The examinations are scheduled to start on November 19.
"Academic standards have to be maintained....If professional courses do no uphold quality, the whole society suffers," said a division bench of Justices Naresh Patil and A P Bhangale.
The petitioners -- students of private engineering colleges -- had moved the court after they were refused admission to the seventh semester.
Under the new rule, a student cannot be admitted to the fourth and final years of B.E. If he or she has failed in more than five subjects in the third year or has failed to clear subjects in the first and second years.
The students contended that they would lose a year if not allowed to appear for the exams and the new credit system, which will kick in from next year will put those studying under the old system at a disadvantage.
Earlier this month, the court had allowed these students to appear for the viva and practicals, subject to the final order.
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