The Tehrik-e-Hurmat-e-Rasool, a movement launched by the Jamaat-ud-Dawah, had filed the petition against a move by authorities to rename the roundabout.
Zahid Butt, a local trader who filed the petition on behalf of the organisation, claimed that RAW, India's external intelligence agency had funded the
Bhagat Singh Foundation to raise the issue.
He claimed the Foundation lobbied the Dilkash Lahore Committee that recommended the renaming of the roundabout.
Senior JuD leader Maulana Amir Hamza, who heads the Tehrik-e-Hurmat-e-Rasool, has said the group will not allow places to be named after Hindus, Sikhs or Christians.
"Pakistan is a Muslim country and such ideas cannot be appreciated," he said recently.
The JuD wrote a strongly worded letter to district administration chief Noorul Amin Mengal and other government officials, warning them not to rename the roundabout after a "Hindu freedom fighter".
The Dilkash Lahore Committee had rejected all objections and asked authorities to notify the new name for the roundabout without delay.
In a related development, civil society activists have filed two applications in the Lahore High Court, asking it to make them parties to the case challenging the renaming of the roundabout.
Activists Taimur Rehman and Saeeda Diep filed the applications in the Lahore High Court yesterday through lawyer Yasser Latif Hamdani to support the renaming of the chowk after Bhagat Singh.
These applications were accepted.