The award - India's second-highest civilian honour -was received last year by Kokilaben, Mr Ambani's wife, at Rashtrapati Bhavan. She was accompanied by both her billionaire sons Anil and Mukesh Ambani.
"In his time, he was known as the biggest industrialist of the country. You are not to decide on who should get the Padma Vibhushan. If they give it to you, we can't question (it)," the judges said to the lawyer who asked for the award to be withdrawn.
PC Srivastava claimed in his petition that Mr Ambani, who died in 2002, had not "rendered any exceptional and distinguished service."
In 2005, the Reliance empire was split as a consequence of an estrangement between Anil and Mukesh Ambani. They have since reconciled on some business projects which have seen them collaborating.
(With inputs from IANS)