The BMC earlier told the high court that it had all the necessary approvals for the project.
The Bombay High Court on Tuesday quashed the Coastal Regulation Zone (CRZ) clearances granted to the city civic body's ambitious Rs 14,000-crore coastal road project.
The court's ruling means the Brihanmumbai Municipal Corporation (BMC) cannot continue work on the 29.2 km-long project, proposed to connect Marine Drive area in south Mumbai to suburban Borivali in north Mumbai.
A division bench of Chief Justice Pradeep Nandrajog and Justice N M Jamdar quashed the Coastal Regulation Zone clearances while allowing a bunch of petitions filed by activists, residents and fishermen from the city challenging the project.
"We are quashing the Coastal Regulation Zone clearances granted to the project. We have held that the environment clearance is required for the project," the bench said.
BMC's counsel Darius Khambata sought a stay of the order to appeal in the Supreme Court.
The request was, however, refused by the high court.
In April, the high court prohibited the BMC from carrying out any further work on the project following which the corporation appealed in the Supreme Court.
In May, the apex court permitted the corporation to carry out the existing work, but prohibited it from doing any new work.
The apex court then directed the high court to take up the petitions for final hearing.
The petitioners challenged the reclamation and construction work for the project on the primary ground that it will result in damage to the coastline and destroy major marine life along the coast and livelihood of the fishermen.
They claimed that the coastal road project will irreversibly damage the coastal ecosystem and deprive the fishing community in the city of its source of livelihood.
The BMC earlier told the high court that it had all the necessary approvals for the project.
Khambata argued that the coastal road project was trying to address the issue of traffic congestion in Mumbai.
The project, proposed to connect south Mumbai with north western suburbs of the metropolis, was one of the flagship infrastructure schemes of the BJP-led Maharashtra government.