"There can be views and views and opinions and opinions on the issue, but they have to be sorted out only by Parliament because privatization as a fundamental concept could primarily be examined only by Parliament," the judgment stated.
Also cleared were charges of favoritism leveled against the Ministry of Communications and Minister Sukh Ram.
The minister was accused of unduly favoring the consortium of New Delhi-based Himachal Futuristic Communications, Thailand's Shinwarta and Israeli government-run Bezeq in the awarding of licenses.
"There is no allegation, not even a whisper of mala fide against the ministry and the minister or any member of the tender evaluation committee," the court said.
With all roadblocks clear, the government will now go ahead with one of its last and largest acts of economic reform before the nation's general elections this spring.
Licenses for five regions will be awarded and bids will be called in once again for 13 regions that received bids below expectation.
Investments of $3.7 billion have already been received for cellular services, where privatization didn't attract as much controversy.
Mr. Ram now expects nearly $6.6 billion to flow in with all decks cleared for basic telecom services.
India has a mere 10.6 million phones lines for its population of 937 million, or about one phone per 100.
International telephony will remain a state monopoly.
"This is a clean chit to the government, victory to the ministry and the policies of the Prime Minister. If you want, you can give a small credit to me," Mr. Ram told reporters. The minister had resisted pressure from the opposition in Parliament to resign.