Highlighting the need to monitor the use of funds by the Centre, the apex court sought details of the expenditure and observed that it seemed that "money has been wasted".
"On what basis have you released 1,000 crore? Tell us how many shelters have you made and on what basis?," the social justice bench of justices Madan B Lokur and U U Lalit said.
"I don't know whether you have been to a shelter home or not. But when I was working as the Delhi High Court judge, homeless people said they don't want to go in the shelter. These shelters are usless, even the homeless person doesn't want to live inside them," Justices Madan B Lokur said.
Additional Solicitor General Pinky Anand told the bench that efforts were on to make the shelters liveable and the government was taking the matter with utmost "seriousness".
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Bhushan also said the basis on which shelters would be provided should also be indicated before the proposals are sanctioned.
"They always say that they don't have land for construction of shelter homes. They have land for malls, five star hotels, shopping complexes but they don't have land for homeless," he said.
Earlier, the Centre had said that 27 states, including Union Territories, have set up the executive committee in terms of NULM for the purposes of permanent housing structures in 790 urban cities.
The ministry had also stated that it would regularly monitor the setting up permanent housing structures and the states and UTs would be asked to give monthly reports.