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Issues Involved:
1. Existence and enforceability of an equitable mortgage. 2. Requirement of registration under the Indian Registration Act. 3. Effect of giving time to the principal debtor on the liability of the surety. Issue-wise Detailed Analysis: 1. Existence and Enforceability of an Equitable Mortgage: The plaintiffs sought to enforce an equitable mortgage on immoveable property situated at Dadar, alleging that the defendants, as owners, created an equitable mortgage as sureties for the firm of Sarda & Sons. The defendants contended that no loan resulted from the negotiations and that no equitable mortgage was created. However, the court found the defendants' claim false, establishing that the plaintiffs advanced money to Sarda & Sons on the security of the defendants' property. The court noted that the defendants were never treated as personally liable for the debt, being referred to as sureties in the plaintiffs' solicitors' letters. The evidence, including the letter dated May 26, 1922, demonstrated that the defendants intended to deposit title-deeds as security against advances to Sarda & Sons. 2. Requirement of Registration under the Indian Registration Act: The appellants argued that the letter of May 26, 1922, required registration under Section 17 of the Indian Registration Act as it purported to create or declare an interest in immoveable property. The court held that the letter did not require registration because the immoveable property (lease) did not exist at the date of the letter. The letter could only impose an obligation to create a mortgage when the property was acquired, thus falling within the exception in Sub-section (2) of sub-paragraph (v) of Section 17. Therefore, the appellants' argument on this point failed. 3. Effect of Giving Time to the Principal Debtor on the Liability of the Surety: The appellants contended that the consent decree of 1925, which gave time to the principal debtor (Sarda & Sons), discharged the surety (defendants) from liability. The court agreed, referencing English case law, including Smith v. Wood and Bolton v. Salmon, which established that giving time to the principal debtor without the surety's consent discharges the surety's liability. The court noted that the Indian Contract Act is not exhaustive and that the general principle of not interfering with a surety's rights without consent applies. The court found no evidence that the defendants were consulted or consented to the giving of time to Sarda & Sons. Therefore, the appeal was allowed, and the plaintiffs' action was dismissed. Conclusion: The appeal was allowed, plaintiffs' action dismissed, and there was an order on the counter-claim for the delivery of the lease to the defendants. The appellants were awarded costs of the appeal and the counter-claim, with two-thirds costs of the action. The receiver was discharged upon passing his accounts, and moneys in his hands were to be paid to the defendants' attorneys, with possession of the property to be handed over to the defendants.
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