The court also directed the government to take an early decision to start a mental hospital in the district.
Hearing the public interest litigation (PIL), the division bench of Chief Justice Yatindra Singh and Justice R S Sharma sought the government's reply on its decision to establish the state university in a place which was earmarked for the hospital.
The government has also been told to take early decision in the matter, according to petitioner's lawyer Narendra Chandel.
During the hearing yesterday, the state government's lawyer argued that state university had recently been opened and sought time to reply about establishing a mental hospital.
The next hearing in the case would take place after winter holidays.
A mental hospital building was erected on the sprawling 61 acre of land at Sendri village, about 15 kms away from the Bilaspur district headquarters.
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Around 137 posts of doctors and specialists were sanctioned for the hospital but suddenly the state government decided to dedicate it for the state university.
Later, Akhil Bharatiya Manavadhikar Nigrani Samiti president Sunita Tikariya filed a PIL saying that a mental hospital was necessary for the mentally challenged patients in Bilaspur.