The district and sessions court in Abbottabad in North West Frontier province issued the notice in response to a petion filed by the family of the 'missing' man.
In the petition, the family had accused Musharraf of having a role in the abduction of the man.
Mohammad Iqbal, the lawyer for the complainants, said he was satisfied with the court's decision directing police to declare Musharraf a "proclaimed offender" and confiscate his property if he failed to cooperate with the probe into the case.
He said the petition was filed in Mar 2009 under provisions of the Pakistan Penal Code and Article 6 of the Constitution which relates to the trial of the President on charges of treason.
From past six months, police was investigating the matter and had accepted that they cannot arrest Musharraf and others named in the complaint, Iqbal said.
"Now the police have got the order from the court. If they will not proceed, the judge will take action against the police," Iqbal was quoted by a TV news channel as saying.