The building is a part of Rocky Hills Complex at Napean Sea Road which houses high court judges.
The division bench of Chief Justice Mohit Shah and Justice M S Sanklecha allowed the Maharashtra government to allot the flats subject to the court's final decision on a PIL alleging violation of Coastal Regulation Zone (CRZ) norms and other rules/laws in its construction.
In 2009, the HC admitted the PIL filed by New Shri Sagar Co-operative Housing Society and restrained the government from allotting flats, but did not stay the construction.
Government pleader D N Nalavade today said the building fell under a CRZ exception provision.
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The building was caught up in a controversy as the Maharashtra government went ahead with the construction despite high court stating in 2006 that it did not want the quarters of its judges.
However, in 2008, when more judges were appointed, Shekhar Naphade, senior counsel for the high court, informed the division bench headed by Justice J N Patel that additional 14 accommodations were required for the judges.