The accused Amer Sarfaraz alias Tamba had filed the application before Additional District and Sessions Judge Lahore Nasir Rana seeking bail in the case.
The judge yesterday dismissed his plea observing the incident had taken place in "broad daylight" in the presence of other prisoners and the jail authorities besides the prosecution had also produced sufficient incriminating evidence against Tamba.
Tamba in his application said he had been implicated in the case as he was not present at the barrack of Sarabjit when he came under attack.
The prosecution informed the judge that both claims of the accused were false as he was caught red-handed while the murder weapon had also been recovered and presented in court.
The case had been transferred to Judge Rana over two months ago. Earlier, Justice Shahzeb Saeed and Justice Syed Anjum Raza heard the case.
The hearing was held at the Kot Lakhpat Jail in Lahore.
Both the accused who are also death row prisoners had allegedly attacked Sarabjit with sharp-edged weapons when he was being moved from one cell to another in the Kot Lakhpat Jail on April, 29, 2013.
The murder trial began in January, 2014, and subsequently the two alleged killers - Tamba and Muddassar Bashir - were indicted.
Both accused denied the murder charges when they were charge-sheeted.
However, earlier they had confessed to the murder of the Indian death row prisoner before a one-member judicial commission constituted to probe the murder.
They said, "We wanted to take revenge from him (Sarabjit) for killing Pakistanis in bomb blasts in Lahore and Faisalabad".
The commission's report has also been submitted to the trial court.
Sarabjit was sentenced to death on spying charges and for killing at least 14 Pakistani citizens in bomb blasts in Punjab province in 1990.
His family however said that he was a victim of mistaken identity and had inadvertently strayed across the border. His mercy petitions were rejected by the courts and former President Pervez Musharraf.
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