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Plastic-foam food containers have long been detested by environmentalists for breaking into tiny pieces and lingering in landfills.Credit Victor J. Blue for The New York Times

New York City’s ban on plastic-foam food containers, the once-ubiquitous vessels for Chinese takeout and curbside halal food, has been overturned, rejecting a signature environmental initiative of two mayors and clearing the way for an industry-backed plan to buy and recycle the items.

Describing the sanitation commissioner’s ban as “arbitrary and capricious,” Justice Margaret A. Chan of State Supreme Court in Manhattan on Monday denied the city’s claim that recycling used polystyrene containers “was neither environmentally effective nor economically feasible.”

The judge ordered the Sanitation Department to reconsider the ban in light of a proposal by a foam container manufacturer to pay for better machines to clean and sort the material and keep most of it out of landfills.

The ban, first proposed by former Mayor Michael R. Bloomberg two years ago and put into effect by Mayor Bill de Blasio in July, was seen as a tipping point in a national campaign to end the polymer’s use in products such as packaging and coffee cups.

The containers, which break into tiny pieces and linger in landfills, have joined, at least for the moment, large sugary drinks in withstanding bans championed by Mr. Bloomberg. His plan to restrict the drinks was defeated in court.

The city is exploring its options for reinstituting the ban, including an appeal. City officials had called it a way to protect city waterways and promote more environmentally friendly materials.

“We disagree with the ruling,” a de Blasio spokeswoman, Ishanee Parikh, said in a statement. “These products cause real environmental harm, and we need to be able to prevent nearly 30,000 tons of expanded polystyrene waste from entering our landfills, streets and waterways. We are reviewing our options to keep the ban in effect.”

The Restaurant Action Alliance, along with a group of manufacturers, recyclers and restaurants, sued the city in April to stop the ban. They said it was in fact possible to recycle the containers in a way that cut down on landfill additions and saved the city money.

The city delayed issuing fines until January 2016, but many businesses quickly replaced plastic foam with paper-based or legal plastic cartons.

Justice Chan’s ruling, made public on Tuesday, hinged on the question of whether the city had broken its obligation to recycle the used containers, as long as it could do so in a way that was efficient and environmentally effective. The sanitation commissioner, Kathryn Garcia, determined in December that the material was nonrecyclable.

But Dart Container Corporation, a manufacturer in Michigan, put forward a plan that the company’s director of recycling, Michael Westerfield, said on Tuesday would allow the city to start recycling a wider variety of plastics and guarantee that products made from recycled foam containers made their way back into the market. “We view this as a win for recycling and the environment,” he said of Monday’s ruling.

As part of the plan, which Dart said it laid out to city officials in a dozen meetings before the ban was announced in January, the company would buy and install new sorting machines that it said would recover more than 90 percent of the foam. A recycler in Indiana promised to buy the bales of plastic material for at least five years and gave the city a list of buyers who were in the market for products refashioned out of the foam, the ruling said. Under the plan, Dart said only 5 percent to 10 percent of the material would end up in landfills.

Justice Chan said the city had ignored those figures and instead made much more conservative estimates. She said the city could make at least $400,000 by recycling 40 percent of its yearly plastic-foam waste.

Eric A. Goldstein, a lawyer at the Natural Resources Defense Council, said the court had “glossed over” evidence that plastic-foam containers could not be recycled. “There’s not a single major city in the nation that has successfully implemented a recycling program for used polystyrene food containers, and the reason is simple: It doesn’t make economic sense,” Mr. Goldstein said.

Officials from the Bloomberg administration also cast doubt on whether the manufacturer had really found a better way to recycle plastic foam.

“The decision is clearly wrong,” a former deputy mayor for operations, Caswell F. Holloway, who led the administration’s efforts on foam, said in a statement. “The product has inflicted extraordinary environmental harm and should not be in use.” Mr. Holloway added, referring to Mr. de Blasio, “We’re glad he is going to continue this fight.”