A division bench of Acting Chief Justice B.D. Ahmed and Justice Siddharth Mridul vacated the suspension granted by a single judge bench of the high court Wednesday on the movie's release.
The filmmakers of "Gulaab Gang", set to release Friday, assured the bench that they will run a disclaimer that the movie is not based on the life of Sampat Pal and her work.
The production house filed an appeal against the restraint order passed by a sin gle-judge bench earlier.
The high court Wednesday blocked the release of the film, which stars Madhuri Dixit and Juhi Chawla, saying that if the release is allowed, it will cause irreparable damage to the reputation of Sampat Pal.
"Reputation once lost is lost forever and cannot come back and can't be compensated in monetary terms," the court observed.
Directed by debutant Soumik Sen, the film has been produced by Anubhav Sinha.
Sampat Pal moved the Delhi High Court seeking restraining order on the release of "Gulaab Gang", saying the filmmakers did not take her permission before making the movie, which shows her in bad light.
She alleged that the actress playing her character was shown in a bad light in the promos of the film, which will thus affect her reputation.
She also contended that the film's promos depict her as an anti-social element, contrary to her real life image.