The Bombay High Court dismissed two writ petitions challenging the initial public offering (IPO) of WeWork India Management Private Limited, holding that Securities and Exchange Board of India (SEBI) had exercised “due care and caution” and complied with all legal requirements under the relevant regulations before allowing the IPO to proceed. The petitions had contended that the offer documents — both the Draft Red Herring Prospectus (DRHP) and the final Red Herring Prospectus (RHP) — failed to adequately disclose serious criminal charges pending against the promoters, understated ongoing proceedings by enforcement agencies, and downplayed the risk that a conviction could trigger termination of the licensing agreement governing WeWork India’s use of the global “WeWork” brand.
The petitioners, Hemant Kulshrestha and Vinay Bansal, argued that the DRHP omitted allegations such as offences under the Indian Penal Code and the Prevention of Corruption Act, and that the company’s negative net worth and history of losses, combined with the fact that the IPO was structured entirely as an Offer for Sale — thereby providing no fresh capital — rendered the issue unsuitable and overly risky for investors. They claimed that SEBI’s inaction on their prior complaints regarding these lapses and failure to ensure complete disclosure violated regulatory norms and investor-protection principles.
In response, SEBI, WeWork India, and the book-running lead managers (BRLMs) maintained that the allegations had been sufficiently addressed: SEBI had directed the company to elevate the ongoing Enforcement Directorate proceedings to the first risk factor in the RHP; relevant criminal proceedings were disclosed; and the DRHP and RHP contained the required litigation disclosures and responses to the petitioners’ earlier complaints. The bench of Justices R I Chagla and Farhan P Dubash expressed satisfaction that SEBI had indeed complied with the disclosure norms required under the Issue of Capital and Disclosure Requirements Regulations, 2018 (ICDR Regulations). The Court observed that its role is supervisory, and courts must be slow to substitute their judgment for that of a regulator entrusted with technical expertise.
On the question of selective disclosure, the Court said that the RHP did clearly reveal that a chargesheet had been filed against the promoters under several criminal provisions, including 120B and 420 of the IPC, which would put any reasonable investor on notice that other related offences may also be pending. The Court found no evidence of gross or deliberate suppression, and noted that the risk of revocation of the brand‑licensing agreement upon a promoter conviction had been expressly disclosed. In light of these circumstances, the Court did not find merit in the petitioners’ claims of misleading or inadequate disclosures.
Dismissal of the petitions marked the end of the legal challenge against the IPO. The petition filed by Bansal was dismissed with a cost of ₹1 lakh, payable to the relevant legal services authority within a specified duration; the petition by Kulshrestha was dismissed without costs. The judgment thus upheld SEBI’s decision-making process and cleared the way for the continued listing and trading of WeWork India’s shares under the IPO.
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