The petition, filed by investor Vinay Bansal, accuses SEBI of overlooking statutory red flags and lapses in disclosure. Bansal claims that the market regulator failed to act on detailed complaints submitted in August regarding WeWork India’s financials and pending legal matters.
Key Allegations in the Plea
According to the petition, the WeWork India IPO approval was unlawful for several reasons:
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The DRHP allegedly misrepresented the company’s growth projections despite accumulated losses and negative net worth.
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There was an alleged suppression of material complaints and legal disputes relevant to investor decision-making.
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The document reportedly created a misleading impression of WeWork India’s association with its global counterpart, suggesting stronger financial backing than actually exists.
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Certain investor complaints and negative reports about WeWork India’s business model were not disclosed, despite being attached as exhibits.
The case came up before a Division Bench of Justices RI Chagla and Farhan Parvez Dubash, who have listed the matter for further hearing on October 8.
Failure to Exercise Statutory Duties
Bansal argues that SEBI violated its obligations under Section 11A of the SEBI Act, 1992. The section empowers SEBI to prohibit public issues if they pose risks to investors. According to the plea, the regulator failed to pass a reasoned or “speaking” order on the objections filed, which amounts to a breach of natural justice.
The petitioner has sought the following reliefs:
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Quashing of SEBI’s approval for the WeWork India IPO.
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Restraining WeWork India from proceeding with the IPO until all investor complaints are resolved.
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A direction to SEBI to issue a speaking order on the pending objections.
Allegations of Non-Disclosure Under PMLA
Another petitioner, Hemant Kulshrestha, contends that WeWork India failed to disclose significant criminal proceedings under the Prevention of Money Laundering Act (PMLA). While the red herring prospectus mentions civil attachment proceedings by the Enforcement Directorate (ED), it omits a prosecution complaint currently pending before a Special CBI Court in Telangana.
Kulshrestha’s counsel argued that SEBI’s Issue of Capital and Disclosure Requirements (ICDR) Regulations require full disclosure of all criminal cases. The plea asserts that the responsibility for ensuring transparency lies solely with the company, its merchant bankers, and SEBI—not with the investors.
Legal Representation
Vinay Bansal was represented by Senior Advocate Navroz Seervai, with advocates Prasad Shenoy and Chinmay Babhulkar. Senior Advocates Amit Desai and Ashish Kamat represented Hemant Kulshrestha. Senior Advocate Shiraz Rustomjee represented SEBI, while WeWork India’s legal team included Senior Advocates Darius Khambata and Gaurav Joshi from Shardul Amarchand Mangaldas & Co.
What This Means for Investors
The WeWork India IPO has drawn significant market attention, but this legal challenge could delay its listing. If the High Court finds merit in the plea, SEBI may have to revisit its approval process and enforce stricter disclosure compliance.
For now, the fate of the WeWork India IPO hinges on the Bombay High Court’s upcoming hearing. The case underscores growing scrutiny over transparency and investor protection in India’s capital markets.
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