Relief to WeWork as Bombay High Court dismisses petitions challenging SEBI approval to IPO

The Bombay High Court on Monday dismissed the plea challenging the Securities and Exchange Board of India’s (SEBI) approval to WeWork India’s initial public offering (IPO) [Vinay Bansal v. Securities Exchange Board of India].

The petitioner, Vinay Bansal, filed the plea relying on allegations by investors that the capital market regulator had overlooked disclosure lapses, including non-disclosure of pending criminal proceedings under the Prevention of Money Laundering Act.

However, a division bench of Justices RI Chagla and Farhan Parvez Dubash found no merit in the petition and dismissed it while also imposing costs of ₹1 lakh on the petitioner, payable to the Maharashtra Legal Services Authority.

A detailed order is yet to be uploaded.

Bansal had claimed in the petition that SEBI's approval to WeWork India’s IPO was unlawful because the company’s draft red herring prospectus (DRHP) filed on January 31 contained the irregularities.

He claimed that it showed an accumulated losses and negative net worth while projecting an inflated growth trajectory without adequate risk disclosures.

The DRHP also suppressed details of pending complaints and disputes, he said, arguing that the same is material to investor decision-making.

Finally, he argued that there was a misrepresentation of WeWork India’s relationship with the global WeWork brand, creating a perception of financial backing and stability.

Bansal claimed that despite submissions of repeated complaints on August 25, SEBI neither decided on the objections nor issued a reasoned order.

As per the petition, by failing to exercise this power despite statutory and factual red flags, SEBI violated its non-discretionary duties.

The High Court also dismissed an accompanying petition filed by Hemant Kulshrestha who claimed that significant criminal proceedings remained undisclosed.

He argued that it is not the responsibility of the investors to unearth and flag omissions.

The High Court dismissed his petition but did not impose any costs.