The Supreme Court was on Monday privy to high drama during a hearing in NGO Infrastructure Watchdog’s appeal against the Securities Appellate Tribunal’s (SAT) refusal to halt the Initial Public Offering (IPO) of Smartworks Coworking Spaces Limited [Infrastructure watchdog Vs Securities Exchange Board of India].
Appearing for the NGO, Senior Advocate Narender Hooda produced what he claimed was a letter from the Ministry of Corporate Affairs (MCA) to SEBI, purportedly highlighting ongoing investigations against the Sarda family, promoters of Smartworks.
Senior Advocate Gopal Subramanium, representing the respondents, disputed the claim, stating that an RTI filed with the MCA revealed no such letter had been issued to SEBI. He accused the NGO of misleading the Court with fabricated material.
A Bench of Justices PS Narasimha and AS Chandurkar reacted sternly:
“You cannot get away with simply apologising to the Court. We will examine the document, and if it is found to be false, prosecution may follow.”
The Court also asked SEBI to verify whether it had complied with all statutory requirements before clearing Smartworks’ IPO.
You cannot get away with simply apologising to the Court.Supreme Court
Infrastructure Watchdog is a New Delhi–based NGO registered under the Societies Registration Act, 1860. It describes itself as a public interest group monitoring regulatory and corporate governance issues.
Smartworks was listed on July 17, debuting at a premium of 7% on the BSE and nearly 7% on the NSE.
The appeal before SAT arose after Infrastructure Watchdog sought directions to SEBI to investigate alleged non-disclosures in Smartworks’ draft prospectus and to restrain the company from proceeding with its IPO.
On July 16, SAT dismissed the appeal, holding:
Complaints already disclosed: Smartworks’ red herring prospectus (RHP) and addenda contained references to Infrastructure Watchdog’s complaints dated January 12, March 29 and May 21, 2025 along with company responses.
Income-tax reports inconclusive: The Tribunal noted that the NGO relied on two internal income tax reports but those were “indicative in nature and not exhaustive” and had not resulted in statutory notices or tax demands.
Investor participation decisive: On Day 1, the IPO was subscribed just 0.83%. After the July 11 addendum disclosing the NGO’s complaints, subscription surged, closing at 13.45 times overall, including 24.4 times in the Qualified Institutional Buyers’ category. “It would be incongruous to assume that QIB investors and High Net Worth investors would have invested without proper analysis,” SAT said.
Maintainability and locus: SEBI had said that the NGO was not a “person aggrieved” under Section 15T of the SEBI Act. SAT kept this issue open but decided the case on merits “in the peculiar facts.”
The Tribunal was informed that the NGO was acting at the behest of estranged members of the Sarda family, citing its possession of a withdrawn Punjab National Bank show-cause notice addressed to companies linked to the family.