The High Court rejected that and said the law banning homosexuality was an affront to the dignity of India's people.
Its ruling was met with jubilation by same-sex couples in the capital, New Delhi, at the time.
Vikram Seth, the author of A Suitable Boy who has written about his bisexuality, criticised the latest ruling.
"There is a barbarism in treating choices of consenting adults as a crime. I wasn't a criminal yesterday. Today I am. I intend to continue being a criminal."
According to the judgment, the High Court ruling that the law criminalising homosexuality was a breach of liberty, dignity and privacy was wrong. The Supreme Court ruled that the original appellants had failed to establish homosexuals had suffered discrimination.
Hopes the Government might take up the issue were dismissed by Suhsil Kumar Shinde, the Home Minister.
He said it was not possible to introduce new legislation because the issue "needs political consensus".
Human rights groups said the Government had failed to defend the human rights of India's gay community. "The Supreme Court's ruling is a disappointing setback to human dignity, and basic rights to privacy and non-discrimination," said Meenakshi Ganguly of Human Rights Watch.