Negotiable Instruments Act,1881

Act No : 26

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Section : Discharge of indorser's liability.

40. Discharge of indorser's liability. 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. 20

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