He was "very happy and relieved", Paraskar said afterwards while talking to reporters.
Special Public Prosecutor Pradeep Gharat said government would file an appeal against the order in the Bombay High Court.
Jude V A Raut passed the order in-camera.
Paraskar's lawyer Rizwan Merchant said the charge sheet made out no case against his client. "We argued that the charges were groundless and based on a false complaint," Merchant said.
In July 2014, the suburban Malwani police registered a first information report against Paraskar under IPC sections 376(2) (rape by a police officer), 376 C (intercourse by superintendent of jail, remand home, etc) and 354(D) (stalking). The charge sheet was filed in May, 2015.
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According to her, she met Paraskar for the first time in 2012, when he was an Additional Commissioner of Police regarding a case.
In August, 2014, the special court for women's cases here granted Paraskar pre-arrest bail while observing that "it appears from the behaviour of the complainant and her e-mails that the act must have been committed with consent."
Jealousy could be a possible motive behind the complaint, it said, noting that even after the alleged offence the complainant's behaviour with him was normal.
He was accused of having violated Central Civil Services (Conduct) Rules as he had once travelled with the woman beyond his jurisdiction and accepted expensive gifts from her without prior permission of his seniors.
Reacting to the discharge order today, Paraskar said he was "very happy and relieved".
"Meeting (after the FIR was filed) the constables and police officials who once worked under me was the worst kind of embarrassment," he said.