A bench headed by Justice Abhay Oka refused to grant a stay on the notification of the government which was to come into effect from August 1.
The court said that at this stage it cannot grant a stay on the notification unless it heard all the parties.
The bench asked the government to file a reply and kept the matter for arguments on August 8.
The PIL, filed by a group of local political leaders and social activists, demanded to "quash and set aside the said political decision of the government."
"The decision to have proposed headquarters at Palghar is discriminatory and violative of fundamental rights, guaranteed under Articles 14 and 19 of the Constitution for tribal and backward class people of the region.
"Their decision is arbitrary, malafide, contrary to public opinion and views of all the five panchayat samitis, MLAs and MPs of area," the PIL alleged.
"The decision is also violative of the directive principles of the state policy and the object of Articles 243 to 243(o) of the Constitution of India are thereby defeated. The decision to have headquarters at Palghar is violative of constitutional rights of tribal and backward class people and the other poor people of the region," it said.
