Page 18 - EW April 2021

Education News

monitors of India’s higher education agreement and the remain-
system these high-profile resigna- ing Rs.50 crore within one
tions from this torch-bearer private year.
liberal arts university are likely to Under the terms of the
make the growing tribe of ‘give back’ agreement, subject to pay-
philanthropists think twice about ment of the full amount, the
promoting private universities. school management com-
Nevertheless, this controversy mitted to pay a fixed lease
has highlighted several important rental to VJTFI. According
university governance issues. One to Jain, Cerestra paid Rs.47
of them is for clear definition of crore upfront for purchase
the roles of promoter-trustees, vice of its 51 percent stake in
chancellor and institutional manage- VJTFI. However, it failed
ment. and neglected to pay the
Autar Nehru (Delhi) Dr. Jain: cheating complaint remaining Rs.50 crore for
over three years, a default
MAHARASHTRA devised several strategies to enable which prompted Jain to terminate the
Witty-Cerestra fallout private school promoters to earn sur- agreement of sale of 51 percent equity
pluses for investment in institutional
of VJTFI to Cerestra on December 24,
upgradation and promotion of new 2020.
HE YEAR-LONG SHUTDOWN OF ALL greenfield schools. Subsequently, we learned Cerestra
education institutions coun- Typically, an asset management “had not taken the required per-
Ttrywide to protect children and for-profit limited liability company is mission to enter into the 2016 agree-
youth from the Covid-19 pandemic registered by a private school promot- ment from SEBI (Security Exchange
has thrown the finances of the over- er. The physical assets — land, build- Board of India). It had cheated, mis-
whelming majority of the country’s ings, equipment — of a given school/ represented and given wrong repre-
450,000 private schools into disarray. college, are sold to the asset manage- sentations and warranties to us and
Even in upscale private schools, cash ment company and leased back to the wrongly acquired 51 percent stake in
flows have been adversely affected be- school which (from fees paid by stu- VJTFI,” says Jain. Therefore on March
cause a minority of parents who suf- dents) pays the company an annual/ 31, Jain repudiated the original agree-
fered salary cuts or deferment or even monthly lease rent. Payment of rent ment with Cerestra and formally regis-
job losses are unable to pay children’s for leased premises doesn’t fall within tered a cheating complaint with SEBI.
school fees. the definition of commercial activity On the other hand, Cerestra claims
This black swan event i.e, the pan- for schools. that while Witty had collected fees
demic, has been made worse for the However, the necessity to negotiate from the students of the school it
country’s private schools by the Cen- and devise complex contracts to get failed to make rental payments to
tral government’s failure to classify around legislation and case law which VJTFI since April 2020, and it was in
them as MSMEs (micro small and forbids “commercialisation of educa- “wilful default.” Moreover, Cerestra
medium enterprises) entitled to sev- tion” has generated its own problems. (which declined to speak with Educa-
eral pandemic reliefs (interest pay- In 2016, the Hyderabad-based tionWorld) has submitted that SEBI
ment moratoria, soft loans etc), and Cerestra Infrastructure Trust regulations prevented them from ac-
state governments recklessly slashing (estb.2015) which describes itself as quiring more than 25 percent stake
school fees and imposing fee ceilings. an “edu-infra partners and institution- in any Indian company and pleaded
The financial difficulties of private alised edu-infra sale and leaseback” force majeure.
school promoters/managements have company, entered into an agreement Since then, the media has been
created M&A (merger and acquisition) with Dr. Vinay Jain, promoter- flooded with press releases from both
opportunities for well-funded offshore director of the Mumbai-based Witty parties, alleging fraud, criminal breach
education corporates and REITs (real Group of Institutions which owns four of trust and cheating. On April 1, an
estate investment trusts). K-12 schools, to acquire a 51 percent arbitration petition was filed in the
To get around clumsy laws replete stake in VJTF Infraschool Services Bombay high court by both the par-
with loopsholes, drafted by govern- (Mumbai) Pvt. Ltd (VJTFI), the as- ties and hearing is set to commence
ment bureaucrats prohibiting for- set management company of Witty on April 9.
profit corporates and entrepreneurs International School (Mumbai), for There the matter rests. For the mo-
from promoting or owning educa- Rs.97 crore to be paid in two install- ment.
tion institutions, astute lawyers have ments — Rs.47 crore on signing of the Dipta Joshi (Mumbai)

20 EDUCATIONWORLD APRIL 2021