SHAKUR AND OTHERS

DATE OF JUDGMENT:
11/09/1964

BENCH:
SHAH, J.C.
BENCH:
SHAH, J.C.
GAJENDRAGADKAR, P.B. (CJ)
AYYANGAR, N. RAJAGOPALA

CITATION:
 1965 AIR 920 1965 SCR (1) 254
 CITATOR INFO :
 E 1969 SC1334 (8A)

ACT:
 Provincial Insolvency Act (5 of 1920), ss. 33, 75(1) and
80- Negotiable Instruments Act (26 of 1881), s. 118-
Official Receiver-If bound to rely upon statutory
presumption-High Court-Jurisdiction under s. 75(1) of the
Insolvency Act.

HEADNOTE:
 The second appellant, who had executed promissory notes in
favour of the respondents was adjudicated an insolvent on a
petition by them. The Official Receiver in exercise of the
powers under ss. 33 and 80 of the Provincial Insolvency Act
(5 of 1920) and under directions of the Insolvency Judge,
inquired into the claims of the respondents and rejected
them. On appeal, the Insolvency Judge directed the
inclusion of their names in the schedule of creditors. The
appeal to the District Court against the order of the
Insolvency Judge was allowed. In second appeal to the High
Court, it was held, that the inference drawn by the District
Court from its findings was a matter of law and that
therefore the High Court had jurisdiction under s. 75(1), to
interfere with the order of the District Court. Relying
upon the presumption in favour of creditors in s. 118 of the
Negotiable Instruments Act (26 of 1881), the High Court set
aside the judgment of the District Court. The Official
Receiver and the insolvent appealed to the Supreme Court.
HELD : The appeal should be allowed.
Since all the findings of the District Court were findings
of fact and the question whether a statutory presumption was
rebutted by the rest of the evidence was also a question of
fact, the High Court had no jurisdiction to set aside the
judgment of the District Court. [259A-C].
Wali Mohammad V. Mohammad Bakhsh, (1930) L.R. 57 I.A. 86.
approved.
Section 118 of the Negotiable Instruments Act, enacts a
special rule of evidence which operates only between parties
to the instrument or persons claiming under them in a suit
or proceeding relating to the negotiable instrument. The
section does not affect s. 114 of the Evidence Act, and in
cases not falling within s. 118 of the Negotiable
Instruments Act the Court may or may not presume that a
promissory note was founded on good consideration.
Therefore, in a proceeding relating to proof of debts, the
question being not one between the insolvent and the proving
creditor alone, and since the rights of other creditors of
the insolvent have of necessity to be considered, the Court
has jurisdiction to investigate whether there is a real
-debt. Even if for some reason the debtor himself is
estopped from denying the debt, there could be no estopped
against the Insolvency Court. There is thus no statutory
presumption of consideration in favour of the creditors
under promissory notes in proceedings under s. 33 of the
Provincial Insolvency Act for settlement of the schedule of
creditors, and the Receiver exercising powers under s. 80 of
that Act is not bound to admit the debts in the schedule
merely because the insolvent or the creditors have failed to
displace such a presumption. [261F-262C; 264E-G].
Case law reviewed.
255JUDGMENT:
 CIVIL APPELLATE JURISDICTION: Civil Appeal No. 257 of
1962.
Appeal from the judgment and decree dated February 19, 1957
of the Allahabad High Court in S. A. F. No. 4 of 1952.
 S. T. Desai, and J. P. Goyal, for the appellants.
 G. S. Pathak, B. Dutta, J. B. Dadachanji, O. C.
Mathur and Ravinder Narain, for respondent No. 2.
 The Judgment of the Court was delivered by
 Shah J. Respondents I to 3 in this appeal presented a
petition before the Insolvency Judge, Kanpur for an order
adjudicating the second appellant--Kotwaleshwar Prasad-
insolvent. In their petition they alleged that Kotwaleshwar
had in the course of business dealings with them borrowed
Rs. 15,000 on September 28, 1935 from respondents I and 3
and had executed a promissory note agreeing to repay the
amount, and that he had borrowed Rs. 3,500, on January 9,
1936 and Rs. 4,000 on April 7, 1936 from respondent 2, and
executed similar promissory notes, that he had failed to
repay the amounts due by him and with a view to defeat or
delay his creditors secluded himself so as to deprive his
creditors of the means of communicating with him, and had
thereby committed an act of insolvency. The Insolvency
Judge by order dated October 8, 1937 adjudicated
Kotwaleshwar insolvent and appointed the first appellant the
Official Receiver, Kanpur, as receiver of his estate with
powers under s. 80 of the Provincial Insolvency Act,
1920--hereinafter called 'the Act'.
 The Receiver proceeded in exercise of the powers under s.
33 read with s. 80 of the Act to frame a schedule of debts.
The claims set up by the respondents were challenged by
Kotwaleshwar and a creditor named Abdul Sayed, but the
Official Receiver included the claims of the respondents in
the schedule of debts, for in his view Kotwaleshwar had
admitted the claims on October 8, 1937 before the Insolvency
Court.
 In appeal under s. 68 to the Insolvency Judge the matter
-was remanded to the Official Receiver with directions to
hold a fresh enquiry into the debts due to the respondents.
The Official Receiver then held a further enquiry and
rejected the claims of the respondents I to 3. He held that
it was not proved that Kotwaleshwar had received
consideration for the three promissory notes. In the view
of the Official Receiver the documentary evidence produced
by Kotwaleshwar and the respondents established that the
promissory notes were executed by Kotwai-
256
eshwar under the influence of respondents I to 3 and their
servant Amir Hassan and that the evidence including the
books of account of respondents 1 to 3 in support of the
advance of consideration under the promissory notes was
unreliable.
 In appeal against the order of the Official Receiver,
the Insolvency Judge, Kanpur directed that the names of
respondents I to 3 be included in the schedule of creditors.
In the view of the Insolvency Judge the presumption of
consideration arising under s. 118 of the Negotiable
Instruments Act supported the rest of the evidence which was
directed to establish the genuineness of the signatures and
the endorsements of execution on the promissory notes by
Kotwaleshwar and on the receipts executed by him and that
the Kachi Rokar of the respondents were adequately corr-
borated by the evidence of the creditors, their witness
Abdul Rashid and others and that Kotwaleshwar had failed to
discharge the burden which lay heavily on him to establish
want of consideration.
 Against the order of the Insolvency Judge an appeal was
preferred to the District Court, Kanpur. During the
pendency of the appeal respondents 1 and 3 were declared
evacuees under the Administration of Evacuee Property Act
and the Assistant Custodian of Evacuee Property in whom
their property had vested was impleaded as a party
respondent. In the view of the District Court the testimony
of witnesses of the respondents in support of the plea of
payment of consideration was unreliable and that the
admission made by Kotwaleshwar before the Insolvency Judge
on October 8, 1937 was procured by the exercise of undue
influence and that the books of account relied upon by the
respondents and the oral evidence in support thereof were
unreliable. The District Judge observed that the
presumption under s. 118 of the Negotiable Instruments Act
in respect of the promissory notes did arise, but it stood
in the circumstances of the case weakened and the burden
shifted to respondents I to 3, to prove affirmatively that
the sums covered by the three promissory notes were in fact
paid to the insolvent and that they failed to discharge the
burden.
 Against the order passed by the District Judge, a second
appeal being No. 4 of 1952 was preferred under s. 75 (I.)
proviso 2 of the Provincial Insolvency Act. 1920 to the High
Court -of Allahabad. The Division Bench hearing the appeal
referred the following two questions to a Full Bench. These
questions were
 (1) Whether the presumption mentioned in cl.
 (a) of s. 118, Negotiable Instruments Act,
 1881 can be
 257
 invoked in insolvency proceedings where an
 alleged debt against the insolvent is called
 in question by the official receiver or by a
 creditor or by the insolvent ?
 (2) If it can be invoked, would
 circumstances tending to make it doubtful that
 consideration passed under the n
egotiable
 instrument even though coupled with a denial
 on the part of the maker of the instrument,
 suffice to deprive the creditor of the benefit
 of the presumption and require him to prove by
 evidence that consideration did actually pass
 ?
 A Full Bench of the High Court by majority having recorded
an affirmative answer on the first question, the second
appeal was placed for hearing before a Division Bench of the
High Court. The Division Bench observed that the District
Court had recorded certain findings and from those findings
it had inferred as a matter of law that the statutory
presumption under s. 118 of the Negotiable Instruments Act
stood rebutted. The High Court then observed :
 "The correctness, or otherwise, of the
 preliminary inference must need (sic) be
 considered first. Scrutiny of that inference
 should however be prefaced with the
 observation that it is open to question not
 only because the various findings, or at least
 the material ones, described as circumstances
 by the court below, whereon that inference was
 based suffer from one or the other of the
 legal defects pointed out above, but also
 because the inference drawn by that court as a
 result of its view that the statutory
 presumption stood rebutted was a finding on a
 question of law and not on a question of fact.
 That inference, or finding, of the court below
 was that the onus of proving consideration had
 shifted on to the
 creditors. . . . . . . . .A finding
 which has to draw on a rule of law for the
 recording of it or for the ascertainment of
 its truth is a finding on a question of law,
 any other a finding on a question of fact.
 The finding that onus has shifted has to draw
 on the rules of pleading and proof, of
 procedure and evidence, for the recording of
 it as well as for the ascertainment of its
 truth. It is therefore a finding on a
 question of law."
The Court then held that in the case before it "not only had
the insolvent failed to displace, or even to weaken, the
presumption in favour of the creditors under s. 118 of the
Negotiable Instru-
258
ments Act, but the consideration stood fully established,
even if there was no initial presumption in favour of the
creditors, by the evidence adduced by them and by the
insolvent's own admission." With special leave, this appeal
is preferred by the Official Receiver and Kotwaleshwar.
 The District Court found on the evidence that the
insolvent's father died in 1933 leaving considerable
properties, that the insolvent was at the time of his
father's death a young man about 20 years of age,
inexperienced and open to all the temptations of early life,
that the insolvent "got mixed up" with Amir Hassan and
others and "they initiated him into the mysteries of wine
and women", that although the promissory notes were not
executed ",under the influence of drink" there were grounds
for holding that he was under the influence of Amir Hassan
when he signed them, that it was significant that the three
promissory notes were executed in quick succession and at
that time the insolvent was already indebted to other
creditors to the extent of Rs. 6,000 that the respondents
had no previous business relations with the insolvent, that
although the creditors knew that the insolvent's share in
the property left by his father was only Rs. 28,000 to Rs.
30,000 and that he was joint in estate with his brother, no
kind of security was taken from the insolvent, nor was any
enquiry made whether the said property was encumbered or
not, that respondent 3 Abdul Wahid admitted that about 21
months after the execution of the promissory note dated
September 28, 1935 he came to know that the insolvent was
executing "bogus and fictitious promissory notes" in favour
of his friends to defraud his real creditors, and therefore
it was incredible that further sums should have been
advanced under the two subsequent promissory notes of the
aggregate value of Rs. 7,500, that the insolvent was "fairly
well off for his ordinary needs" and there was no apparent
reason why he should have borrowed those considerable sums
of money, that the respondents did not have sufficient funds
or resources with them to advance either the amounts covered
by the three promissory notes or those under the prior
promissory notes of September 4, 1935 and September 15,
1935, that the thumb impression of the insolvent had been
taken in addition to his signatures on the promissory note,
and that his signatures were also obtained on the Rokar
Bahi, that the oral evidence produced by the respondents in
proof of the payment of consideration did not inspire
confidence, that the admission of the insolvent dated
October 8, 1937 on the foot of which the order of
adjudication was passed appeared to have been made in
suspicious circumstances and it was an erroneous admission
and therefore did not bind the insolvent and that the Bahi
259
Khatas of the creditors were of a suspicious character. AR
these findings were findings of fact. The District Court
inferred from the facts found that the statutory presumption
under s. 118 of the Negotiable Instruments Act had been
weakened and the burden which lay upon the insolvent was
discharged and it was not open to the High Court exercising
jurisdiction under s. 75(1) proviso 1, nor even under
proviso 2, of the Provincial Insolvency Act to set aside the
judgment of the District Court, for it is well settled that
the question whether a statutory presumption is rebutted by
the rest of the evidence is a question of fact : Wali
Mohammad v. Mohammad Bakhsh (1).
 This would be sufficient to dispose of the appeal. But
the question whether the Official Receiver is bound to give
effect to the statutory presumption in respect of a
negotiable instrument arising under s. 118 of the Negotiable
Instruments Act when the negotiable instrument is sought to
be relied upon by a creditor in the course of the insolvency
proceeding in proof of the debts to be entered in the
schedule of creditors, has been fully argued before us and
as the High Court has overruled an earlier decision of that
Court: Ram Lal Tandon v. Kashi Charan (2), and as the
question is of some importance, we deem it necessary to
express our opinion on that question.
 Section 33 of the Provincial Insolvency Act by the first
subsection provides :
 "When an order of adjudication has been made
 under this Act, all persons alleging
 themselves to be creditors of the insolvent in
 respect of debts provable under this Act shall
 tender proof of their respective debts by
 producing evidence of the amount and
 particulars thereof, and the Court shall, by
 order, determine the persons who have proved
 themselves to be creditors of the insolvent in
 respect of such debts, and the amount of such
 debts, respectively, and shall frame a
 schedule of such persons and debts :
 The Act imposes a duty upon the court to frame a schedule
of creditors and of the debts due to them which are provable
under the Act. For that purpose the court has to hold an
enquiry into the debts due by the insolvent which are
provable.
 A proceeding under s. 33 of the Provincial Insolvency Act
is not a proceeding between the insolvent and the proving
creditor.
(1) L.R. 57 I.A. 86, 92.
(2) A.I.R. 1928 All. 380.
260
The proceeding is between the creditors represented by the
official receiver and the insolvent. When a creditor,
seeking to prove a debt relying upon a negotiable
instrument, or other evidence makes a claim for inclusion of
the debt due to him, the court, or where he is authorised
the receiver of the estate of the insolvent, has to be
satisfied about the existence of the debt, the amount due,
its particulars and that it is provable in insolvency.
Section 33 does not indicate the quantum of proof which may
be regarded as sufficient to prove a debt. A court may
accept in proof of a debt a registered letter to the court
and an affidavit verifying the debt (see s. 49 of the Act).
That however is a matter of procedure, and does not lay down
as to what is sufficient to prove the debt. In each case it
is for the court or the receiver (Subject of course to
review in the manner provided by the Act) to consider
whether the debt of which the creditor claims inclusion is
proved. The decision of the question must of necessity
depend upon the circumstances and the evidence led to prove
the debt.
 In the present case the High Court by majority took the
view that in a proceeding under s. 33 when the promissory
note is brought before the Court by the promisee, a
presumption that the promissory note was made for
consideration arises under s. II 8 of the Negotiable
Instruments Act and unless that presumption is rebutted by
the promissory by other creditors or by the receiver that
the amount for which the promissory note is executed must be
included in the schedule. In so holding the High Court pri-
marily relied upon absence of any reference to the nature of
the proceeding in which the presumptions are required to be
raised in relation to negotiable instruments.
 It,,must be noticed in the first instance that presumption
under s. 118 of the Negotiable Instruments Act is a
presumption of consideration : it does not in all cases
prove the quantum of debt due by the insolvent at the date
of insolvency. The Insolvency Court has, it must be
remembered, to ascertain whether a debt is due by the
insolvent, whether the debt is provable in insolvency, and
the quantum of the debt due at the material date. In making
this enquiry in its three aspects even the judgment of a
court against the debtor may not be regarded as binding upon
the Court. In Ex Parte Lennox(1), it was held that a
judgment which the judgment debtor cannot set aside, may
still be subjected to investigation by the court of
Bankruptcy to enquire whether the debt on which the judgment
was founded was a good debt, and if the Court be satisfied
that it was not, the Court may refuse to make a receiving
(1) [1885]16 Q.B.D. 315,
261
order in respect of the debt. The principle of that case
was extended in In Re. Fraser Ex Parte Central Bank of
London(1). It was held in that case that "upon the hearing
of a creditor's petition for a receiving order against a
judgment debtor, the Court of Bankruptcy has power, at the
instance of the debtor himself, to go behind the judgment
and to inquire into the validity of the debt, even though
the debtor has previously applied in the action to set aside
the judgment, and his application has been refused, and the
refusal affirmed by the Court of Appeal." Lord Esher, M. R.,
observed at pp. 636-637
 "The decision (Ex parte Lennox) is based upon
 the highest ground-viz., that in making a
 receiving order, the Court is not dealing
 simply between the petitioning creditor and
 the debtor, but it is interfering with the
 rights of his other creditors, who, if the
 order is made, will not be able to sue the
 debtor for their debts, and that the Court
 ought not to exercise this extraordinary power
 unless it is satisfied that there is a good
 debt due to the petitioning creditor. The
 existence of the judgment is no doubt prima
 facie evidence of a debt; but still the Court
 of Bankruptcy is entitled to enquire whether
 there really is a debt due to the petitioning
 creditor."
A debt to be entered in the schedule must therefore be a
real debt. A judgment against a debtor which is sought to
be relied upon in proving a debt does not necessarily
establish the existence of a real debt for the judgment may
have gone by default, it may have gone by consent or it may
have been procured for any other reason. In a proceeding
relating to proof of debts the question which arises being
not one between the insolvent and the proving creditor
alone, the rights of other creditors of the insolvent have
of necessity to be considered. Even if for some reason the
debtor himself is estopped from denying the debt there will
be no estoppel against the Insolvency Court.
The Court therefore in each case has jurisdiction to
investigate whether there is a real debt: whether production
of a judgment or a negotiable instrument or other evidence
may be regarded as sufficient to regard the debt as proved
is a matter for the Insolvency Court to decide. The
question is not to be adjudged in the light of any estoppel
which may operate against the insolvent or of any
presumption. The Court in a given case may rely merely upon
a judgment or a negotiable or other instrument, and admit
the debt to the schedule not because there is an estoppel
1. [1892] 2 Q . B.D. 633.
L2Sup./64-4
262
against the Receiver or the other creditors, or presumption
of 1aw in favour of the evidence produced, but because in
its view in the light of the circumstances no further
enquiry beyond proof of the judgment or negotiable
instrument or other document evidencing the debt and proof
of non-satisfaction of the debt since the date thereof is
sufficient. The Court has power, however, to insist upon
proof of the debt apart from the judgment or the negotiable
or other instrument. The reason is that the Insolvency
Court with a view to effectively distribute the estate of
the insolvent among the creditors is entitled to go behind
outward forms of transactions and to ascertain the truth of
the debts sought to be proved, and the estoppel to which the
insolvent may have subjected himself will not prevail
against the Receiver. Whether the power should be exercised
in the case of a judgment debt in a given case depends upon
the discretion of the Court which has to be exercised on
sound judicial principles. It is true that the Court
ordinarily; does not go behind a judgment against the
debtor, on a bare suggestion by the debtor that the debt
which is merged in the judgment did not exist or was bad.
There must undoubtedly be circumstances prima facie
justifying an enquiry There must appear something that the
judgment was procured by fraud or collusion, or that there
has been miscarriage of justice But a mere irregularity or
error in form will not be a sufficient reason for going
behind the judgment.
 When a debt secured by a promissory note is sought to be
proved, the Insolvency Court must enquire into the reality,
and the quantum of consideration. What shape this enquiry
may take will depend upon the circumstances of the case. In
a given case the Insolvency Court may regard an affidavit
setting out the particulars ,of the debt, and affirming
execution of the promissory note by the insolvent, and
asserting non-satisfaction of the debt, as sufficient In
other cases, the Court may enter upon a fuller enquiry which
the circumstances of the case may demand. But in all cases
of proof of debts under s. 33 the burden is upon the
-creditor. That burden may be discharged by the affidavit
of the creditor viewed in the light of a presumption which
the Court may raise under s. 114 of the Evidence- Act, that
a bill of exchange accepted or endorsed, was for good
consideration. If that be the true effect of. s. 33 of the
Provincial Insolvency Act, and we think both on principle
and authority that is the true effect, of necessity the
presumption under s. 118 of the Negotiable Instruments Act
that every negotiable instrument was made or drawn for
consideration cannot avail against the Receiver of the
estate of the insolvent
263
 It is true that s. 118 of the Negotiable Instruments
Act, unlike s. 119 to s. 122 which occur in Ch. XIII, does
not refer to a proceeding in suit where the various
presumptions directed have to be raised. The section is
undoubtedly in terms general. But there is no reason to
suppose that it was intended to apply to a proceeding which
is not in the nature of a civil dispute between the parties
to the negotiable instrument or their privies. The
Negotiable Instruments Act is intended to codify the law
merchant relating to 'dealings concerning negotiable
instruments. The presumptions which are raised under s. 118
do undoubtedly set out special rules of evidence relating to
negotiable instruments, but in our opinion the nature of the
presumptions from their very nature operate in favour of or
against the parties to the negotiable instrument or their
privies and cannot generally apply to persons who do not
claim under the parties to the instrument. In Anumolus
Narayana Rao v. Chattaraju Venkatappayya(1) it was observed
by Varadachariar J., that a suit on a promissory note
instituted against an undivided son of a Hindu promisor
governed by the Mitakshara law after the latter's death
cannot be regarded as one against the heirs or
representatives of the promisor, because it only seeks to
enforce the Hindu law theory of pious obligation of the sons
in respect of the property which the sons have taken by
survivorship. The pious obligation can arise only on the
assumption of the existence of a debt due by the father and
in such a case the onus of proving the existence of the debt
must prima facie be laid on the creditor who can call in aid
the presumption permissible under the general law of
evidence, namely, s. 114 of the Indian Evidence Act and not
the presumption under s. 118 (a) of the Negotiable
Instruments Act. The learned Judge observed
 "Though this section is not, like sections 119
 to 122, limited in terms to a suit upon the
 instrument, it seems only reasonable to hold
 that the special rules of evidence laid down
 in section 118 must have been intended to
 apply only as between the parties to the
 instrument or those claiming under them. In
 other cases the presumption can only be in the
 terms enacted in section 114 of the Evidence
 Act (vide illus. c) which by the use of the
 expression 'may presume leaves it to the Court
 to apply the presumption or not according to
 circumstances."
(1) I.L.R. [1937] Mad. 299.
264
 Section 114 of the Indian Evidence Act authorises the
Court to presume the existence of any fact which it thinks
likely to have happened, regard being had to the common
course of natural events, human conduct and public and
private business in their relation to the facts of the
particular case. Under the third illustration of s. 114 the
Court may presume that a bill of exchange accepted or
endorsed was accepted for good consideration. But the
section provides, that the, Court shall also have regard to
other material facts in considering whether the maxim does
or does not apply in the particular case before it. It is
therefore open to the Court to consider in its proper
setting, the fact that the drawer of a bill of exchange was
a man of business, and the acceptor was a young and ignorant
person completely under the former's influence. This is one
illustrative fact which the Court may consider in raising
the presumption. There may be other circumstances which may
also justify the Court in declining to raise the
presumption. Mr. Pathak for the respondents urged that the
Indian Evidence Act was enacted in 1872 and the Negotiable
Instruments Act having been enacted in 1881, and as the two
provisions conflict or overlap, s. 118 of the Negotiable
Instruments Act must supersede S. 114 of the Evidence Act.
We are unable to accept that contention. Undoubtedly S. 114
of the Evidence Act is a general provision which enables the
Court to presume, though not obliged to do so, that a bill
of exchange or a promissory note were founded on a good
consideration. Section 118 of the Negotiable Instruments
Act, however, enacts a special rule of evidence which
operates between parties to the instrument or persons
claiming under them in a suit or proceeding relating to the
bill of exchange and does not affect the rule contained in
s. 114 of the Evidence Act, in cases not falling within s.
11 8 the Negotiable Instruments Act.
 In our view the High Court was in error in holding that a
statutory presumption of consideration arose in favour of
the respondents in the proceedings under S. 33 for
settlement of the schedule of creditors, and the Receiver
exercising power under S. 80 of the Act was bound to admit
the debts in the schedule if the insolvent or the other
creditors failed to displace that presumption
 The appeal must therefore be allowed, the order of the
High Court set aside, and the order of the District Court
restored, with costs in this Court.
Appeal allowed
265

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