However, a division bench of Justices C.N. Ramachandran Nair and P.S. Gopinathan asked Air India to ensure an amicable agreement on the compensation amount after talking to the families of those who lost their lives in the May 22, 2010, crash.
The new order came after Air India filed an appeal against last month's verdict by Justice P.R. Ramachandran Meno ordering Rs.75 lakh each to the families of the victims.
The flag carrier initially paid compensation of Rs.20 lakh each to the victims' kin as per the terms of the Montreal Convention on air carriers' liability.
Air India Express flight 812 from Dubai to Mangalore overshot the runway while landing at Bajpe airport, about 20 km from Mangalore, and caught fire after plunging about 300 metres off a cliff.
The Montreal Convention, signed under the aegis of International Civil Aviation Organisation (ICAO) in 1999, establishes rules concerning compensation for the victims of air disasters.
The convention also protects passengers' rights to claim compensation from either the airline or a third party liability system provider, which includes insurance companies, without the need for lengthy litigation.
Soon after the accident, the civil aviation ministry announced Rs.10 lakh each compensation for families of the dead. The Karnataka government offered Rs.3 lakh each as compensation while Rs.2 lakh each was given to the victims' kin from the Prime Minister's Relief Fund.