Negotiable Instruments Act Section 40 — Discharge of indorser's liability
CHAPTER III PARTIES TO NOTES, BILLS AND CHEQUES.
General
Summary
If the person holding a negotiable instrument destroys it or damages the holder’s ability to claim money from an earlier party, without the indorser’s permission, then the indorser no longer has to pay the holder. This release from liability is the same as if the instrument had been fully paid when it was due.
Official Text
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.