Justice V K Jain allowed Gutta's plea and said, "I am of the view that you (BAI) must allow her to play in the tournament".
However, the court said a detailed order will be passed on her plea later in the day.
The court also observed that till the final view is taken by the committee, she should be allowed to take part in the tournament.
The BAI, however, had yesterday withdrew the selection of Gutta and her doubles partner Ashwini Ponnappa from Denmark Open.
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The BAI's disciplinary committee has recommended a life ban on Gutta for trying to stop some players of her franchise Krrish Delhi Smashers from playing a match against Banga Beats in the Indian Badminton League in August this year.
Gutta approached the high court challenging the decision of BAI to recommend a life ban on her for alleged indiscipline in the IBL.
"You have to treat a sports woman with dignity," he said.
Countering his arguments, senior advocate Shanti Bhushan submitted that for past few years her performance is below the rank and there is nothing wrong in the decision taken by BAI's committing.
"If she admits that she has committed a mistake or tenders apology, she will be allowed to play," Bhushan said.
Gutta has sought quashing of the October 7 order, where BAI had ruled out considering Jwala for selection in any international event in the next one month, pending a decision by the three-member committee that was formed on Monday.