An agent who ran Coventry University's recruitment in India claims he was "commercially exploited" and left unpaid, while two university employees have been questioned by police over allegations that they stole from his office.
Coventry denies the claims made by Ram Beegala, whom it hired last August on a three-year contract to provide "consultancy services" and set up and manage a recruitment office in Chennai.
The row comes as UK universities grow ever keener to recruit non-European Union students, who pay higher fees than home and EU students. India is seen as a key market for recruits.
Under the deal it struck with Mr Beegala, Coventry paid him no basic salary or retainer, but instead made his remuneration reliant on success fees for recruitment above the university's "steady state" of 450 Indian students a year.
When Madeleine Atkins, Coventry's vice-chancellor, announced that the university was opening a Chennai office, she said it was "indebted to Ram Beegala".
In April 2010, Coventry served notice that it was terminating the deal in order to set up its own office. Two Indian staff, hired by Mr Beegala for the university, remained in its employment.
A stand-off developed when Mr Beegala objected. Student files and office equipment were left on the premises, which he had leased under his own name.
He said the office was then stripped bare by the two Coventry staff, who he claims removed office equipment, furniture and files and also changed the locks.
Coventry says that its employees did not gain unlawful access to the office, and that all the items removed belonged to the university.
After the agent made formal allegations of trespass and theft, the Coventry employees were asked to attend a police station to explain the university's position. The pair have filed anticipatory bail claims ahead of any potential charges.
According to Mr Beegala, Coventry refused to hand over the money it owed him for student recruitment - which he estimated at between £60,000 and £80,000.
However, the university said it did not owe Mr Beegala money as the number of Indian students recruited in 2010 was 421, meaning its threshold had not been breached.
In a legal notice sent to the university, Mr Beegala requests compensation of £300,000 for loss of past and future earnings.
He told Times Higher Education that the university commercially exploited him, and "wanted to use my services to enter into a difficult and complex recruitment market, which it could not have achieved directly".
Coventry says in a statement that it has "an excellent reputation for the way in which it conducts its international activities" and that the "allegations made by Ram Beegala have no basis in fact or in law".
It adds: "An international focus is essential ... however, it is not without its risks and the current challenges remind us that caution is required - especially around commercial arrangements as these may need to be terminated."