Only legislature,whether it's of state or at the center,has power to make laws. The Supereme Court and The High courts have been given the power by Constitution of India to make the interpretation of already made laws. Such Interpreatation are binding to the lower courts.
See, my views are related to context of any State's HC;
First - The Hon’ble Supreme Court has ruled that law should prevail over equity and that judges should not legislate as it would be violative of the basic democratic principles.
Second - Art. 141 COI declares that the law declared by the Hon'ble SC shall be binding on all Courts and authorities within India.
Third - I am in agreement to your context to conflict in Law especially when pronounced by State's HC's and what should prevail not only for sub-ordinate Courts of that State or by other States' on same question of Law which other State's HC may differ and then which Law should prevail; Infact there is a pending Bill in Parliament "The Conflict of decisions (Restoration of Uniformity) Bill, 1990" which is a Bill to promote uniformity of law, by providing a machinery for settling conflicts of decisions amongst High Courts. It is a very simple 2 page Bill and once it ever gets passed by Legislatures in both Houses of the Parliament this Don Quixote question in context will remain headache for both practitioners of Law as well as for larger sections of general public.