The Negotiable Instruments Act, 1881
§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”. indorsement, “Peter Williams”. indorsement, “Wright & Co.” “John Rozario”.