The Delhi High Court also vacated an earlier order banning Karisma from travelling abroad with her six-month-old daughter Samaira.
The application issued by the Mumbai passport office -- earlier signed only by Karisma -- would now be taken as a joint application, Sanjay, who was present in court, said through his counsel.
Disposing of the case, Justice Mukul Mudgal asked the central government to inform the immigration authorities in Mumbai about the new court order.
The court also expressed its happiness and appreciated efforts made by the couple and their counsel to resolve the marital dispute through talks.
"The resolution of the marital dispute through talks is in the interest of the court as well as the parties," the judge observed.
As the matter was called out for hearing, counsel for the two parties informed the court that they had made appreciable progress in talks to resolve the discord. The fact that Sanjay had signed the passport application was a testimony to it, they said.
Sanjay had challenged the issue of a passport to Samaira.
The court had on Aug 5 restrained the actress from taking her daughter out of the country without permission of her estranged husband.