Revenue Minister E Chandrashekharan told media persons, "This was a preliminary probe and a more detailed probe is required to find out details."
Mr Chandy, who belongs to the Nationalist Congress Party and is the transport minister in the current Left government in Kerala, has said, "This is a conspiracy against me. I am open to any inquiry. I have not encroached upon any area."
Thomas Chandy is the richest legislator in the Kerala Assembly.
The opposition led by Ramesh Chennithala last month raised the allegations against Thomas Chandy several times in the Assembly but the minister was backed by the chief minister who said, "There was nothing illegal and that the allegations were politically motivated," leading to the opposition staging walk outs.