NEW DELHI/MUMBAI: India's top court on Tuesday said several banks had colluded with Amrapali Developers , one of India's largest real estate firms, in the misappropriation of loans meant for housing projects.
The Supreme Court criticised the lenders for failing to monitor the end use of loans to the company, one of several developers in India to hit financial trouble in recent years after a decade-long building boom.
More than 40,000 homebuyers are suing Amrapali in a long running legal battle over delays to projects, many of which have not yet been started even though customers have made payments.
“The authorities and bankers have violated the doctrine of public trust and their officials, unfortunately, acted in collusion with builders," a two-judge bench of India's Supreme Court said on Tuesday, referring to state development authorities.
The Bank of Baroda and Corporation Bank — Amrapali lenders criticised by the court — did not respond to requests for comment.
Amrapali declined to comment.
A court-ordered forensic audit of Amrapali released in May said the firm defrauded its customers out of around 35 billion rupees ($507.88 million) by diverting home buyers' funds. It also said that loans taken by banks had also been diverted by the promoters to increase their own personal wealth. Amrapali has not commented on the audit.
A government-run construction company has been delegated with completing the unfinished projects of the group.