His leave was extended today, a senior health ministry official said.
However, according to sources, Prasad allegedly went to his office today and a "verbal spat" ensued between him and B D Athani, currently in-charge of the DGHS office.
The spat, sources claimed broke out after Prasad found him in his cabin without his knowledge.
Athani was given the charge "with full powers" last month.
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Meanwhile, an order was purportedly circulated today which stated that Prasad has been placed on suspension as a disciplinary proceeding for major penalty is pending against him.
"Now, therefore, the President in exercise of the powers conferred by sub rule (1) of Rule -10 of the Central, Civil Services (Classification, Control and Appeal) Rules, 1965, hereby places Dr Jagdish Prasad, DGHS under suspension with immediate effect," the order dated today read.
A senior official from the health ministry clarified that the order was not enforced. "Prasad came to office and extended his leave," the official said.