Jethmalani had filed the suit against the BJP for expelling him in 2013. He had also sought Rs 50 lakh in damages.
Additional District Judge Sumit Dass disposed of the suit considering the settlement agreement between BJP and 95-year-old Jethmalani.
"Now nothing survives in the suit. The suit is disposed of," the judge said.
The BJP and Jethmalani had said in the joint plea, filed on Thursday, that a decree be passed in terms of amicable settlement between them as BJP president Amit Shah has expressed "regret" over the senior lawyer's expulsion from the party.
When the matter came up for hearing, the court recorded the statements of advocate Ashish Dixit, representing Jethmalani, and Manik Dogra, appearing for the BJP, that issue has been settled amicably and the suit be decreed.
The plea said: "During the pendency of the suit the President of Defendant no.1 party Amit Shah along with the General Secretary of Defendant no.1 party Bhupender Yadav called upon the plaintiff (Jethmalani).
"During the said meeting the President and the General Secretary expressed their sincere regret at the expulsion of the plaintiff vide the order dated May 28, 2013 passed by the Parliamentary Board of Defendant no. 1."
It said pursuant to the meeting, the party through its general secretary has issued a letter on November 3, asserting the facts stated in the application.
"The plaintiff acknowledges the gracious conduct of Amit Shah...and Bhupender Yadav... It is submitted that the parties have amicably settled the lis before this court and therefore have filed the present joint application seeking passing of decree in view of the letter dated November 3...," the application said.
(With inputs from agencies.)