This is the first of its case that Central Government has intervened.
The latest update in the case comes after Army chief Gen Deepak Kapoor had only taken administrative action against Prakash.
Kapoor was accused of being soft on Prakash as he had just an explanation from him in response to the Army's court.
Kapoor had suggested court martial of Lt Gen PK Rath, another officer who was indicted.
He also submitted his action-taken report to the Defence Ministry Jan 11.
The scam came to light after the Army granted a no objection certificate to business groups and a private education trust to acquire a 71-acre tea estate adjacent to the Sukhna military station.