New Delhi: The Supreme Court today heard an appeal filed by NGO Infrastructure Watchdog challenging the Securities Appellate Tribunal’s (SAT) refusal to stall the Initial Public Offering (IPO) of Smartworks Coworking Spaces Limited.
Appearing for the NGO, Senior Advocate Narender Hooda produced what he claimed was a letter from the Ministry of Corporate Affairs (MCA) to SEBI flagging ongoing investigations against the Sarda family, promoters of Smartworks.
Senior Advocate Gopal Subramanium, representing Smartworks, strongly disputed the authenticity of the document. He told the Bench that an RTI response from the MCA confirmed that no such communication had been sent to SEBI. He accused the NGO of misleading the Court with “fabricated material.”
A Bench comprising Justice P.S. Narasimha and Justice A.S. Chandurkar reacted sternly, “You cannot get away with simply apologising to the Court. We will examine the document, and if it is found to be false, prosecution may follow.”
The Court also directed SEBI to clarify whether all statutory requirements were duly complied with before granting clearance to Smartworks’ IPO.
The New Delhi–based NGO, registered under the Societies Registration Act, 1860, describes itself as a public interest group monitoring regulatory and corporate governance issues.
It had petitioned SEBI, alleging non-disclosures in Smartworks’ draft prospectus and sought to restrain the company from proceeding with its IPO.
The SAT, however, dismissed the plea on July 16, holding that Smartworks’ red herring prospectus and addenda had already disclosed the NGO’s complaints and company responses.
The Tribunal also found that internal income-tax reports cited by the NGO were “indicative and not exhaustive,” and investor participation in the IPO was decisive, with overall subscription reaching 13.45 times.
SAT further noted that the NGO’s maintainability as an “aggrieved person” under Section 15T of the SEBI Act was doubtful, and suggested the group may be acting at the behest of estranged Sarda family members.
Despite these findings, the NGO approached the Supreme Court, where the matter is now under scrutiny, with the apex court cautioning against misleading the Bench through questionable documents.
Smartworks was listed on July 17, debuting at a premium of 7% on both the BSE and NSE.
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