The Bombay High Court directed that the Adarsh Co-operative Housing Society be demolished.
The Bombay High Court said that the Adarsh Housing Society is an illegal apartment building in Mumbai that became a symbol of political corruption, must be demolished.
The court also ordered the State government and Union of India to consider initiating appropriate legal action against the bureaucrats, ministers and politicians.
Adarsh is a 31-story building in Colaba in south Mumbai whose apartments were intended for war veterans but were grabbed by politicians, defence officers and bureaucrats.
Congress' Ashok Chavan was forced to quit as Chief Minister in 2010 after it was revealed that three of his relatives had also been given apartments in the building.
In 2013, a judicial commission found that 25 of the 102 members in the Adarsh society were ineligible and there were 22 cases of flats being bought on proxies.
The inquiry report also said Mr Chavan and other bureaucrats gave permissions and clearances to the builders as a quid pro quo.