Supreme Court to Hear Plea Against Smartworks IPO Amid Unusual Delay in SAT Order and Ongoing Investigations
New Delhi : The Supreme Court will tomorrow hear a petition filed by public policy group Infrastructure Watchdog challenging the clearance granted to Smartworks Coworking’s ₹583-crore IPO. The plea comes in the wake of the Securities Appellate Tribunal (SAT) dismissing the NGO’s appeal against the IPO on July 16—but the tribunal’s detailed judgment is yet to be uploaded to its official website, six days later, raising serious procedural concerns.
Infrastructure Watchdog had approached the SAT earlier this month, alleging that Smartworks is under active investigation by the Ministry of Corporate Affairs (MCA) and the Income Tax Department. The petition claimed that the company’s Draft Red Herring Prospectus (DRHP) failed to disclose crucial details about these ongoing probes. It further alleged that Smartworks, despite being registered as a Section 8 non-profit entity, had raised funds through questionable means, possibly involving benami transactions.
SAT dismissed the petition, stating orally that it found “no good reason” to stay the IPO. However, even after nearly a week, the tribunal’s written order is not available in the public domain. Legal observers have flagged this delay as highly irregular, particularly in a matter involving a live IPO and a pending Supreme Court challenge. Petitioners argue that the absence of the order is effectively stalling their ability to seek meaningful redress before the IPO process reaches its conclusion.
Despite the allegations and investigations, Smartworks received the go-ahead from SEBI to launch its public issue, which opened on July 10 and closed on July 14. The IPO was heavily oversubscribed—QIBs bid 24 times their quota, NIIs 22 times, and retail investors 3.5 times. The listing was initially expected on July 17, but with the matter now before the Supreme Court, the timeline could shift depending on the outcome of tomorrow’s hearing.
Questions are also being raised about SEBI’s role in granting clearance despite red flags. With the MCA reportedly examining whether Smartworks misused its Section 8 registration and the Income Tax Department probing its funding structure, critics argue that SEBI should have insisted on full disclosure before greenlighting the issue.
The Supreme Court is expected to hear arguments on whether SAT’s handling of the matter—particularly the absence of a published order—has undermined procedural fairness. If the court finds merit in the NGO’s concerns, it may order a temporary stay on the listing or seek further clarifications from SEBI and the company.
As of now, the Smartworks IPO remains in legal limbo. What was billed as a promising market debut for one of India’s largest co-working firms is now at the center of a growing regulatory and legal storm.
