In February 1992, when he had finished almost ten years of service, he was called by the Government of Kerala, to head the University of Kerala as its Vice-Chancellor for a full term of four years. He took charge but in about six months, the Communist Party of India (Marxist) gave a petition to the Chancellor of the Universities in Kerala stating that Vil’anilam had obtained a professorship in 1982 on the basis of a false certificate and that he was not qualified to head a university! (Nobody listened to the query why an appointment done ten years previously by a statutorily constituted recruitment committee of the University, was not questioned until Vil’anilam became the Vice-Chancellor!).The leader of the Marxists was misled by some vested interests who were angling for the vice-chancellorship, a position highly coveted and prestigious in Kerala/India. The opponents also got bad publicity for Vil’anilam through some newspapers that were on the side of the people who were aiming to become Vice-Chancellor. The Marxist Party goaded its students’ wing to organize agitations in all the affiliated colleges. The Vice-Chancellor was physically prevented from entering the University; and his house, car and other personal property were attacked. There were threats posted on the front door of his house and his life was in danger. But Vil'anilam stood firm. In his eyes, he had not done anything wrong. He stood his ground. Family and friends gave moral support, and the Government of Kerala gave protection, though belatedly, to his house where the Vice-Chancellor conducted the business of the University, the meetings of the various bodies of the University including the Syndicate. This situation continued for months. The agitators approached the Honourable High Court of Kerala with a "Quo Warranto" petition, but were disappointed when the Court ruled that Dr. Vil'anilam had the right to continue as the Vice-Chancellor. An Enquiry Committee appointed by the Government of Kerala also found no merit in the opposition's demand for his resignation. Finally, the agitators withdrew their activities after being made aware of their mistake by well-meaning friends of the University and their own leadership. However, much damage was done to the cause of higher education in Kerala, and to public buildings and transport vehicles. But despite all his personal problems during this dark period in the history of the university and in his own life, Dr.Vil’anilam kept his faith in the goodness of human nature. The trials he had undergone during his life made him realize that truth would triumph in the end. The biblical saying, “You shall know the truth and the truth shall set you free” guided him throughout this ordeal which the media characterized as“The Vil’anilam Problem”! Light-heartedly, Vil’anilam always maintained that it was not his problem at all!! Dr. Vil’anilam was the first VC of any affiliating university in India to introduce the flexible Credit and Semester System (CSS) in higher education, which he maintained, would empower both students and faculty. It would give the teachers the freedom to innovate; it would give the students the freedom and flexibility to choose courses of their own liking; and it would modernize higher education In the long run, it would be beneficial to the nation. Subsequent Vice-Chancellors supported the new System and it is being extended to the colleges now.