Strict SARFAESI compliance governs auction validity, while bona fide improvements may still attract equitable compensation.

Territorial jurisdiction was upheld because the appellate order formed part of the cause of action and the forum non conveniens objection could not be reopened after the court had already entertained the matter. The SARFAESI enforcement measures and auction sale were invalid because the statutory safeguards on notice, possession, valuation, sale and consideration of the borrower's representation were not strictly followed, so the sale was rightly set aside. A bona fide purchaser from the auction-purchaser could not retain title where the underlying transfer was illegal, but equitable relief was warranted for improvements made in good faith, with directions preserving the borrower's redemption rights while providing valuation-based protection and compensation.

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Issues: (i) Whether the writ petition was maintainable before the High Court despite the forum non conveniens objection; (ii) Whether the measures taken under the SARFAESI Act and the consequent auction sale were valid; (iii) Whether the petitioner, as a bona fide purchaser from the auction-purchaser, could retain protection and be compensated for improvements made to the property.

Issue (i): Whether the writ petition was maintainable before the High Court despite the forum non conveniens objection.

Analysis: The appellate order under challenge formed part of the cause of action, and the petition had already been entertained earlier. The objection based on convenience could not be reopened after the court had exercised its discretion to hear the matter. Territorial jurisdiction was therefore available and the discretionary objection failed.

Conclusion: The writ petition was maintainable before the High Court; the forum non conveniens objection failed.

Issue (ii): Whether the measures taken under the SARFAESI Act and the consequent auction sale were valid.

Analysis: The statutory scheme under the SARFAESI Act and the Security Interest (Enforcement) Rules, 2002 requires strict compliance with the notice, possession, valuation, sale and redemption safeguards. The borrower's representation under section 13(3A) was not duly dealt with, the notice and possession requirements were not properly complied with, and the reserve price and sale process were found to be suspect. In such a regime, failure to follow the mandatory procedure vitiates the measures taken under section 13 and justifies invalidation under section 17.

Conclusion: The auction sale and the underlying SARFAESI measures were invalid and were correctly set aside.

Issue (iii): Whether the petitioner, as a bona fide purchaser from the auction-purchaser, could retain protection and be compensated for improvements made to the property.

Analysis: A bona fide purchaser ordinarily receives protection, but that protection cannot survive where the title originates from an illegal transfer in a flawed SARFAESI sale. At the same time, the petitioner had invested in construction and occupied the property in good faith. The equities therefore required balancing: the petitioner's title could not be preserved, but her investment and improvements had to be valued and protected while preserving the borrower's statutory right of redemption.

Conclusion: The petitioner's title was not saved, but she was entitled to valuation-based protection and compensation for bona fide improvements, with directions framed to balance the competing equities.

Final Conclusion: The sale stood annulled, but the matter was not left at that; the court preserved the borrower's redemption rights while directing fresh valuation, payment safeguards, and an equitable mechanism to protect the petitioner's bona fide investment and possession during the further process.

Ratio Decidendi: Under SARFAESI, mandatory procedural safeguards governing notice, possession, valuation, sale, and redemption must be strictly complied with, and a sale founded on an illegal enforcement process cannot be protected merely because the transferee is a bona fide purchaser, though equitable relief may be moulded to compensate bona fide improvements.

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