A bench of Justice Sangita Dhingra Sehgal also exempted Kejriwal from personal appearance before a trial court on December 11 in the case.
The court was not inclined to stay the proceedings before the trial court and listed the matter for further hearing on January 22.
Kejriwal had sought stay on the summons issued to him by the trial court on March 4.
Mr Chandra had on November 17 last year sought the prosecution of the Delhi chief minister for allegedly defaming him by levelling false allegations in the wake of demonetisation.
Senior advocate Sanjay Hegde and advocate Rishikesh Kumar, appearing for the Chief Minister, sought quashing of summons and the complaint filed before the trial court, on the ground that Mr Chandra himself has not stepped into the witness box to prove his case.
The counsel also submitted that Mr Chandra was a Member of Parliament, who stayed in Delhi, and he should have personally stepped into the witness box to prove his defamation case like other Union Ministers have done in the past.
To this, the bench observed that the trial court had passed a detailed order with regard to the summoning of Chief Minister as an accused in the case.
"You are seeking a stay. Please point out the mistake in the trial court's order," the bench asked Kejriwal's counsel. However, it later said let the replies from the police and Mr Chandra come in the matter.
In his plea, Mr Chandra, the chairman of the Essel group, has alleged that Kejriwal, while addressing a press conference on November 11 last year, had made "false, fabricated and defamatory allegations" against him.
The complaint claimed that Kejriwal had, "without any lawful basis or justification, dragged the name of the complainant in the entire facade which has defamed and lowered the reputation of complainant in the eyes of general public and thus accused person (Kejriwal) has committed the offence of criminal defamation."
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