"We direct the state government to reconsider its July 30 decision and take appropriate decision in the light of the observations made in this interim order," said the division bench, headed by Chief Justice Abhay S. Oka and Justice S.R. Krishnakumar.
Declining to stay the ban on Hazrat Tipu Jayanti, sought in a public interest litigation (PIL), the bench said the state government should take a decision in 2 months and get back to it by third week of January, 2020.
"The state government can file objections, state details of jayanti celebrations of personalities at state level and orders if any, of celebration of these festivals," said the order.
The previous Congress government began celebrating Tipu Jayathi since November 2015 onwards despite protests by the BJP and many righ-wing organisations, which consider the 'Tiger of Mysore' a tyrant, religious bigot and anti-Hindu.
"The state government will take all precautionary measures to see that the celebrations, if any, will be doe peacefully," added the order.
The state Kannada & Culture Department cancelled the Tipu celebrations on a letter by BJP legislator K.G. Bopaiah from Kodagu, about 270km southwest of Bengaluru.
For the opposition Congress, however, Tipu Sultan (1750-1799) was a "valiant hero" who died fighting against the British at Srirangapatna, about 20km from Mysore, which was his state capital.
State Advocate General P.K. Navadagi told the bench that the ban was only a policy decision to stop Tipu Jayanti celebrations at the administrative level.
"If the petitioners want to celebrate it, nothing prevents them from doing so," Navadagi said.
The bench also observed that the decision to cancel Tipu Jayanti was taken in a single day when the BJP government did not have a cabinet in place.
"It should not look like, as the decision was taken arbitrarily," it said.
Observing that the policy of the state government must uphold the secular values enshrined in the Constitution, Chief Justice Oke said the policies should not be arbitrary or discriminatory against any community.
Navadagi assured the court that the state government would not prevent anyone from celebrating Tipu Jayanti across the state peacefully.
The bench directed the government to provide adequate protection and ensure peace on the occasion.
( With inputs from IANS )