Passing the interim order on a petition by Mr Bala seeking to quash the proceedings against him, Justice S S Sundar directed the state government to file its counter.
The freelance cartoonist was arrested on November 5 after a complaint was filed by Tirunelveli District Collector Sandeep Nanduri. He was released on bail by a court a day later.
A case was registered on November 1 under Indian Penal Code Section 501 (printing or engraving matter known to be defamatory) and under the Information Technology Act.
Sandeep Nanduri and Tirunelveli city police Commissioner Kapil Kumar Sarathkar were also caricatured. The caricature was uploaded on Mr Bala's Facebook page on October 26.
The petitioner contended the FIR clearly showed that there was no criminal offence. He also claimed that the police had no jurisdiction to proceed with the probe without prior permission of the court concerned.
The cartoon was uploaded days after a man and his wife set themselves and their two kids afire at the Tirunelveli Collectorate complex allegedly due to harassment by a money-lender.
While the woman and her two children died on the day of the incident on October 23, the man succumbed to injuries later.