Maintenance Controller reported non compliance with SOP and MEL procedures allowed an aircraft to fly in revenue service with known; inoperative passenger oxygen system components.

Narrative

Aircraft X had a check card that was deferred per procedures on Day 0 due to limited ground time. The work card; was to accomplish the operational test of the passenger oxygen system. On Day 1 I received a call stating that they had been assigned the work card and had numerous faults while performing the card which affected approximately 67 passenger seats as well as the overhead Flight Attendant crew rest and a couple of Flight Attendant jump seats. I informed the Maintenance Operations Manager of the issue and said that we have the option to maintenance ferry the aircraft to another maintenance facility or we could apply MEL 35-XX-XX and block off the affected seats that had failed the test of the oxygen system. The Maintenance Operations Manager said that they wanted them to continue to follow the fault isolation procedures and see if we could repair the system. I continued to work with the mechanics via phone during the duration of my shift and then turned it over to the night shift. The next morning I arrived at work and asked what the status of the troubleshooting was and was told they had isolated the fault. The decision was made by management to allow the station to defer and work the card because it still had time left to accomplish the card and let the aircraft continue in revenue service with known faults with the passenger oxygen system.