The three-judge panel of the US court of appeals for the second circuit ruled that it found the arguments presented by Sikhs for Justice in its case against Gandhi "without merit".
The bench of Circuit Judges Jose Cabranes, Renna Raggi and Richard Wesley affirmed the district court's order of June 9, 2014 in which the judge had dismissed the human rights violation lawsuit filed by SFJ against Gandhi.
US District Judge Brian Cogan had granted Gandhi's motion to dismiss the complaint due to "lack of subject matter jurisdiction" and failure to state a claim.
"Upon due consideration..., it is hereby ordered, adjudged, and decreed that the judgement of the district court is affirmed," the three-judge bench said in its order issued in New York on Tuesday.
Gandhi's lawyer eminent Indian-American attorney Ravi Batra termed the appeals court ruling as "historic" and said the judges have upheld a nation's sovereignty by declared Gandhi free of any fault -- despite SFJ's "reprehensible defamatory efforts".
Batra told PTI in a statement that SFJ should "publically apologise" to Gandhi and to every leader it has sued without just cause or any legal right or standing to do so, and state that it will no longer hurt genuine victims of 1984 by selling false hope that only re-victimises them.
"SFJ making false, reprehensible and defamatory allegations against India's leaders is the wrong recipe," he added.
SFJ legal advisor Gurpatwant Singh Pannun said the group will file a petition for a "rehearing en banc" with the appeals court challenge the order within 14 days of the order.
The SFJ had filed a lawsuit in 2013 against Gandhi accusing her of allegedly shielding and protecting Congress party leaders in the anti-Sikh riots that had erupted following the assassination of former Prime Minister and her mother-in-law Indira Gandhi.
The three-judge panel ruled that the district court had lacked subject matter jurisdiction in the case against Gandhi because "all the relevant conduct took place outside the United States" in India.
The judges also ruled that as for the SFJ's claims under the Torture Victim Protection Act, the district court had "correctly" held that the group does not have "associational standing" to sue on behalf of other persons.
In their order, the appeals court judges said SFJ "failed to plausibly allege" that Gandhi is liable for the anti-Sikh riots.
"At best, the amended complaint alleges that certain attacks were carried out on defendant's 'orders', and that defendant was present at one of several meetings at which the riots were planned. The amended complaint, however, is wholly devoid of any factual detail as to what orders defendant gave, to whom she gave them, and how they were carried out," the judges said.
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