"Justice must not only be done but must be seen to be done, which is the purpose of an open court," the court said, adding, "People are entitled to know whether the justice delivery system is adequate."
Justice Revati Mohite-Dere minced no words as she noted that the special CBI court overreached its powers with the ban order issued in November.
"Mere apprehension of sensationalism by the accused is not sufficient ground for such gag orders," said the judge, agreeing with journalists.
She also dismissed the objections to such reportage by the accused in the case, saying they had failed to prove to the court that there existed any legal provision for a trial court to ban reporting on the case.
Nine journalists from leading newspapers, online media outlets and television channels in Mumbai had gone to the High Court against the ban on any reporting on the case in which several police officers, retired and serving, are among the accused.
They said it is the fundamental right of journalists to report and the basic right of every citizen to be informed.
They argued that the order is "illegal and is not tenable in law" and based on "apprehension" of an untoward incident and the plea of the accused does not elaborate on what these apprehensions are based on.
Advocates Abad Ponda and Abhinav Chandrachud argued for the journalists and said that according to Section 327 of the Code of Criminal Procedure (CrPC), the courts have to be open and the subsections in the CrPC define the reasons only under which the courts shall make procedure in camera.
"The lower court does not have the inherent power to ask media not to publish. It has the power to make trials in-camera. But here the court has not done so. The media persons can enter the court and other citizens can also go. But publishing of articles cannot be done," Mr Ponda argued.
The petition also said the case had already been extensively reported and there was no security threat to any of the accused or their lawyers.
Sohrabuddin Sheikh, a petty criminal, was killed in near Gujarat's Gandhinagar in November 2005, by Gujarat police officers who called him a terrorist. His wife Kausar Bi was also killed. Tulsiram Prajapati, who was accompanying the couple and became a witness to the crime, was killed a year later.
Investigators said the killings were meant to silence the men, who were instrumental in an extortion racked the police of three states - Gujarat, Rajasthan and Andhra Pradesh - were running at the behest of their political bosses.