Tuesday's ruling by a two-judge panel means the 63-year-old tycoon will be able to have a full hearing on his appeal to overturn an extradition order.
India accuses him of money laundering and conspiracy involving hundreds of millions of dollars. He has repeatedly denied wrongdoing.
An extradition judge ruled in December that he would have to return to India to stand trial.
A date for his appeal will soon be set.
Mallya was once a leading figure among India's business elite. He was involved with Indian's Formula One racing team and also operated an airline.
He says India's case against him is politically motivated.
Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.