Highly placed sources said the Speaker's sanction to prosecute Singh under the Prevention of Corruption Act was denied to Mumbai police recently.
Speaking on condition of anonymity they, however, declined to divulge the grounds on which sanction was refused.
"The decision is open to court's scrutiny," sources said.
The Speaker's decision drew criticism from opposition BJP which demanded that he reconsider the decision.
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However, Congress rushed to back the Speaker on the issue and said charges against Singh were "politically motivated".
"The charges against Singh were politically motivated. The Speaker must have taken a decision after examining the legal aspects," state Congress president Manikrao Thakre said.
Even NCP chief Sharad Pawar appeared to support Walse-Patil, saying "the Speaker is a law graduate. If he has taken a conscious decision, there must be a sound reason."
A SIT, then headed by Mumbai Police Commissioner Satyapal Singh, had completed investigations in the case last December and sent its report to the Speaker seeking his approval to prosecute Singh.
The Prevention of Corruption Act requires the probe agency to secure sanction of the appointing authority before prosecuting a public servant.