MUMBAI: The Bombay High Court has dismissed two writ petitions filed by Vinay Bansal and Hemant Kulshrestha that aimed to prevent WeWork India’s initial public offering (IPO), effectively ending their last-minute legal challenge.
A Division Bench consisting of Justice RI Chagla and Justice Farhan Parvez Dubash rejected the petitions and imposed a cost of Rs 1 lakh on Vinay Bansal, instructing him to deposit the amount with the Maharashtra State Legal Services Authority within two weeks.
The court reserved its decision on October 8 after the arguments were concluded and delivered the ruling orally today. A detailed written judgment is still pending.
The petitioners raised concerns about SEBI’s endorsement of the IPO, asserting that it carries significant risks that were inadequately disclosed or unclear.
They highlighted WeWork India’s financial losses, negative net worth, ongoing criminal cases involving its promoters, and noted that the IPO is entirely an offer-for-sale, describing this combination as creating an “unprecedented” risk for investors.
In defense of SEBI, Senior Counsel Shiraz Rustomjee stated that courts should respect a regulator’s technical expertise unless a decision is arbitrary or unconstitutional. He added that SEBI exercised thorough oversight, specifically mandating WeWork India to list the ongoing criminal proceedings as the primary risk in their prospectus.
Senior Counsels Darius Khambatta and Gaurav Joshi, representing WeWork India, argued that all necessary disclosures were made as required by the ICDR Regulations, which call for clear summaries instead of extensive details.
They also pointed out the timing of the petitions, indicating that the petitioners had ample time to evaluate the draft prospectus but chose to approach the court only at the last moment.
Senior Counsel Janak Dwarkadas, representing the lead merchant bankers, emphasized that a fully offer-for-sale arrangement complies with the Companies Act and ICDR Regulations. He noted that the bankers had adhered to all due diligence duties and that SEBI had reviewed and directed the inclusion of pertinent risk factors.
Data presented to the court demonstrated that the issue was oversubscribed, with interest from anchor investors and qualified institutional buyers, indicating that investors were making informed decisions based on the available disclosures. SEBI’s counsel added that due to the high volume of complaints received monthly, it’s unreasonable to provide detailed, reasoned orders for each case.
