Fergus Wilson, who owns hundreds of properties in Kent in south-east England, had denied being racist but lost the legal action brought by the UK's human rights watchdog when Maidstone County Court granted an injunction against the policy this week.
The injunction, in place for three years, orders that Wilson cannot apply a lettings policy stopping Indian or Pakistani people renting his properties.
If he breaches the order, he could be found in contempt of court and face jail or a hefty fine.
"I find the policy is unlawful. Such a policy has no place in our society," said Judge Richard Polden in his ruling.
The 69-year-old property tycoon and former boxer defended himself in court against the Equality and Human Rights Commission (EHRC), which had challenged the policy after it emerged in an email sent to a lettings company informing them of his policy of "no coloured people because of curry smell".
"I refuse to take tenants from a group of people that produce curry smells. I take just about anyone except Pakistanis and Indians," Wilson said in a subsequent email exchange with the EHRC when it confronted him.
Wilson's defence in court ranged from asserting that the email containing the ban on "coloureds" was just a joke and banter with a young letting agent, through to defending it on behalf of all landlords and describing the legal action as "political correctness gone mad".
"My only concern is for people who would have been coming into buy to let but now will not. Public opinion has been on my side throughout," he claimed.
He had justified his ban on Indian and Pakistani tenants on economic grounds to save costs on re-carpeting homes that smell of Indian cooking once the tenants have left.
"It's perfectly legal not to buy a house because you think it smells of curry. The problem is that if you have a 250,000 pounds mid-terrace house, the valuation drops by 50,000 pounds if it smells of curry," Wilson told the court.
But the judge was not convinced with any of his arguments and ruled in favour of the EHRC, whose chief executive Rebecca Hilsenrath welcomed the decision as a step closer to a "more equal Britain".
"Our homes are fundamental to our private lives and to who we are. Denial of a home on the grounds of race or colour is abhorrent conduct we do not accept in today's society.
There are still deep inequalities in our country and sadly some of the causes of those inequalities were illustrated by Mr Wilson's comments over the summer," she said.