The apex court had earlier halted contempt of court proceedings against Malik, considered to be close to army chief Gen Ashfaq Parvez Kayani, until his appeal was decided.
Following the dismissal of the appeal, the Supreme Court will now start contempt of court proceedings against Malik on November 20.
A three-judge bench headed by Chief Justice Iftikhar Chaudhry had indicted Malik for not complying with the apex court's orders to hold local body elections in over 40 cantonments across the country.
The last elections to cantonment boards were held in 1998 and the bodies have been without public representation for 14 years, officials said.
The Chief Justice said the responsibility for the delay in polls lay with the Defence Secretary and refused to accept his written apology.
In October, the apex court had issued a notice to Malik, asking him to explain why action should not be taken against him under the contempt of court law for not holding the polls.