The decision came two years after the apex court said it will look into the state government's plea for laying down uniform guidelines for dealing with cases of encounter killings.
"We dismiss the petition as there is no ground for this court to interfere," the bench said, while observing that "the matter involves federal power and this is a state subject."
"Who will agree on uniform policy. Every state has its own peculiarity," the bench said and noted that many states are not agreeable to the suggestion.
Gujarat government's counsel submitted that notices were issued two years ago in the case which has been pending for further orders.
Gujarat government in 2012 had filed the PIL for independent probe into all cases of alleged killings by police in past 10 years in the country and had sought direction to deal with all cases of fake encounters in a uniform manner.
Gujarat government alleged that some vested interest groups are selectively targeting its police force over the encounter killings.
The petition had said the Gujarat government was seeking "an appropriate direction from this court to deal with all cases of fake encounters in the country in uniform manner which would ensure that while human rights are protected, police force of terrorism-prone Gujarat is not left demoralised on the ground that some vested interest groups are selectively targeting the police force of only one state."
The petition had sought a direction to all state governments and Union Territories to evolve and formulate a uniform nation-wide policy providing for an independent agency like "monitoring authority/special task force" created by the Gujarat government to probe into all cases of alleged fake encounters.