The Rahul Nagar, Prabuddha Nagar and Dyaneshwar Nagar Residents' Association, a co-operative housing society of 318-odd slumdwellers, had moved the HC. Of the 120 slumdwellers to be rehabilitated in the first phase of the scheme, 73 had already shifted to a transit camp at Mankhurd and Kurla. The others who refused to shift filed this petition.

They complained against the ineffectiveness of various housing schemes floated by different state governments in the last twenty years. They also expressed apprehension about the SSPL, especially the fear that like other schemes, this one too will prove a non-starter. According to the petitioners, the scheme might uproot them from their present houses without any alternateaccommodation and leave them on the streets in the name of rehabilitation.

The division bench of Justice B P Saraf and A Y Sakhare therefore directed the SSPL to file an affidavit detailing the financial viability of the scheme. The bench also decided to club the various other petitions relating to rehabilitation of slumdwellers. Incidentally, around this time the bench was hearing another public interest petition which drove the court's attention to the sub-human conditions in the transit camps and other cessed buildings of the Maharashtra Housing and Area Development Authority (MHADA). When MHADA assured SSPL of funds worth Rs 300 crore, the bench asked MHADA how it would raise such a huge amount when it was facing paucity of funds for building repair.

Meanwhile, the petition against SSPL came up before another bench of Justice Ashok Agarwal and S S Parkar after the Diwali vacations. The SSPL filed its affidavit stating that a sum of Rs 30 crore has been set aside for the rehabilitation of Rahul Nagar.Moreover, alternate accommodation (225 sq feet each) has been earmarked for the slumdwellers. SSPL also assured the rehabilitation process for these slumsdwellers will take two to three years. In view of the assurance given by SSPL, the court dismissed the petition.