The order, imposed by a single judge bench Tuesday, was vacated by a division bench.
The court had earlier stayed the release of the film, scheduled to be released across India on Friday, after a lawyer filed a petition complaining about its vulgar dialogues and obscene content.
He said that the movie promos were degrading women and that the content and actions in the film were indecent.
Starring Vivek Oberoi, Riteish Deshmukh and Aftab Shivdasani, "Grand Masti" is a sequel of the "Masti", which was released in 2004.
In his petition, the lawyer sought directions for the Central Board of Film Certification to reconsider its approval granted to allow screening of the film.