Bombay High Court: In the writ petitions filed under Article 226 of the Constitution of India seeking intervention in relation to the IPO (Initial Public Offering) of WeWork India, a Division Bench of R.I. Chagla and Farhan P. Dubash,* JJ., upheld the SEBI approval for WeWork India IPO and imposed a cost of 1 lakh for deliberate act of suppression of concealment of material facts.
Brief Facts
In the instant matter, the WeWork India filed its Draft Red Herring Prospectus (DRHP) on 31-01-2025. The Securities and Exchange Board of India (SEBI) placed the IPO in abeyance from Feb—July 2025. On 27-09-2025, the Red Herring Prospectus (RHP) was published and filed.
The petitioners complained of material mis-statements and non-disclosures, particularly relating to pending criminal proceedings against the promoters and filed the present petitions seeking intervention in relation to the IPO of WeWork India. The petitioners asserted that the Offer Documents contained “gross and deliberate suppression of information” regarding criminal cases against promoters and the DRHP disclosed only IPC 120B and 420, omitting Section 409 and Section 477-A IPC, and offences under the PMLA.
However, the SEBI contended that the primary responsibility of disclosures rests on Book Running Lead Managers (BRLMs), the petitioners are aware of the facts and hence not misled, called their locus into question and that Regulation 6(2) of Issue of Capital and Disclosure Requirements Regulations, 2018 (ICDR Regulations) permits IPO even if the issuer does not satisfy financial conditions, provided 75% is allotted to QIBs.
WeWork India also contended that full disclosures were made, including in Section II (Risk Factors) and Section VI of RHP and the complaints by petitioners were themselves disclosed in Section IX (Material Contracts & Documents for Inspection).
The BRLMs also contended that the complaint by the petitioner was adequately responded to in writing and the IPO was fully compliant and disclosures were sufficient.
Moot Point
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Whether the WeWork IPO violated eligibility conditions under SEBI Regulations or General Order 01/2012?
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Whether the Offer Documents failed to disclose material legal proceedings?
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Whether the court should intervene in a regulatory matter entrusted to SEBI?
Court’s Analysis
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Applicability and effect of SEBI’s General Order 01 of 2012
On the applicability and effect of SEBI’s General Order 01 of 2012, the Court observed that the General Order is only illustrative and indicative, and only in the nature of general standards and mere triggering of any or a few criteria mentioned, cannot be regarded as an automatic case for rejection. The Court emphasised that the General Order does not regulate on merits or approve the document of offer ,but mandates a true, fair and adequate disclosure so that investors may exercise due diligence and caution.
The Court further held that the General Order had been implicitly superseded by later statutory regulations “…on account of the fact that subsequently, on 11th September 2018, SEBI has notified the ICDR Regulations, 2018… superseded at least to the extent of provisions contained in the ICDR Regulations.” Thus, the Court held that the petitioners’ reliance on the General Order was misplaced and without merit.
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WeWork India IPO eligibility and financial losses
While rejecting the petitioners argued that WeWork India had negative net worth and losses, and therefore could not come out with an IPO, the Court held that Regulation 6(2) of the ICDR Regulations expressly allows an IPO even if eligibility conditions are not met, provided the issue is through the book-building process and at least 75% is offered to QIBs.
“…an issuer not satisfying sub-regulation (1) shall be eligible… if the issue is made through the book-building process and the issuer undertakes to allot at least seventy-five percent of the net offer to QIBs…”
The Court found that the requirement under ICDR Regulations was complied with as the Offer Documents clearly reveal that the IPO is being made through the book-building process and the other requirement of 75% allotment to QIBs was also satisfied. Thus, the Court held that WeWork India was legally eligible to come out with an IPO.
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Adequacy of disclosures regarding legal proceedings and IPC charges
On the adequacy of disclosures regarding legal proceedings, the petitioners argued that DRHP and RHP hid serious criminal allegations, but the Court after detailed verification of disclosures, such as summary of outstanding litigation, litigation details in Section VI and risk disclosures in Section II, noted that the same were specifically pointed out and the DRHP and RHP mentioned and provided the details at several places.
The Court further stated that disclosure of ED proceedings against the promoter was clearly listed as Internal Risk No.1, i.e., “details of the proceedings initiated by the ED against the promoter… and the risks involved if there is any adverse outcome.” The Court held that disclosures were adequate and allowed investors to make informed decisions.
Though the petitioners claimed selective mention of IPC sections, but the Court emphasised that while the petitioners demanded more detail, the law requires disclosure of material facts, not a verbatim enumeration of every statutory section.
The Court asserted that as the full litigation context was disclosed, including existence of chargesheets, no material suppression existed. The Court held that the petitioners are asking for over-disclosure however the ICDR Regulations only demands adequacy, not exhaustiveness.
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Application of “fit and proper” criteria
While rejecting petitioners’ contentions that SEBI should apply the “fit and proper” test from Intermediaries Regulations, the Court bluntly held that “there is no merit in the submission… since no such requirements are prescribed in the ICDR Regulations.” The Court held that “ fit & proper” standards for intermediaries cannot be transposed onto company promoters in the context of IPO eligibility.
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Judicial restraint and SEBI’s regulatory domain
After careful perusal of the ICDR Regulations, the Court stated that the primary obligation of ensuring that Offer Documents contain “all material disclosures that are true and adequate so as to enable the public/investor to make an informed investment decision” lies with the Lead Managers.
The Court noted that since WeWork India had appointed Respondent 3—7 as BRLMs, “the primary responsibility in that regard would rest with them,” not with SEBI. The Court stated that the BRLMs were required to exercise due diligence and satisfy themselves about “the veracity and adequacy of the disclosures in the DRHP and RHP” and the SEBI’s role in the IPO process was “only supervisory in nature.”
The Court examined SEBI’s letter dated 08-07-2025 to one of the BRLMs, and stated that the SEBI had indeed exercised discretion and applied its mind to the Offer Documents and provided a detailed list of observations. While noting that the SEBI had complied with the legal requirements, including those prescribed under the ICDR Regulations, in connection with the WeWork India IPO and the Court asserted that they are “satisfied with the steps taken by SEBI in that regard.” Therefore, SEBI’s judicial intervention was unwarranted.
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Petitioner’s suppression of facts
The Court emphasised that a litigant is obligated to approach the Court with clean hands and concealment of material facts and documents is fatal. The Court reiterated the settled principle that
“a party who approaches the court with unclean hands or by withholding material documents and/or information is disentitled to any reliefs from the court.”
The Court accepted the sincerity of the counsel’s apology and stated that Court had “no hesitation in believing him”, but explicitly refused to extend such acceptance to the petitioner.
The Court held that “it was incumbent upon Vinay Bansal to have disclosed these two responses and impleaded the 5 BRLMs” in his petition and the failure to do so constituted deliberate suppression. The Court held that on the ground of concealment of material facts, alone the petition merited dismissal with costs.
Court’s Decision
The Court rejected the petitioners’ challenge and declined to grant relief and held that —
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WeWork India IPO was permissible under Regulation 6(2) of ICDR, which “entitles an issuer not satisfying Regulation 6(1) to make an IPO through the book-building process with 75% allotment to QIBs.”
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Disclosures regarding litigation were adequate and contained at several places in the RHP.
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The General Order is directory and illustrative, not mandatory.
The Court dismissed both petitions, however imposed a cost of Rs. 1 lakh, payable to the Maharashtra State Legal Services Authority within two weeks on the petitioner.
[Vinay Bansal v. SEBI, W.P. (L) No. 31301 of 2025, Decided on 01-12-2025]
*Judgment by Justice Farhan P. Dubash
Advocates who appeared in this case:
Mr. Navroz Seervai, Senior Advocate a/w Mr. Prasad Shenoy and Mr. Chinmay Babhulkar i/b Mr. Akash Menon, Counsel for the Petitioner
Mr. Shiraz Rustomjee, Senior Advocate a/w Mr. Prateek Pai, Mr. Ravishekhar Pandey and Mr. Ankit Ujjwal i/b Agama Law Associates, Counsel for the Respondent No. 1
r. Darius Khambata, Mr. Gaurav Joshi – Senior Advocates a/w Ms. Shruthi Sabharwal, Mr. Avinash Das, Mr. Anant Mishra, Mr. Ayan Tandon and Ms. Prachi Gupta i/b Shardul Amarchand Mangaldas & Co., Counsel for the Respondent No. 2
Mr. Janak Dwarkadas, Senior Advocate a/w Mr. Ravitej Chilumuri, Ms. Aishwarya Singh and Ms. Sanya Gandhi i/b Khaitan & Co., Counsel for the Respondent No. 3 and 7
Mr. Ravi Kadam, Senior Advocate a/w Mr. Ravitej Chilumuri, Ms. Aishwarya Singh and Ms. Sanya Gandhi i/b Khaitan & Co., Counsel for the Respondent No. 4, 5 and 6