Sharma and several other policemen, were accused of murdering one Ramnarayan Gupta alias Lakhan Bhaiyya in a fake encounter in November 2006.
A police team allegedly led by Sharma picked up Gupta along with his friend Anil Bheda from neighbouring Vashi on the suspicion that he was a member of Rajan gang. Prosecution claimed that Gupta was killed in a "fake" encounter near Nana Nani Park in suburban Versova in western Mumbai on the same evening.
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On July 12 this year, the sessions court had acquitted Sharma, observing that there is no direct or circumstantial evidence to show his involvement in the case.
According to the sessions court, the prosecution evidence against Sharma was "weak" to come to the conclusion that he had led the police team.
The lower court had convicted 21 other accused, including 13 police officials, and sentenced them to life imprisonment on charges of murder.
On August 7, Gupta's advocate brother Ramprasad Gupta approached the High Court challenging Sharma's acquittal.
A division bench of Justices P V Hardas and P N Deshmukh had then sought to know if the state government would also file an appeal against the acquittal.
On October 28, additional public prosecutor Hitendra Dedhia informed the court that a draft of their appeal was ready but is pending approval from the Home ministry. Following this, the court adjourned Gupta's appeal till November 26.
On November 16, the state government filed its appeal seeking to challenge the acquittal.
The convicted accused had also approached the High court earlier challenging their conviction.