Purohit has sought bail on grounds that the National Investigation Agency had dropped charges against him under the stringent Maharashtra Control of Organised Crime Act (MCOCA) and the sanction obtained for prosecution under the Unlawful Activities (Prevention) Act was defective.
He further said that had no role to play in the blast case and that he was languishing in jail for the past seven years without trial.
Opposing the bail plea, the NIA said that Prasad's arguments should be considered during the trial and not at this stage.
Besides, the NIA said prima facie, it had gathered sufficient evidence against the accused.
Upholding the NIA plea, Special Judge S. D. Tekale rejected Purohit's bail application.
The sensational blast during Ramzan on September 29, 2008, which ripped through Malegaon, a Muslim-dominated powerloom town in Nashik district, killed seven and injured over a 100.
Besides Purohit, 11 others, including Sadhvi Pragnya Singh Thakur were arrested in connection with the sensational case.
In its chargesheet filed in May this year, the NIA had described Purohit as one of the founders of the right-wing group, Abhinav Bharat Trust in 2006, when he was a serving officer in the Indian Army.
He has been charged with allegedly collecting funds to procure the explosives which were used in the blast, but he flatly denied the accusations.
