The bench said "the expression "fly in and fly out" will only cover a casual visit not amounting to "practice".
The court said that the Bar Council of India or Union of India can make appropriate rules in this regard including extending Code of Ethics being applicable even to such cases.
The Bombay High Court, in its 2009 judgement, had held that while foreign law firms could not practice in India, foreign individuals may do so after getting registered in India.
The Supreme Court today issued notice to the Bar Council of India (BCI) in a petition seeking ban on MPs and MLAs from practicing law.
Earlier, Additional Solicitor General Maninder Singh had told the court that the Centre supports the entry of foreign firms in the Indian legal sector.
The court also held that foreign lawyers and law firms had no absolute right to participate in arbitration proceedings in India, but could participate in global arbitration proceedings held in the country, subject to Bar Council regulations.
The only exception that is available is for foreign lawyers coming to India for providing advice on foreign law or when they are coming in to take part in an global commercial arbitration.
The top court's ruling had come on an appeal by the Bar Council of India (BCI) against the judgment of the Madras high court.
In the alternative, he has sought for a direction quashing Rule 49 of the Bar Council of India Rules as ultra vires the Constitution and its basic structure, and to permit all Public Servants to practice as Advocates. All others can appear only with the permission of the court, authority or person before whom the proceedings are pending, it said, adding the regulatory mechanism for conduct of advocates applies to non-litigation work too.
The court said: "If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration Act, foreign lawyers may not be debarred from conducting arbitration proceedings arising out of worldwide commercial arbitration in view of Sections 32 and 33 of the Advocates Act".
The court verdict came on pleas challenging the judgments pronounced by the Bombay and Madras High Courts.