A special forest bench of justices K S Radhakrishnan and C K Prasad passed the orders while dealing with environmental issues listed before it.
Both Chhattisgarh and Odisha have opposed the construction saying it would submerge vast tracts of villages in the two states.
Polavaram dam, now known as 'Indira Sagar Project', is a multi-purpose project being constructed by Andhra Pradesh across the river Godavari, whose two tributaries Sabari and Sileru flow in Chhattisgarh and Odisha and meet in the Naxal- hit district of Dantewada of Chhattisgarh.
Andhra Pradesh had taken the stand that it had obtained all necessary environmental and other clearance to go ahead with the project.
Chhattisgarh had urged the apex court to restrain Andhra Pradesh from continuing construction of a dam on river Godavari at Polavaram, saying the clearances given to the project are illegal and the project threatens the environment and tribals of the state.
Chhattisgarh is the second state after Odisha to move the apex court against the Polavaram project by Andhra Pradesh.
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"The project will threaten valuable ecology and wildlife. The project will bring misery to thousands of tribals by submerging more than 300 villages in Andhra Pradesh, Chhattisgarh and Odisha," Chhattisgarh government had said.
The state contended around 2015.52 hectares of land falling in south Bastar, Dantewada in Chhattisgarh will be submerged by the dam and the environment clearances have been granted to the project without conducting public hearings in the area. (More)