The court in its interim orders suspended the pre-closure orders issued by Andhra Pradesh Power Generation Corporation (AP Genco).
Justice D.V.S.S. Somayajulu also stayed the reverse tendering process for the Polavaram hydroelectric project and the dam headworks.
The interim orders were delivered on a petition filed by Navayuga, challenging the pre-closure order for the project worth Rs 3,216 crore.
The Jagan Mohan Reddy government on August 1 had terminated the contract to Navayuga on the grounds that the previous TDP regime awarded it on nomination basis in violation of rules.
AP Genco on August 14 issued the pre-closure order to Navayuga on the hydroelectric project, citing lack of progress in works.
The works awarded to Navayuga including hyderpower project were valued at Rs 4,987.55 crore.
Polavaram is a national project funded by the Centre but being executed by the state government under the supervision of the Polavaram Project Authority.
Ignoring the advisory of the Centre that reverse tendering will lead to delay and cost escalation, the state government last week issued reverse tender, inviting fresh bids for the hydropower station and the Polavaram headworks.
Navayuga, in its petition, submitted to the court that the delay was not its fault and that the land required for the project was not handed over to it. It also contended that as per the contract, it had time till November 2021 to complete the project.
Meanwhile, TDP chief and leader of the opposition N. Chandrababu Naidu termed the court order as a slap in the face of the government. He said it would have a severe impact on the progress of the Polavaram project as a whole and cause inordinate delay in its execution.
( With inputs from IANS )