Hearing a petition, a division bench of Chief Justice Mohit Shah and Justice B P Colabawala said "if the government does not decide on the application by then (March 16), the Principal Secretary of the Department of Medical Education and Research will have to personally be present in court".
The hospital had sent a proposal to the state government on July 31, 2014, saying that if the transplant centre was approved it would be one of its kind in the world.
The hospital filed an affidavit informing the court that work on repairing, reconstructing and maintaining the hospital building has begun and would be completed by March 31, 2016 and Rs 27.9 crore has been earmarked for repairs.
The hospital received several awards and once the new building is ready it would be able to house 150 beds in its Neonatal Intensive Care Unit and 24 beds in the Paediatric Intensive Care Unit, the affidavit said.
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The municipal corporation and Wadia Trust have reached an agreement to take equal financial responsibility to run the hospital.