Congress also demanded the immediate sacking of Governor Jyoti Prasad Rajkhowa and demanded an apology from all those involved in the decision of toppling the government.
Government said it will do a "structured examination" of the order and its implications before making a detailed response.
Putting up a brave front, BJP tried to deflect the criticism saying the political crisis in the state was an outcome of Congress' internal fight and claimed that the order is not a setback to the party.
Rahul Gandhi took a dig at Modi as he thanked the apex court for "explaining to him (PM) what democracy is".
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"Those who had trampled upon constitutional propriety and democratic norms have been defeated today. This judgement, that firmly establishes the democratic values enshrined in our constitution, will deter the Union Government from any further misuse of power," Sonia said in a statement.
She also welcomed the "historic" verdict reinstating the "democratically elected and unconstitutionally removed" government.
"It paves the way to protect healthy democracy in the country," Tuki said.
Delhi Chief Minister and AAP chief Arvind Kejriwal also hit out at the government.
"SC judgement is yet another tight slap on dictatorial Modi govt. Hope Modi ji would learn and now stop interfering in democratically elected governments," Kejriwal tweeted.
The apex court ordered that status quo ante that prevailed on December 15, 2015 be restored in Arunachal Pradesh Assembly.
The judgement is seen as a major setback to the central government and the BJP, which is extending outside support to the Pul government.
"Rahul Gandhi is talking about democracy but he should know that past Congress governments have made a century of the use of Article 356 (of the Constitution) to dismiss state governments."
Uttarakhand Chief Minister Harish Rawat, who had also got relief from the apex court, lauded the verdict.