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The case pertains to death of seven persons in police firing inside the mosque in south Mumbai during the 1992-93 communal riots.
Farooq Mhapkar, a survivor of the firing, has moved the high court, seeking a CBI inquiry, the Maharashtra government is agreeable to this, but the CBI is not willing to take up the case.
"Why the agency is running off from the case? In other cases you rush to investigate...Here seven persons have died but you are aloof," said division bench of Justices F I Rebello and Ashutosh Kumbhakoni.
The state government issued a notification last year, handing over the case to CBI. But the agency told the high court that its hands were already full, and it cannot investigate a 15-year-old case in which special task force had already given the police a clean chit.
The Shrikrishna Commission that probed the 1993 riots had blamed police sub-inspector Nikhil Kapse's team for opening fire without any provocation, but a departmental enquiry found that police were not at fault.
On the other hand, police have filed a case of rioting against Mhapkar.
The court said that it would examine whether the CBI can refuse to take over a case despite a request from the state government. The hearing has been adjourned till October 7.