A division bench headed by Chief Justice D H Waghela sought the clarification while adjudicating on a PIL which said Cuttack was left out from the list in a discriminatory manner.
The matter has been posted for further hearing on September 28.
President of High Court Bar Association Ashok Mohapatra filed the PIL in his capacity as chairman of Cuttack Smart City Action Committee.
The PIL claimed that Cuttack, being the former capital of Odisha, has been illegally and wrongfully debarred to get the smart city tag by an arbitrary evaluation of its potentialities.
"The state government recommendation was lacking with fairness, reasonableness and transparency and application of judicial mind for due determination," the PIL alleged.
The Centre has unveiled a list of 96 smart cities in the country, including Bhubaneswar and Rourkela of Odisha.