The Supreme Court, in a 3-2 ruling, said Wednesday the Board of Control for Cricket in India (BCCI) was an autonomous body which did not come under the purview of the government just because it picked the Indian team.
The court said that if the cash-rich BCCI, which runs the country's most popular sport, was to be held as "an instrumentality of the government", then all other sporting federations should also be declared a "state".
If the court had agreed that the board came under government purview then Zee Telefilms, India's largest listed media company, was likely to have kept broadcasting rights granted after a tender process.
The court also dismissed the petition filed by Zee against the BCCI's decision to cancel TV rights which the network insists were awarded to it for the next four years.
The BCCI last September awarded four-year television rights to Zee for a record 308 million dollars. It later cancelled the bid following Zee's legal battle with ESPN-Star Sports in the Bombay High Court.
The BCCI had feared it might be forced to delay last October's Test series against world champions Australia if the legal battle continued. It said it had not formalised the deal with Zee on paper and had returned Zee's advance payment of 20 million dollars.
The Australian series, and the subsequent tour by South Africa, was telecast by state broadcaster Doordarshan.
The court order means the BCCI can now call for fresh TV bids for the upcoming tour by Pakistan and for other series in India over the next few years.
Pakistan's tour, which includes three Tests and five one-day internationals, begins on February 25 and will be lucrative for whoever gets the rights.
Zee's offer of 308 million dollars was a sixfold increase on the 54 million dollars paid by Doordarshan for the past four years, and dwarfed the government's annual sports budget of 44 million dollars.
With cricket taking up three-quarters of sports advertising in India, Zee was expected to rake in revenues of upwards of 320 million dollars over the four years.
There was no immediate reaction from the BCCI or Zee on the Supreme Court ruling.