A division bench of Justice B.D. Ahmed and Justice Siddharth Mridul said they will not permit drivers to ply the vehicles without a driving license and refused to lift the ban on the e-rickshaws.
"We are concerned about the livelihood of these operators, but our concern is also with the citizens of India," the bench said.
"One thing we are very clear is that people driving on roads must have driving licenses and they should know how to drive. The e-rickshaws should be regulated and they (drivers) must have the expertise to drive on roads," it added.
The central government also submitted draft guidelines to the court to regulate plying of e-rickshaws by bringing these battery-operated vehicles under the ambit of the Motor Vehicles Act.
Filing the guidelines for framing rules for operation of e-rickshaws, the ministry of road transport and highways said it will finalise the guidelines in about two months and till that time the ban on the vehicles should be suspended.
"The finalisation of these rules may take two months due to compliance of procedural modalities and effective deliberations for framing such rules," said the draft guidelines.
Refusing to vacate the stay order, the bench said its "primary consideration is they (drivers) must have drivers license, registration and insurance", and until then these battery-operated vehicles will not be allowed to ply.
The bench also asked the central government whether it wants the court to suspend the law for two months, as under the Motor Vehicles Act it is compulsory to have registration of vehicles, and drivers to have licenses.
"India has a rule of law, it's not a banana republic. We are the largest democracy. It's a country with rules and regulations," the bench observed.
The court said untrained people and even minors were driving the e-rickshaws.
The court suggested the government set up camps to register these vehicles and get an insurance company to cover them.
"There are some rules for three-wheelers like auto as they have colour, uniform etc. You (government) can do the same thing for these vehicles also," the court suggested.
As per the draft guidelines, the e-rickshaws will run at a maximum speed of less than 25 km per hour with a maximum capacity of four people and 50-kg load.
"Three-wheeled vehicles with motor power as specified by the central government (less than approx 650 to 1,000 watts to carry the specified load at a specific maximum speed) be regulated with a set of rules within the MV Act which will be easier to implement ensuring roadworthiness of vehicles, easier to register," the draft guidelines say.
There will be triennial renewal of registration of the e-rickshaws, and registration will be given to only those drivers who hold a valid licence.
Compensation to accident victims will be given as per provisions of the MV Act.
The guidelines said the e-rickshaws were providing employment to hundreds of thousands who have upgraded from the manually-pulled ones to the electric-powered vehicles.
"As technology improves, the society craves for value addition for vehicles. Hence, there should be an option to the three-wheeled manually-pulled rickshaws to replace these with affordable and convenient e-rickshaws," it added.
The court had earlier banned the plying of e-rickshaws saying their unregulated operation was "hazardous to other traffic on the road as well as to citizens".
Asking the court to allow plying of e-rickshaws, the central government said more that 50,000 families of e-rickshaw operators were affected, and lakhs of Delhi commuters who were using e-rickshaws for last-mile connectivity were facing difficulties.
Due to non-registration of e-rickshaws, traffic police had earlier said that passengers of e-rickshaws were not insured for injury or death as the vehicles did not have insurance cover.
It was also said that as the operation of e-rickshaws was not regulated under the MV Act, police were unable to prosecute the drivers.