When the matter was taken up, the vigilance prosecutor informed the court that no criminal offence was detected and the case against Jayarajan was going to be closed.
Jayarajan had resigned as Industries minister in October last year in the wake of the appointment row.
Justice P Ubaid, considering the petition filed by Jayarajan seeking quashing of the Vigilance probe against him, clarified that the stay would not be a bar in filing of a closure report before the Vigilance Court.
He appointed his nephew, P K Sudheer Nambiar as Managing Director of Kerala Industrial Enterprises Ltd.
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The appointment was later quashed by the government.
Jayarajan, who had successfully contested from Mattannur in northern Kannur district, was a member of the legislative assembly from 1991-96. He was again elected in 2011.
Additional Chief Secretary Paul Antony and Sudheer Nambiar, nephew of Jayarajan and son of CPI(M) central committee member P K Sreemathy, are the other accused in the case.