In the video, patients are seen sharing beds, being treated on the floor and even sharing oxygen cylinders pointing to the failure of the administration to treat the patients.
These conditions come to light when the World Health Organisation (WHO) and the government has constantly stressed on maintaining social distancing.
The hospital has seen a large number of COVID-19 patients due to its close proximity to Dharavi, Asia's biggest slum.
Doctors at the hospital claim that overcrowding has long been a problem at the hospital, but with the coronavirus crisis, it has become even worse.
This is not the first time that the shoddy conditions at the Sion hospital have come to light. A video pointing at serious medical negligence in early May shot inside a ward at the municipality-run Sion hospital in Mumbai that showed dead bodies wrapped in black plastic bags lying next to patients who are being treated for COVID-19.
The video was widely shared on social media on Wednesday.
"The bodies were there just for a short time – 15 or 30 minutes," Dr Daksha Shah, the spokesperson for the Brihanmumbai Municipal Corporation health department said. "The video must have been taken at that time. There is always a transit period before bodies are moved and they were immediately afterwards."
The BMC also said it has set up a committee to investigate the video and will submit its report in next 24 hours.