Metropolitan magistrate S S Shirke on Friday rejected the "C" summary application filed by the Economic Offences Wing, Mumbai, seeking closure of the case against Dilip Pendse and others.
The magistrate has further directed the joint commissioner of police, Mumbai, to appoint any other investigating officer to further probe the case.
Tata Finance, on August 6, 2001, had filed a complaint against its former managing director Dilip Pendse through a first information report accusing Pendse and others of criminal breach of trust, forgery, falsification of accounts, criminal conspiracy and cheating.
Jethmalani added, "Investigations by the Mumbai police leave much to be desired."
Pendse is at present in Tihar jail under judicial custody after being arrested by the Delhi police on February 25, 2003 for fund misappropriation of Rs 2 crore (Rs 20 million). The complaint was filed by Inshaallah Investments, an erstwhile subsidiary of Tata Finance.