Soon after receiving the order of reinstatement, Nayak took charge.
He had been suspended from the service in January 2006 and was arrested by the Maharashtra Anti Corruption Bureau after a court rejected his anticipatory bail plea in the case.
In October 2009, the then director-general of police S S Virk had denied permission to prosecute Nayak in the case with a remark that there were insufficient grounds and cleared him of all charges. Later, his file had been sent to the Anti-Corruption Bureau. This had paved a way for his reinstatement in the force.
"Subsequently, the magistrate of the court concerned was informed that the case does not stand against Nayak. Hence there is no case against him now. So, he is eligible for the reinstatement. The city police commissioner passed an order for his reinstatement and Nayak is now posted at Local Arms wing," an Indian Police Service officer told PTI.
A 1995-batch police officer, Nayak had got actor Amitabh Bachchan to inaugurate his school in Karnataka in memory of his mother nearly seven years ago.
The ACB had also arrested his two friends, who lent their names to the transfer of his wealth. The ACB also sought to arrest Nayak's wife Komal.
According to the ACB, Nayak's investments include a posh flat at Charkop, a defunct financial company. The school in Karnataka was constructed at a cost of Rs one crore, which ACB officials had claimed were "proceeds of corruption".
Nayak and his wife Komal ran a few companies to launder the money, the ACB had alleged.
Nayak had refuted the charge that he donated Rs 1 crore to this school and submitted a list of donors in an earlier enquiry. Prosecution claims that some of these donors' names are fake.
Nayak, a sub-inspector of the 1995 batch, rose to fame in a short span by killing around 80 criminals including Vinod Matkar, Rafik Dabba, Sadik Kalia and three Lashkar-r-Tayiba operatives.
Nayak was unavailable for comment. The movie Aab Tak Chappan was based on his career.