Negotiable Instruments Act, 1881 · Chapter III: P A R T I E S T O N O T E S, B I L L S A N D C H E Q U E S .
Section 40: Discharge of indorser's liability
In plain words
If the holder, without the indorser's consent, destroys or weakens the indorser's remedy against an earlier party, the indorser is discharged towards the holder as if the instrument had been paid at maturity.
A simplified explanation, prepared with AI assistance from the official text below and checked automatically against it for numbers and cross-references. The official text is the law and prevails over this summary. Not legal advice.
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.
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.
Source: India Code (indiacode.gov.in), the consolidated text published by the Legislative Department, Government of India. Text as updated on India Code on 15 October 2026. Words in square brackets [ ] were inserted or substituted by later amending Acts, and *** marks words omitted by an amendment. The amendment footnotes are not reproduced here. Official text on India Code.
Supreme Court judgments citing the section 40
No Supreme Court judgment in our database cites this section yet.