The 59-year-old engineer-in-chief has been accused of misbehaving with a Colonel's wife during an official trip to Israel in May 2010.
Based on preliminary investigations, the Army has found loopholes in the account of allegations. To ascertain the real facts, the army initiated the probe.
The charges of sexual misconduct against Lt Gen Nanda were levelled by the Colonel's wife in a complaint. However, Nanda's wife Neerja Nanda has dismissed the charges.