Pandey, currently out on bail, had contended that the statements of two witnesses against him were contradictory and that none of the other 105 witnesses examined by the court had named him.
The Central Bureau of Investigation (CBI) had named him as an accused in its chargesheet, without obtaining the mandatory sanction from the Centre, Pandey's lawyer told the court.
Pandey had resigned in April last year after his appointment as the in-charge DGP was challenged in the Supreme Court.
The CBI had opposed his discharge plea, saying it had enough evidence to prove that he was part of the conspiracy to carry out the alleged fake encounter.
Ishrat Jahan's mother Shamima Kauser and Javed Sheikh alias Pranesh Pillai's father Gopinath Pillai were made respondents by the court in the matter on their request. Both opposed Pandey's application, saying if he was discharged, it would obstruct the investigation.
Pandey was the head of the city crime branch then.
The Gujarat police had claimed that Ishrat and the others were terrorists with links with Pakistan-based terror outfit Lashkar-e-Taiba (LeT).
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