A bench headed by Chief Justice Manjula Chellur dismissed the appeal filed by Adarsh Society against the order of a single judge of the high court rejecting the society's petition.
The society had contended that the officer who signed the suit on behalf of the Defence Ministry was not authorised to do so. The ministry denied this contention.
The Defence Ministry filed the suit in the Bombay High Court in December 2012, two years after it came to light that the 31-storey Adarsh building was constructed in violation of several civic and environmental norms.
The ministry alleged that the building was constructed "illegally and unlawfully".
More From This Section
The land was transferred to the Adarsh Society through fraud, collusion and connivance on the part of the society members, ministers and bureaucrats of Maharashtra government, it said.
The society opposed the suit saying that only the Defence Estate Officer can file such suits. It relied on a government order issued in 1930, during the British rule, and 'military land manual' to make this claim.
The High Court had ordered demolition of the Adarsh building after holding that it was constructed illegally.