The court had last month directed the government to decide by today on an application filed by Wadia Trust which runs Bai Jerbai Wadia Children's Hospital.
Government lawyer G W Mattos told a division bench, headed by Chief Justice Mohit Shah, that permission cannot be given as the building which houses the hospital is still being renovated.
"The children's hospital is temporarily functioning from nearby Naoroji Wadia Maternity Hospital. The government officials have already conducted inspection of the building housing the children's hospital and have informed the Wadia Trust of the deficiencies. Once the (trust) meets with all the requisitions the permission to set up the centre will be given," Mattos said.
"The fresh application shall be filed within two weeks and the government shall conduct inspection and inform of any deficiencies and complete all necessary formalities within two weeks thereafter. Upon compliance of all requisitions, permission shall be given," the court said.
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According to the trust's proposal, which was sent to government in July 2014, the organ transplant centre would enable the hospital to perform 900 surgeries in year with a survival rate of 80 per cent, which will bring down the waiting list of patients in government-run hospitals.
The court has posted the matter for hearing on May 7.