The Army Headquarters had submitted its report into the functioning of the Technical Support Division (TSD) last year and recommended a CBI probe.
The TSD was mired in a major controversy two years back after allegations that the secret unit had carried out some unauthorised operations and even tried to topple the Jammu and Kashmir government.
The Ministry is learnt to have disfavoured a CBI probe, government sources said.
The report had asked the Defence Ministry to take action against the unit saying that it was allegedly involved in carrying out unauthorised operations.
Army sources said the force did not carry out a Court of Inquiry (CoI) itself as it did not want to be seen as taking action against its former chief.
The report submitted by the Bhatia-led committee had alleged that TSD was allegedly involved in "unauthorised operations" which may have taken place even across the border without the proper clearance from the higher-ups in the government.
