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The Lahore high court directed the three men -- traders Mehtab Butt and Atif Butt and security guard Babar Shabbir -- to file an amended petition after deleting the name of the Indian mission from the list of respondents.
During preliminary arguments on the petition on Monday, the lawyer of the three men contended that the actions of the Indian media had damaged their reputation and tarnished the image of Pakistan around the world.
All three men work at Hafeez Centre, a bustling market in Lahore that deals in mobile phones and electronic goods.
They also asked the court to direct authorities to protect them against possible arrest by Pakistani intelligence agencies.
Indian TV news channels last week broadcast the photos of five men who were described in a terror alert in India as LeT terrorists who had sneaked into the country to carry out terror attacks.
The Pakistani media subsequently established that all five men ran businesses or worked at Hafeez Centre.