In a letter to V Narayanasamy, Minister of State in the Prime Minister's Office, Nariman said he declines the "honour" to be part of the committee.
"In my humble view, this is no way in which an institution as vital and as important as the Lokpal is to be constituted.
"The chairperson and members of the Lokpal as ultimately selected may well be projected as democratically chosen by a broad consensus from amongst two levels of selectors (upper and lower), but it is precisely for that reason that I do fear that the most competent the most independent and the most courageous will get overlooked," he wrote.
His name was proposed by a five-member selection committee to be a part of the eight member search committee under the Lokpal Act.
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The search committee will scrutinise the applications received for the post of chairperson and eight members (four judicial and four non-judicial) and forward the names to the selection committee.
The selection committee comprises Prime Minister Manmohan Singh, Lok Sabha Speaker Meira Kumar, Supreme Court judge H L Dattu - a nominee of the Chief Justice of India P Sathasivam, Leader of the Opposition in the Lok Sabha Sushma Swaraj and jurist P P Rao.
She is believed to have recommended the names of Nariman and senior lawyer Harish Salve for the selection committee.