The Ladle Madhaq Dargah has a Sufi shrine as well as a Shivlinga on the compound.
A small town of about 60,000 in northern Karnataka is on alert as Hindus and Muslims observe separate festivals inside the same dargah or shrine.
With drones and extra personnel keeping a watch, the police have banned large gatherings in Aland city of Karnataka Kalaburagi district, around 600 km from the capital Bengaluru, to thwart any attempt to stoke tension.
In a rare ruling, the Kalaburagi bench of the Karnataka High Court on Friday allowed a group of Hindus to carry out Shivratri prayers inside the Ladle Madhaq Dargah.
The prayers were cleared earlier by a religious tribunal, and the high court refused to cancel the verdict based on an appeal by the dargah authorities.
The dargah houses the shrine of a Sufi saint, and the compound has a Raghava Chaitanya Shivlinga as well.
Around 15 people have been allowed to worship the Shivlinga and perform their rituals between 2 pm and 6 pm on Saturday.
Since the day also marks the Urs, or the death anniversary of the Sufi saint, the court has permitted 15 people from the Muslim community also to offer prayers between 8 am and noon.
The communally sensitive area had seen instances of stone-throwing last year over the face-off.
The Kalaburagi police have set up around 12 check posts around Aland city and are using drone cameras to keep vigil.
Senior police officer Alok Kumar said that around 500 police personnel from various units have been posted at various vantage points in the city.
Karnataka will hold a high-stakes election later this year, and some groups have tried to polarise voters by fanning religious strife.