Discharge of indorser’s liability
Chapter 3: Parties to notes, bills and cheques
Where the holder of a negotiable instrument, without the consent of the indorser, destroys or impairs the indorser’s remedy against a prior party, the indorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity.
Illustration.
A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:— First indorsement, “B”. Second indorsement, “Peter Williams”. Third indorsement, “Wright & Co.” Fourth indorsement. “John Rozario”. This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario.
The Negotiable Instruments Act, 1881 (Act No. 26 of 1881). From the updated text on India Code, with later amendments. Being checked against the official copy; amendment notes are not shown yet.