The First Bench, comprising Chief Justice Sanjay Kishan Kaul and Justice M Sathyanarayanan, said dogs in the unit at Saidapet would be rehabilitated with the assistance of the Animal Welfare Board of India (AWBI).
The court's order came while disposing of two PILs of People for Ethical Treatment of Animals (PETA) India, Mumbai, and E Seshan on December 7.
It had earlier made it clear that the unit would be shutdown if it does not comply with the recommendations of the AWBI.
The AWBI carried out an inspection and found that the functioning of the unit was not in accordance "with the manner in which it has to be run. In fact, the unit is not even registered with the Animal Welfare Board of India, violating the rules."
The petitions sought a direction to Secretary, Animal Husbandry, Dairying and Fisheries Department to shut down the unit.
The petitioners further sought a direction to hand over the dogs to the petitioners "for sufficient treatment and care they desperately need before being adopted into loving 'forever' homes.
When the matter came up last week, the bench perused the inspection report of AWBI and its recommendations and directed that the unit be shutdown within two months of issue of the order.
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