The All India Football Federation's (AIFF) Players Status Committee issued Anwar Ali a No Objection Certificate (NOC) on Thursday, overturning his suspension.
The decision came after the Delhi High Court intervened and ordered a rehearing of his case which was earlier imposed by AIFF.
"The player's subsequent conduct of signing with East Bengal FC be given effect under Article 9.5 and the CRS be updated by treating this order as the requisite release letter/NOC," the PSC said while granting him NOC.
The next hearing is scheduled for September 30, which would decide a fine for Anwar and transfer bans for the club East Bengal.
On September 10, the AIFF gave a four-month suspension to Anwar, saying that he was "guilty" of unilaterally terminating his four-year contract with Mohun Bagan unjustly to join East Bengal, permanently.
In addition to the suspension, the AIFF sought a staggering compensation of Rs 12.90 crore from him, as well as from his parent club, Delhi FC, and East Bengal, where he had signed a five-year contract.
The Delhi High Court, however, intervened and emphasised that the AIFF's decision lacked reasoning and did not follow the principles of natural justice.
The court also criticised the federation for not allowing Anwar a fair opportunity to present his case and directed the AIFF to reconsider its ruling.
With the NOC, Anwar is now "free" to officially join East Bengal and contest in the ongoing Indian Super League.
He will be available for their upcoming match against Kerala Blasters on September 22 as well as for the highly-anticipated Kolkata Derby against Mohun Bagan on October 19 at Salt Lake Stadium.