A bench of Chief Justice N V Ramana and Justice Rajiv Sahai Endlaw directed NGO Maulik Bharat Trust to approach a magisterial court for the remedy.
"Whatever relief you (NGO) are seeking from this court cannot be granted in this PIL," the bench said, adding, "You can approach the magisterial court as the high court is not the appropriate forum."
The bench also said, "you have a good case, so go to an appropriate magistrate and argue your case and then ask for prosecution if there is any violation of the election rules".
It further said, "As per the apex court judgment, high court cannot hear PIL on election".
In its petition, the NGO alleged that Arvind Kejriwal violated provisions of the Representation of People Act by submitting an incorrect affidavit, regarding details of his assets and income, at the time of filing his nomination paper.
"In the affidavit submitted to Election Commission at the time of filing of nomination he submitted the wrong detail of his Indirapuram plot. He also undervalued the cost of his property and mentioned its market value at Rs 55 lakh. Present fair market value of the property is approximately Rs 2.4 crore....," the PIL said.
Apart from cancellation of Arvind Kejriwal's nomination, the NGO had also sought a CBI inquiry of the allegations they had levelled against him as well as directions to the government "to generate a permanent mechanism to check and verify affidavit of all candidates willing to contest elections".
"He (Arvind Kejriwal) has not only rendered himself liable for criminal prosecution but also has created a feeling of distrust among the nationals by raising allegations on others over moral and corruption related issues and also character assassination through exposes' of many public figures in the recent past," it said.
This was done only to sway the emotions of the general public in order to create an unprecedented mass following, making the Janlokpal movement and creation of a platform for AAP," the plea said.
Meanwhile, the bench deferred the hearing on another PIL, filed by advocate M L Sharma, seeking directions to the CBI to register a case of cheating and corruption against Arvind Kejriwal for allegedly misleading the voters by making "false promises" in the poll manifesto.
While adjourning the plea for February 5, Justice Ramana said that the advocate should go through the Supreme Court's judgement passed in similar issue.
It is alleged that they misled Delhi citizens by making false promises in the AAP election manifesto in their bid to enjoy power and benefits.
The plea said the court needs to decide the issue of false declaration by "misusing chief minister's office for political gain" which amounted to corruption.