In March, the Lokayukta had held then municipal councillor Ajit Singh Tokas and Ravi Prakash Sharma guilty of promising to help raise illegal constructions in their areas and recommended to Khanna to caution and reprimand them.
The Lt Governor, however, did not accept the recommendation on the ground that such reprimand would be inconsequential as both Tokas and Sharma have ceased to hold office of municipal councillors.
"In both cases, the competent authority has not acted on the recommendations only because the public functionaries have ceased to hold office. This raises a seminal issue of importance, namely 'Is a public functionary not to be proceeded against despite being found guilty of misconduct because he ceased to hold office.
"The decision of the hon'ble Lt governor in the above cases appears to be answering the above issue in affirmative," the Lokayukta said in an order.
A senior official in LG's secretariat, while reacting to Lokayukta's comments, said Khanna took a "balanced view" of the matter and gave a decision as per law.
"It was in the jurisdiction of the Lokayukta to recommend action and it was in the jurisdiction of the Lt Governor to take a decision," the official said.
The Lokayukta had decided to initiate a probe into the issue in December last year after a news channel telecast a sting operation purportedly showing that money was demanded for allowing illegal construction.