The apex court's order delivered a blow to the Samajwadi Party, which wanted to field Dutt from Uttar Pradesh capital Lucknow, much to the chagrin of the Congress for the actor's father, the late Sunil Dutt was associated with the party for a long time. His sister Priya is a Congress MP from Mumbai.
While the Samajwadi Party was stunned, Dutt put up a brave face saying he respected the court's decision but he would not leave Lucknow.
"I respect the decision of the honourable court. I am a law-abiding citizen and I really appreciate that the honourable court absolved me of TADA (Terrorist and Disruptive Activities Act) charges, " Dutt told reporters in Lucknow.
He, however, added: "I am not going to leave Lucknow. Lucknow is my home whether I fight this election or not. This is my father's place and I owe a lot to Lucknow. I am not going to leave Lucknow no matter what happens."
Asked if his wife Manyata would be fielded as his party's general secretary Amar Singh had stated earlier, Dutt was non-committal. "This decision would be taken by (Samajwadi Party leaders) Mulayam Singhji and Amar Singhji. It's my duty that I stand besides them lifelong, " he said.
"Whosoever will be the new (Samajwadi Party) candidate will be my candidate. This is my seat and will remain forever, " the popular film star added.
The Congress, which had said it had not fielded a candidate from Lucknow because of its respect for Sunil Dutt, now said the field was open. "The next decision will be taken on merit, " senior Congress leader M. Veerappa Moily told reporters, adding that the Supreme Court's order was final.
The actor has been sentenced to six years in jail by a Mumbai anti-terror court for holding illegal arms in the run-up to the 1993 Mumbai serial bombings.
As per electoral laws, a person convicted for a criminal offence and sentenced to jail for more than two years is barred from running for elections.
A bench headed by Chief Justice K.G. Balakrishnan refused to stay Dutt's conviction, saying his case does not have parity with that of cricketer-turned-Bharatiya Janata Party (BJP) parliamentarian Navjot Singh Sidhu, who had resigned his seat after his conviction in a case of unintentional killing.
The bench, which also included Justice P. Sathasivam and Justice R.M. Lodha, dismissed Dutt's plea, saying that electoral laws that bar a person convicted for a crime and sentenced to jail for over two years are aimed at stopping criminalisation of politics.
"In view of the serious offence for which he has been convicted by the special judge (of a Mumbai anti-terror court), we are not inclined to suspend his conviction and sentence, " said the bench.
The bench dismissed Dutt's plea even after noting his family background and his stature as a film star.
"The petitioner (Dutt) is a well-known cine artist and because of his contribution to the art and cinema, he has got a large number of fans throughout the country and abroad, " said the bench. "His father was also a well-known film actor and he was deeply involved in politics.
"At one point of time, he was even a minister in the union cabinet, " noted the bench, adding that "the petitioner is not a habitual criminal.
"But despite all these favourable circumstances, we do not think this is a fit case where conviction and sentence could be suspended" to enable Dutt fight an election, said the bench.
BJP general secretary Arun Jaitley welcomed the apex court's order and said "it is a good precedent that the apex court has set because judgements are stayed only in the rarest of the rare cases where there are some special circumstances.
Lucknow was represented in the outgoing Lok Sabha by former prime minister Atal Bihari Vajpayee of the BJP, who is not contesting this time due to advancing age.