The Supreme Court refused on Monday to halt work to raise the height of a controversial dam after an intervention by the prime minister, who pleaded the dam was important for the people.
"We find no reason to restrict construction at this stage as non-construction (in the uncompleted blocks) may endanger the safety of the dam," the court order said.
Activists say the ambitious and one of the most controversial project involving 3,200 dams on the Narmada river, cutting through the states of Madhya Pradesh, Gujarat and Maharashtra, could lead to the displacement of thousands of people.
The eye of the storm is the Sardar Sarovar dam and the Narmada Bachao Andolan (NBA) says raising the height of the dam could lead to 35,000 families, mainly poor tribal farmers, losing their homes and fields.
The project's supporters say it would provide much-needed power and water to the three states.
The court gave the order after recording the views of the prime minister -- expressed through an affidavit -- and that of the NBA. It fixed the next hearing for September.
"It would not be appropriate ... to pass any direction or orders at this stage stopping the construction of the dam which is designed to serve public interest," Singh said in his affidavit.
The NBA asked the country's top court in April to halt construction at the site accusing the Government of Madhya Pradesh of doing nothing for affected people.
The prime minister said the court should direct the Government of Madhya Pradesh, ruled by an opposition party, to speed up the relief work.