The court told the CBFC, that whether its TV or cinema, the board should leave it to the people to decide whether the film is defaming a state. The division bench asked why it was not banning "Udta Punjab" if the movie indeed glorified drugs.
It will pronounce judgement on Monday, four days ahead of the scheduled release of the film.
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Meanwhile, the censor board told the court that some of the scenes recommended for deletion in the Hindi movie "Udta Punjab" were "very vulgar".
Citing examples, lawyer Advait Sethna for the Central Board of Film Certification (CBFC) said one dialogue, "zameen banjar to aulad kanjar", was abusive.
To this, the division bench comprising Justice S.C. Dharmadhikari and Justice Shalini Phansalkar-Joshi pointed out that films do not run on such content and modern audiences were a mature lot.
Sethna argued that the word "kanjar" showed Punjab in poor light as it was a highly productive state. He added that a dog in the movie was named "Jackie Chan".
The judges noted that all this was giving unnecessary publicity to the film and said people must be allowed to see things of their choice, be it cinema or television.
On Thursday, the court noted that the film was against drugs and was not "made with a view to malign the state or its people".
Directed by Anurag Kashyap, "Udta Punjab" stars Shahid Kapoor, Alia Bhatt, Kareena Kapoor-Khan and Diljit Dosanjh. It is based on the menace of drugs in Punjab.
(With additional information from IANS)