In a conversation, which of the two sentences below is grammatically correct?
There was a party celebrating for my sister's marriage.
There was a party which was being celebrated for my sister's marriage.
Both are wrong
This is grammatically incorrect. You celebrate an event. You do not celebrate for an event.
This is incorrect (or at least very unlikely). What is being celebrated is the marriage. The first part of this sentence makes it seem that the event which you are celebrating is the party itself. A party is a type of celebration. You don't usually celebrate a celebration.
If you are recording a past event you might write
or, somewhat more passively,
Out of the two choices, I agree with @Jason Chen. However, I would rewrite the sentence completely: