The Option Deposit does not constitute trust money as it was not segregated as required by trust principles, establishing a debtor-creditor relationship under the Insolvency and Bankruptcy Code.

1. M/s Radius & Deserve Land Developers Private Limited (Radius Company/ the Applicant) is a company incorporated under the Companies Act, 1956, and is currently undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency & Bankruptcy Code, 2016 (Code). This application has been filed through its Resolution Professional (RP) of the Radius Company namely Aegis Resolution Services Private Limited primarily seeking return of the Option Deposit of Rs. 240.85 Crores.

2. Respondents

2.1 Respondent 1 is Radius & Deserve Builders LLP (Radius LLP/ Corporate Debtor) is also undergoing CIRP under the Code and is represented by its RP Mr. Jayesh Natvarlal Sanghrajka. It is an admitted position that the Applicant and Respondent No. 1 are related parties and controlled, interalia, by Mr. Sanjay Chhabria. Radius Company had entered into an Option Agreement dated 14.09.2015 with Radius LLP and had paid option deposit to Radius LLP under the said agreement which is sought to be refunded.

2.2 Respondent 2 is Chandak Realtors Private Limited (Chandak) in whose favour the the Slum Rehabilitation Authority had issued revised Letter of Intent dated 12.04.2023 for development of a land parcel in Kurla which was earlier being developed by the corporate debtor under, Letter of Intent dated 24.07.2013, but was terminated by the Slum Rehabilitation Authority on 20.09.2021. The limited prayer against R-2 is, to deposit any amount payable for reimbursement of expenses to the corporate debtor, in a separate bank account.

2.3 This application was filed in February 2024 while Chandak had submitted its Resolution Plan on 05.03.2024 which was approved by the CoC with 100% voting on 20.08.2024 and Chandak is now the Successful Resolution Applicant (Resolution Applicant) of the corporate debtor.

2.4 Respondent 3 is the Slum Rehabilitation Authority (SRA) and merely a proforma party as no prayers are sought against it.

3. Brief background of the case

3.1. On 14.09.2015, Radius Company and Radius LLP entered into an Option Agreement. As per the terms of the Option Agreement, Radius Company paid the Option Deposit of Rs. 240,85,00,000/- to Radius LLP. As per the Option Agreement, Radius Company had an option to purchase Floor Space Index (FSI) on the land parcel being developed by Radius LLP in Kurla (hereinafter referred to as ‘Radius LLP Property’) on such terms and conditions as set out in the Option Agreement. The option period was of 60 months ending on 14.09.2020. Clause 5.1 of the Option Agreement provided that if the option was not exercised by Radius Company within the Option Period, then the Option Deposit shall be refunded by Radius LLP to Radius Company within 15 days.

3.2. It is undisputed position that Radius Company did not exercise its option to purchase FSI, within the option period, and that Radius LLP did not refund the option deposit to Radius Company. It is also admitted that Radius Company, under the management of the suspended director, never demanded refund of the Option Deposit from Radius LLP.

3.3. Subsequently, Radius Company was admitted into CIRP vide order dated 03.05.2023 in CP(IB)/892/2022 (Radius Company Petition). The IRP of Radius Company addressed letters dated 01.06.20