Kerala High Court Refuses to Halt Learnfluence IPO

The Kerala High Court on Thursday declined to stay the proposed Initial Public Offering (IPO) of Learnfluence Education Limited, the company behind the "Lakshya" coaching platform. Justice Harishankar V. Menon held that the former promoter challenging the issue must approach the Securities Appellate Tribunal (SAT) to contest the approval granted by the Securities and Exchange Board of India (SEBI).

The decision follows a writ petition filed by Adheesh Damodaran, an erstwhile promoter and co-founder of Lakshya CA Campus. Damodaran had sought to restrain the company from proceeding with its public issue, alleging large-scale fraud, forgery, and the manipulation of shareholding structures.

Allegations of Fraud and Share Manipulation

In his petition, Damodaran contended that the company was proceeding with an IPO based on disputed records. He alleged that his shareholding in Learnfluence Education had been systematically diluted—from 50% to approximately 1.54%—through the fabrication of board resolutions and unauthorized share transfers. The petitioner further argued that the IPO was a "colourable exercise of power" intended to legitimize past illegalities.

The petitioner also relied on a communication from the Assistant Commissioner of Police, District Crime Branch, Kochi, to suggest that an ongoing police investigation supported his claims of fraudulent activity. Counsel for the petitioner argued that allowing the IPO to proceed would shift the risk of these irregularities onto the unsuspecting public.

Statutory Remedy Before SAT

The company and its Managing Director vigorously opposed the plea, highlighting that SEBI had already issued an observation letter on March 11, 2026, granting final approval for the IPO. They argued that under Section 15T of the SEBI Act, any challenge to a SEBI order must be pursued before the Securities Appellate Tribunal.

During the proceedings, the counsel for SEBI produced the March 11 order, which had previously been unavailable to the petitioner. Upon reviewing the order and the statutory framework, the High Court observed that the appellate remedy before the SAT was both available and appropriate.

"I am of the opinion that it is for the petitioner to challenge the order dated 11-3-2026 in accordance with law," the court noted. Consequently, the High Court declined to interfere with the IPO process, leaving it open for Damodaran to "work out his remedies" through the designated statutory mechanism.

Quote Section

"According to the court’s observation, since the SEBI order is appealable under Section 15T of the SEBI Act, the challenge to the approval granted for the IPO must be pursued through the statutory mechanism provided for under the law."

Why It Matters

The court’s refusal to stay the IPO provides a significant green light for Learnfluence Education to proceed with its capital-raising plans, which include a fresh issue of ₹246 crore and an Offer for Sale (OFS). For investors, the ruling underscores the primacy of the Securities Appellate Tribunal in handling disputes related to market regulator decisions.

Key Facts at a Glance

• Company: Learnfluence Education Limited (operating the Lakshya coaching brand).

• IPO Structure: Fresh issue of ₹246 crore and an OFS of up to 40 lakh shares.

• Legal Conflict: Former promoter Adheesh Damodaran challenged the IPO, citing alleged forgery and fraud in share transfers.

• Court Ruling: Kerala High Court directed the petitioner to approach the Securities Appellate Tribunal (SAT) to contest the SEBI approval.

FAQ

1. Why did the Kerala High Court refuse to stay the IPO?

The court held that there is an alternative statutory remedy available under the SEBI Act, which allows parties to challenge SEBI orders before the Securities Appellate Tribunal (SAT).

2. What is Learnfluence Education?

Learnfluence Education is a Kerala-based ed-tech company that operates the "Lakshya" brand, providing coaching for commerce and finance professional courses like CA, ACCA, and CMA.

3. Will the IPO continue as planned?

With the court declining to interfere, the company is free to proceed with its IPO plans, subject to market conditions and standard regulatory timelines.

Source: LiveLaw, NSE India, SEBI