The brief submission was made by the Centre before Justice Manmohan, who was hearing a petition filed by Khobragade on behalf of her daughters challenging revocation of their Indian passports.
The counsel for Khobragade, a former Deputy Consul-General of India in New York, contended that the government had impounded the Indian passports of the diplomat's daughters without following due process of law and not issuing them show cause notice or hearing them.
After brief submissions, the court listed the matter for further hearing on March 30 after Khobragade's lawyer sought a passover since senior advocate Amit Sibal, who was to argue, was not present in court.
The court had in May last year stayed the December 30, 2014 order by which the government had revoked the passports.
Defending its decision, the government had said that Khobragade had obtained US and Indian passports for her daughters in violation of law and without informing External Affairs Ministry (MEA), raising serious questions about her "trustworthiness and integrity".
It had also said she had obtained Indian diplomatic passports for her daughters by "suppressing material facts" which established that she "wilfully and blatantly violated the Indian Passport Act".
Countering the allegations, Khobragade had contended that in her 16 years of service she was "routinely adjudicated" as 'outstanding' or a very good officer with the highest degree of credibility and integrity.
She had also denied the allegation that she had violated the passport and citizenship laws by obtaining American and Indian passports for her two daughters, who she claimed were entitled to have Indian diplomatic passports.
Khobragade was arrested on December 12, 2013 on visa fraud charges for allegedly making false declarations in a visa application for her maid.
She was later released on a USD 250,000 bond. It had triggered a diplomatic row between US and India which had retaliated by downgrading privileges of some categories of US diplomats, among other steps.