The court said a rule that dance bars should be 1 km from religious places and educational institutes are "no reasonable " in Mumbai.

Performers at dance bars can be paid tips but they cannot be showered with cash, the top court said.

The Supreme Court also backed fixing the time and asking dance bars in the state to operate from 6 pm to 11.30 pm.

The rule requiring a partition between bar rooms and the dance floor was also cancelled by the court.

Compulsory installation of CCTV cameras was also struck down by the court that said the rule violates privacy.

The Supreme Court struck down a provision that the owner of the dance bar should have a "good character" and no "criminal antecedents". "There is no precise definition of what amounts to good character and criminal antecedents," the court.

"From 2005 till date, not a single person has been given licence (for dance bars). It cannot be done. There can be regulations but it cannot amount to total prohibition," said a bench of Justice AK Sikri and Justice Ashok Bhushan. "It seems like total moral policing is going on in the state," the court had said last year.

Dance bar owners had objected to the restriction of maintaining a 1-km distance from any religious or educational structure claiming it was not possible in big cities. They had told the court that the state government adopted an attitude that it will not permit dance bars irrespective of court orders.

"We are happy with the government. Our main intention was to protect the bar girls and that has been upheld by the court. Whoever comes to us fulfilling the conditions, we will give licenses," said Nishant Katneshwarkar, the Maharashtra government's lawyer.