It was in the sense of being correct and upright. And the 'lam' is for the emphasis of the negation. And 'with injustice' is a state of the doer. The meaning is:

And it is impossible in wisdom for Allah to destroy the towns unjustly while their people are righteous. This is to glorify His essence from injustice, and to indicate that the destruction of the righteous is an injustice. It was said: injustice is associating partners with Allah, and its meaning is that He does not destroy the towns because of the polytheism of their people while they are righteous, engaging in the truth among themselves and not adding to their polytheism any other corruption.