A bench of justices Shantanu Kemkar and M S Karnik was hearing a public interest litigation (PIL) petition, seeking a judicial inquiry into the fire that had claimed 14 lives.
The Maharashtra government told the court that it had decided to set up a three-member judicial committee to probe the "genesis" of the incident.
Appearing for the state, senior advocate Vineet Naik submitted, in a sealed cover, names of several retired Bombay High Court judges, two architects from the high court panel and two retired secretaries from the urban development department.
The bench also directed the government to expand the committee's remit. "Do not merely probe the reason for the fire. Also suggest remedial measures that can be incorporated to prevent such incidents in the future," it said.
Appearing for the MCGM, advocate Anil Sakhre said the civic body had already set up its own panel to probe the incident and it was conducting fire safety audits across the city.
"We have seen the results of your audit. There are shortcomings and that is why incidents like these are happening," the court said.
A devastating fire had broken out in two adjoining rooftop restaurants -- Mojo's Bistro and 1 Above -- at the Kamala Mills compound in central Mumbai on December 29 last year.
The police have arrested 14 persons, including the owners of the two restaurants and MCGM officials, for alleged illegal alterations and violation of safety norms at the restaurants.
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