A bench of justices Vasanti Naik and Riyaz Chagla also directed the civic body to maintain status quo at the site and refrain from taking any further coercive action.
The occupants of the slum, where nearly 300 shanties were gutted in a fire last week during the demolition drive, have also demanded that they be rehabilitated by the BMC.
The BMC had last week carried out an anti-encroachment drive along the water pipelines in the city, claiming it was in compliance with a previous order of the high court.
During the demolition drive, a fire broke out there engulfing around 300 shanties. The authorities are yet to determine the source or cause of the fire.
The occupants of these shanties have now approached the high court claiming that the BMC failed to give them the mandatory 48-hour notice before demolition.
They have also said that since they have been evicted by the civic body, they can't be left homeless and, thus, they must also be rehabilitated by the corporation.
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