Mumbai, Jan 18 (PTI): In a setback to Maharashtra's former Chief Minister Ashok Chavan, a special court in Mumbai today rejected the CBI's plea to drop his name from the list of accused in the Adarsh Housing Society scam case.

"The CBI's plea stands rejected," judge S G Dighe said, dismissing the plea and added that even though Governor K Sankaranarayanan had rejected CBI's plea for sanction to prosecute Mr Chavan, he could be tried under the Prevention of Corruption act as he has been accused of criminal misconduct. A detailed order is expected later in the day.

In the course of arguments, Special Public Prosecutor Bharat Badami said the CBI would be "very happy" to prosecute the former Chief Minister but "our hands are tied".  He said there was no provision under the law to appeal against the Governor's denial of sanction but the agency can request him for a review of his decision if it has additional evidence against Mr Chavan which was not the case.

The CBI had on January 15 filed an application to allow it to remove Mr Chavan's name from the list of 13 accused charge-sheeted in the case, citing the Governor's decision, which it said was "non-appealable". The court had reserved its order on the application for today.

Acceptance of the CBI's plea by the court would have come as a big relief for both the Congress and Mr Chavan, the only former Chief Minister to have been made accused in the case though two of his predecessors--Vilasrao Deshmukh and Sushil Kumar Shinde-- were also under the scanner.

A judicial commission of inquiry set up by the state government had indicted all three for "blatant violations" of statutory provisions in granting various clearances to the scam-tainted Adarsh housing society.

The judicial panel's report had said, "There was certainly a nexus between the acts of Chavan and benefits derived by his close relatives. The membership process clearly indicates that grant of requisite permission by Chavan was by way of quid pro quo."

Mr Chavan, 55, who had to step down as chief minister after the scam surfaced, had challenged his inclusion in the charge sheet on the ground that no sanction for prosecution had been obtained from the Governor. The CBI had maintained that since he was a former Chief Minister at the time of being charge-sheeted, gubernatorial approval was not required.

The court had, however, directed the agency to get sanction for Mr Chavan's prosecution which was denied by Governor K Sankaranarayanan, apparently leaving CBI with little choice but to close the case against him.