Ethesham Siddiqui in his petition before the high court had claimed that he had seen of Mohammad Ali in ATS' custody a day before he was killed in an encounter on August 22, 2006.
Ali, who was shot dead by Maharashtra ATS in a building in suburban Wadala, was accused of being a Pakistani militant.
Ethesham, who is himself an accused in the 7/11 serial train blasts case, has alleged in his petition that Ali was detained by ATS a day before the alleged encounter and was being interrogated at its Kalachowkie office in south Mumbai.
The petition had sought a judicial inquiry in the incident.
A division bench of Justices S A Bobade and Mridula Bhatkar refused to order judicial probe and said the petitioner could approach the police first.
"We cannot order judicial probe without any investigation done by the police. You (petitioner) have the remedy of approaching the police first," the court said.
Subsequently, Ethsham's lawyer Naima Shaikh, withdrew the petition.