Chavan, who had to resign from the post of the Chief Minister of Maharashtra after the scam surfaced, was among the 12 who were charge sheeted by the agency in connection with the case.
The former Chief Minister had challenged his inclusion in the charge sheet, saying no sanction for prosecution was taken from the Governor whereas CBI countered it by saying since he was a former Minister at the time of being charge sheeted, there was no need for sanction.
The court, however, directed the agency to get the sanction for prosecution. Later, CBI approached the Governor seeking the sanction which was rejected even though the agency had made a detailed submission for it. "We do not have any legal remedy now. It is for the court to look into the matter," CBI Director Ranjit Sinha said.
Agency sources said it is not the first time that cases against powerful ministers have been dropped due to lack of sanction from the competent authorities.
In the Taj Corridor case, then UP Governor TV Rajeswar had rejected CBI's plea for charge sheeting Mayawati which led to dropping of charges against her.
Similarly, in the Letter of Credit (LoC) scam, the then Assam Governor S K Sinha had declined CBI's case to prosecute former Chief Minister Prafulla Kumar Mahanta.
Ashok Chavan was among the 12 who were charge sheeted by the CBI.
The sources said while 12 others which include senior bureaucrats Jairaj Phatak and Pradeep Vyas will face court proceedings, charges against Chavan will be closed.
The CBI sources said they had collected detailed evidence against Chavan which was presented before the Governor while seeking sanction against him. CBI had alleged in its charge sheet that Chavan had increased the floor space index of the controversial Adarsh Society in lieu of two flats to his relatives.
Chavan also asked the Society to take 40 per cent members from civilian category, when it was originally meant only for war veterans, CBI has alleged, adding that Chavan played a key role in the scam. As to the issue of jurisdiction, it said Defence Ministry had forwarded a complaint to it, which led to the probe.
The Maharashtra government has taken a stand that CBI had no jurisdiction to probe the scam. Chavan's mother-in-law Bhagvati Sharma, sister-in-law Seema Sharma and father-in-laws brother Madanlal Sharma have flats in the society.
CBI has filed charge sheet against Chavan and 12 others for criminal conspiracy, cheating and criminal misconduct under Indian Penal Code and also under Prevention of Corruption Act.