The Bombay High Court yesterday (May 12) granted relief to Witty International School, Malad (Witty) in its case against its investor, Cerestra Infrastructure Trust (Cerestra). While the Court dismissed Cerestra’s petition against the school, it admitted the petition filed by Witty against Cerestra. The case pertains to petitions filed by the Hyderabad-based Cerestra Infrastructure Trust (estb.2015), that lists itself as an “edu-infra partners and institutionalised edu-infra sale and leaseback” company and Dr. Vinay Jain, promoter-director of the Mumbai-based Witty Group of Institutions which owns four K-12 schools. Both parties have alleged each other of ‘willful fraud’ and ‘criminal breach of trust’ with regards to an earlier agreement dated 2016.
The said 2016 agreement between Cerestra and Dr. Vinay Jain allowed Cerestra to acquire a 51 percent stake in VJTF Infraschool Services (Mumbai) Pvt. Ltd (VJTFI), the asset management company of Witty International School (Mumbai), for Rs.97 crore to be paid in two installments — Rs.47 crore on signing of the agreement and the remaining Rs.50 crore within one year. Subject to payment of the full amount, the Witty school management was committed to pay a fixed lease rental to VJTFI.
However, according to Witty management, while Cerestra paid Rs.47 crore upfront for purchase of its 51 percent stake in VJTFI, it failed to pay the remaining Rs.50 crore for over three years, a default which prompted it (Witty management) to terminate the agreement of sale of 51 percent equity of VJTFI to Cerestra on December 24, 2020. Cerestra, which has since then submitted that SEBI regulations prevents them from acquiring more than 25 percent stake in any Indian company, blamed the school for failing to make rental payments to VJTFI since April 2020.
Dismissing Cerestra’s petition, the Court said, Cerestra had no case against the school and neither did it have an explanation to the various undertakings issued by them to the school for investing a total sum of Rs 97 crore to acquire a 51 percent stake in VJTFI.
“Cerestra acquired 51 percent state in our real estate by giving us false promises and undertakings. They not only misrepresented the facts and deceitfully acquired controlling stake in our property with an intention to usurp our property but also maligned the reputation of our institution. However, Justice has prevailed and furthermore, the Court has also ordered Cerestra to bear the legal costs of Rs 10 lakh incurred by us,” said Dr. Vinay Jain, Managing Trustee, Witty International School.
The Bombay High Court has restrained Cerestra from acting against the interests of Dr. Vinay Jain in the company and the case will now be argued before a three-member arbitration panel. Meanwhile Cerestra has moved to the small causes court against the school.
Also read: Witty cancels deal with Cerestra owing to default in equity infusion
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