Diversion of funds by builders a "malady", want to stop this "nonsense": SC

The Supreme Court today said diversion of funds collected from investors by real estate developers was a "malady" and it wants to stop this "nonsense" once and for all.

The apex court observed that if builders were diverting money invested by a person in a particular housing or commercial project to complete other projects, it, prima facie, amounted to misappropriation and criminal breach of trust.

A bench comprising justices Arun Mishra and U U Lalit observed this while it was hearing a matter related to embattled real estate major Amrapali Group.

The bench wondered as to how Rs 2,765 crore fund was allegedly diverted by the Amrapali Group for carrying out works in its other projects.

"How can they (chartered accountants) allow siphoning of money like this," the bench said, adding "money given by the investor to complete a particular project can not be used for other projects as it amounts to criminal misappropriation."
Referring to the issue of diversion of funds, the bench told the counsel appearing for the Amrapali Group, "Stand on your legs and not on the shoulder of investors."