Indian authorities arrested AdvanFort's 197-dwt support ship Seaman Guard Ohio (built 1984) in October for allegedly illegally entering its waters.
India had planned to charge them for not notifying the country of entering Indian waters with undeclared weapons aboard.
All but two of the men were released on bail earlier this month and now Madras high court has kicked the case out.
Justice PN Prakash said the men could not be tried under the Arms Act, the Times of India reported.
He said: "I hold that the anchoring of Seaman Guard Ohio within our territorial sea was out of necessity and their action is saved by the principle of 'innocent passage'.
He added: "The ship had made a distress entry into our waters in search of food and fuel. It anchored at the outer port limit of Tuticorin port and was waiting for supplies.
"When the coast guard questioned them, they admitted straight away that there were arms and ammunitions on board the ship."
