Justice Vilas V. Afzalpurkar dismissed the petition of Silk Smitha's brother V. Naga Varaprasad Rao, who wanted the court to stop the film's release.
The petitioner objected to the way his late sister was portrayed in the film. He also claimed that the filmmakers never took the family's consent for making the film on Silk Smitha.
The court dismissed the petition after the filmmakers clarified that the film was not based on the life of the actress. The Central Board of Film Certification (CBFC) also conveyed to the court that there is no scope for the court to review the decision of the censor board as the filmmakers themselves have denied that the film was based on Silk Smitha's life.
Starring Vidya Balan and produced by Balaji Telefilms, "The Dirty Picture" is set to be released across the country Friday.
Directed by Milan Luthria, the film also stars veteran Naseeruddin Shah, Emraan Hashmi and Tusshar Kapoor.
Varaprasad earlier told the court that the censor board did not respond to his notice, and urged it not to clear the movie.
He claimed Smitha, played by Vidya Balan, was portrayed as a woman of loose character through obscene scenes.
He also said that the private life of his elder sister was different from what it is being portrayed in the film.
Silk Smitha, whose real name was Vijayalakshmi, hailed from Andhra and played sleazy roles in many south Indian films in 1980s.
The actress, who acted in over 200 films, allegedly committed suicide in 1996 at the age of 36.