Considering a Public Interest Litigation (PIL) seeking registration of an FIR against Chandy, the bench of Justices P N Raveendran and Devan Ramachandran asked whether there is any special consideration given to the minister.
The Court observed that if it was an ordinary citizen, he would have been evicted using bulldozers.
All are equal before law, the court said.
The authenticity of documents produced by the minister on the issue need to be examined before filing a report, it said.
The government also pleaded that no special consideration was given to Chandy.
The PIL filed sought a court directive to register an FIR for alleged violation of provisions of Kerala Land Conservancy Act and Kerala Conservation of Paddy Land and Wetland Act by Water World Tourism company which owns the Lake Palace Resort in Alappuzha.
Chandy has been facing allegations for allegedly filling paddy fields for the construction of a parking space and encroaching Marthandam backwaters.
Stepping up its demand for Chandy's resignation, opposition alleged there was "mystery" behind Chief Minister Pinarayi Vijayan protecting the transport minister even after the revenue minister had accepted the district collector's report that "found serious violation of rules".
A businessman-turned-politician, Chandy joined the ministry in April following the resignation of A K Saseendran over allegations of sexual misconduct.
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