Supreme Court Dismisses NGO Plea in Smartworks IPO, Warns Against Fake Documents

The Supreme Court on Monday dismissed an appeal filed by NGO Infrastructure Watchdog against the Securities and Exchange Board of India (SEBI) in connection with the ₹560 crore IPO of Smartworks Coworking Spaces Limited.

A Bench of Justices P.S. Narasimha and A.S. Chandurkar came down heavily on the NGO for producing a false document, warning that such actions could invite criminal prosecution. While the Court refrained from taking punitive action this time, it issued a strong caution that any future attempt to mislead would attract strict consequences.

The case arose from an earlier Securities Appellate Tribunal (SAT) order of July 16, which had rejected the NGO’s plea to halt Smartworks’ IPO. During arguments, the NGO’s counsel presented a supposed letter from the Ministry of Corporate Affairs (MCA) to SEBI, claiming investigations were pending against the promoters, the Sarda family. However, senior counsel for the respondents pointed out that an RTI query with the MCA confirmed no such letter existed.

The Court expressed serious disapproval of both the NGO and its lawyers, stressing that advocates must act as the first barrier against false material being placed before courts. Justice Narasimha directly questioned the lawyers on how they allowed such a document to be filed.

The IPO, which initially struggled with only 0.83% subscription on Day 1, saw a surge after an addendum disclosed the NGO’s complaints. Eventually, it closed at 13.45 times oversubscription, including 24.4 times in the Qualified Institutional Buyers (QIB) category.

SAT had already observed that Smartworks’ disclosures were adequate and that investors had made informed decisions. It also noted that income-tax reports relied on by the NGO were merely “indicative” and had not resulted in statutory notices or demands.

While the Supreme Court has now dismissed the appeal, it underlined that presenting false or fabricated material in judicial proceedings is a grave matter and cannot be condoned.