It also warned that the government officials who were dealing with these cases should be sent to jail.
"Is there nobody who will come and say that he follows the law? Are we only protecting the law breakers? Where are the law abiding citizens," the court said expressing anguish over encroachments in North Delhi's Timarpur area.
"Is this how you (government) treat public land? It is a very serious matter. Can we allow public land to go like this. Its taxpayers money which goes into these lands.
During the hearing, the court said the government officials dealing with these cases should be sent to jail as it was a criminal offence.
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It "pains the judicial conscience ... There is no concern for public property worth crores of rupees," it said.
The court was hearing a petition seeking direction to the Centre and Delhi Government to remove encroachment on a land of 30,000 square yards, now popularly known as Sanjay Basti in Timarpur.
The bench directed that the matter be placed before the secretary of Ministry of Urban Development who shall look into it and file a report and listed the matter for December 6.
The plea said that initially, some quarters were built by the central government for class IV employees which were declared unsafe in 1978-80 and directed to be demolished by the Central Public Works Department (CPWD).
It alleged that the demolition work was given to a private builder which demolished parts of the flats and left the remaining flats, allowing them to be occupied by encroachers.
The court also said the authorities have failed to disclose what action has been taken against the builder who was assigned the work of demolition and against the government officials.