Justice Manmohan issued the interim direction on the plea of a man whose father is an assistant engineer in DJB.
The court also sought response of the civic body on the issue raised by the petitioner, a contractor.
As per the petition, the provision which imposes the blanket ban was introduced by way of an amendment in March 2015.
He claimed that this is the practice followed by other government bodies.
"Amended clause has introduced a blanket ban and it prohibits all contractors whose close family members are employed in DJB from participating in any tender process by any circle/division thereby, rendering all such contractors ineligible to work," the petition filed through advocate Sudhir Naagar said.