While directing the demolition, a bench of Acting Chief Justice Gita Mittal and Justice Rekha Palli said no illegal construction in the city will be spared.
"Law is same for everyone, as to whoever is before us. It has to be complied. Delhi's Master Plan has notified everything whether its a graveyard, ground or houses to be built. So it has to be strictly abided by every citizen of Delhi," the bench said.
It said that old structures will be preserved but only those which have complied the law, while the remaining ones will have to go. "This court will not allow anyone to take law in their hands," the bench added.
The NGO said the shelter houses 50-60 children and around 60 women, who were left homeless after the demolition carried out by the authorities in pursuance to a high court order.
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The court refused to stay the demolition and directed the authorities to ensure that all the homeless are accommodated in another shelter home located in the vicinity.
It said "everyone who is in Delhi should have a roof over their heads. You cannot leave anyone on road."
The court had refused to grant relief to a man against an anti-encroachment drive in parks of the national capital, observing that "squatters" cannot be allowed to stay inside.
The high court had last month issued directions to the authorities to remove encroachments inside and around the 12.8-acre historic park.