Dealing with three Public Interest Litigations (PILs), the court declined to interfere with the Election Commission's order on the ground that the poll panel has Constitutional powers to ensure free and fair polls.
The court, which had reserved its order in the case on Monday, pronounced the same on Thursday.
A bench, comprising Chief Justice Satish Chandra Sharma and Justice A. Rajashekar Reddy, dismissed the PILs filed by journalist and social worker Mallepalli Laxmaiah, Congress leader Bukka Judson and NGO "Watch Voice".
The bypolls in Huzurabad are scheduled to be held on October 30.
On October 18, the ECI had directed the Telangana government to defer the implementation of the scheme till the completion of the bypolls.
The scheme was launched on a pilot basis in Huzurabad in August.
The state government has released Rs 2,000 crore for the implementation of the scheme aimed at empowerment of Dalits.
Under the scheme, every Dalit family will get Rs 10 lakh as grant to start any business or self-employment.
The petitioners, however, challenged the ECI order on the ground that the scheme was launched before the announcement of the poll schedule.
They alleged that the poll panel abruptly stopped the scheme at the alleged instance of some political parties.
Counsel for one of the petitioners had told the court that the ECI's decision has come as a "rude shock" and a serious setback to Dalits, especially to the unemployed youth.
Standing counsel for the ECI, however, had informed the court that the implementation of the scheme was stopped only in Huzurabad constituency and not in others.