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The relief given to the actor by Justice K Venkataraman late last night was shortlived as a division bench comprising Acting Chief Justice Elipe Dharma Rao and Aruna Jagadeesan quashed it, effectively stalling its release today.
The actor now plans to move an appeal in the Supreme Court against the High Court order.
The single judge had granted interim stay of operation of the ban order imposed by the state government prohibiting the film's release across the state after protests by Muslim outfits, who claimed that it showed them in negative light.
The court order came on an appeal by the government against the interim order of the single judge.
Even as the judicial proceedings were on today, Haasan said the issue had been "amicably resolved" during his talks with some Muslim leaders, after he agreed to delete "certain scenes and words" relating to the Holy Quran.
"The film is not anti-Indian Muslims and it is pro-Indian Muslims. There is no difference between me and my Muslim brothers," the actor, who spent nearly Rs 100 crore on the multilingual spy thriller, said.
Upset over the hurdles caused by the ban on the release of the movie, Haasan, in an emotional outburst, said Tamil Nadu does not want him to stay in the state and he might seek a "secular" place in the country or overseas.
During the hearing today, Advocate General A Navaneethakrishnan said the single judge had passed the order without taking into account the fact that the petition (of Kamal Haasan) was not maintainable in law.
The AG also said the judge has not considered the 'important aspect' that the order passed under Sec 144 cannot be assailed by the petitioner as it was done after elaborate and detailed consideration for maintaining public order, preserving public peace, public safety and communal harmony.
The film, which was initially in trouble due to Haasan's tussle with theatre owners, was slated to release on January 25.
A report from Ramanathapuram said a masked gang hurled petrol bombs and pelted stones at two theatres, damaging glass panes and furniture, while Haasan's fans staged protests at Erode and Theni outside theatres, demanding that the movie be screened.
In Delhi, Information and Broadcasting Miniter Manish Tewari said the High Court should consider the matter "holistically".
The AG told the court that the single judge had not considered the 'prospective implications' that would affect public peace, public order, public safety and tranquility consequent to release of the film.
He also said the Judge had 'not at all considered' the fact that several countries like Singapore, Sri Lanka, UAE, and Malaysia have temporarily banned screening of the film, as it was likely to hurt sentiments of certain sections of society and cause communal disharmony.
Earlier, Haasan said, "When M F Hussain can do it, Kamal Haasan will do it... I am fed up. I am an artiste. After that, I will have to seek a secular state for my stay... Secular state from Kashmir to Kerala, excluding Tamil Nadu... Tamil Nadu wants me out."
The actor said he had pledged all his property to make the multi-lingual movie. He said he might lose his house because of the losses incurred by the delay in the release of the movie.
In a show of solidarity, leading film personalities, including Sivakumar, Prabhu and actress Kushboo called on the actor at his residence, where a large number of Haasan's fans gathered.
